You’ve probably seen that Canadian PM Mark Carney has walked away from trade talks with the US. That has led the US to impose staggeringly large (and certainly illegal) tariffs on Canada and Canada is responding in kind. It’s not clear precisely what demands the US made that prompted Carney to do this. Given the pain this will cause Canada, at least in the near-term far more than the US, they must have been not only unacceptable but an affront to Canada’s sovereignty and national dignity.
As I understand it, negotiations appeared to be going well and productively. They began as an attempt to find an agreement to forestall Trump’s original threat of a new round of draconian and illegal tariffs. Indeed, they appeared to be so near completion that an article I saw mid-week referred to Mexico eyeing and looking to negotiate a deal with comparable contours. Point being, it was a measure not only of how well the negotiations appeared to be going but how close they seemed to completion. The broad outlines were known to other interested countries.
Then Carney abruptly ended them in response to new demands.
Canada is much smaller than the US, less than 1/10th the size in population and economy. The self-destruction the US is doing here is vast. But in the near term the pain for Canada is much greater. So what was this new demand? There’s simply no way this was triggered by wrangling over final details. Indeed, Carney’s public statements make this clear, despite his not sharing just what the demands were. I think it must have been demands things that genuinely compromised Canadian sovereignty. It can’t literally have been that Canada become a US state, since then any trade deal is moot. But I wonder how far from that it was. Carney referred to the demands as “unfair [and] uneconomic” and at another point said, “we were not prepared to compromise Canada’s sovereignty or undermine our key industries.”
We know from Trump’s business history that mafia-style squeezes are one of his trademarks. Specifically, he was known for introducing last minute demands that were so over-the-top and shocking that the counterparty would simply be bewildered and thrown off balance and start negotiating against themselves.
Back in early 2016 a TPM Reader who’d spent his career in the New York real estate and knew Trump and those like him described it like this …
There is a personality type with a New York developer, one Donald learned from Fred when he carried his dad’s briefcase to acquisition meetings out in the boroughs and it goes like this:
Donald contracts for a service or good, or the acquisition of a piece of land for $1 million.
He then does not pay you
You ask Donald for your million dollars
Donald yells at you, basely, abusively, wholly out of character to the rich gentleman you broke bread with and made the deal with. He tells you that no, YOU owe him $200,000. Gives you no reason but screams how can you be such a son of a bitch to rip him off, how he’s going to sue you, expose you as a cheat, etc.
You’re off your pins, defensive. How could this be the guy who was so nice when he picked up the check at Per Se?
So, you compromise, because human nature avoids conflict, right? This is what he’s gaming you for because once you compromised, you’ve lost. You’ve inferred his premise that you have some complicity in the matter otherwise why would you compromise? You are on the defensive and will never get it back.
You offer $750,000 as a settlement, angry buy want it over and done with. He then sues you. Why, because you’ve already committed yourself to the loss. You volunteered to surrender your position and what will stop you from keeping going?
I’ve seen many a New Yorker settle things like this with Trump people for 5-10 cents on the dollar and then happy, even eager to keep doing business with them. Why? Because he got in their heads with this aggressively counterintuitive behavior.
This isn’t the same as a end of negotiation ambush, as seems to have happened here. But it’s very much the same energy.
My best guess is that something like that happened at the end of last week. Because what Trump wants – particularly in the psychic space he’s been in since last fall – isn’t any particular trade deal but a burst of domination over and humiliation of the guy on the other side of the table. As we’ve discussed in other contexts in recent months, Trump is now especially craving these bursts of dominating adrenaline, which act as a kind of executive self-soothing, because of the pressure he feels over diminished power on so many other fronts.
Late Update: Carney now says that “in the last hours” the US introduced demands to restrict Canada’s ability to make trade deals with other countries.
