Should Canada have taken the U.S. deal?

0:00At Verbo, we understand that even the best of plans sometimes need a little support. So we've planned for the plot twists. Every booking is automatically backed by our Verbo care guarantee, giving you confidence from the very start. Whenever you need help, it's ready. Before you stay, through the moments in between, and after your trip. Because a great trip starts with peace of mind. And maybe a good playlist. But we've got the peace of mind part covered. This is a CBC podcast. Hey everyone, I'm Jamie Pueson. It's been almost a month now since trade talks between the US and Canada collapsed, and Karni's government walked away from a deal. Canadian retaliatory tariffs went into effect earlier this month, and yet more US tariffs hit this week. A new deal between the two countries is nowhere in sight.

1:01And by and large, Canadians are totally fine with this. Public opinion polling suggests that more than seven in ten people think the feds were right to suspend the talks, and Karni's liberals are sitting higher in the polls than they have in almost a decade. Canadians are choosing to rally around the flag. But as we settle into this new, no-deal reality, we wanted to talk to someone who's seeing this all a bit differently. Who's wondering if we really should have walked away from the table with the US, and who's asking if Canadians and all of their righteous anger are really thinking clearly about the path that we are now on? Sean Speer is editor at Large at the Hub, and a former senior economic advisor to conservative Prime Minister Stephen Harper. He is a Canadian, and the Hub is a Canadian publication, but we're reaching him in New York where he lives with his family. Sean, it's really great to have you on the show.

2:01Thanks so much for making the time. Jamie, it's great to speak with you. So we're coming up on a month now of this deal being floated and then falling apart, and you've had some time to reflect on it, to read reports, hear different accounts of what actually went down. And with that time and space, how are you thinking right now about the deal that Canada walked away from? Well, I have to start, Jamie, with a bit of an admission. I have taken for granted for the better part of the past 18 months, really since then President Electrom started musing about returning continental economic arrangements to kind of pre-free trade era that we were unlikely to secure any type of deal with the administration that would by and large maintain, tear free or at least low, tear access for most Canadian exports. And so perhaps one of the reasons I find myself on the other side of this issue is that my starting point was a high degree of pessimism.

3:04And against that, the reports that we've since learned about the contours of the deal, least the original one negotiated between international trade minister, Dominic Lapland, a trade negotiator, Janice Fred on the Canadian side, and then the U.S. trade representative, James and Greer representing the administration exceeded my expectations. As we understand it, it would have maintained tear free access for the vast majority of Canadian exports. It exchanged for maintaining tariffs on aluminum and steel, although likely with some type of quota regime. And then of course, probably most difficult on our auto sector. But I don't minimize those trade-offs. I don't minimize what that would represent for the workers and those communities. But if you would have told me, Jamie, back in early 2025 that we could get some type of deal with the administration that would by and large protect Canadian access to the U.S. market, I would have said that the Canadian government had done far better than I thought

4:06was possible. And in that sense, you mentioned that I'm a former Harper advisor. I find myself in the kind of uncharacteristic position of saying, I like what the Carnegie government and esteem were able to get out of this deal. And I regret that circumstances have taken it seems to me further away from that type of settlement today than we were merely a month ago. I mean, you're also in the position of disagreeing, I guess, with your former boss, because earlier this week, Stephen Harper did say that he thought that the Carnegie government made the right decision. I do believe that our government had no choice but to take this path. It is clear that the current U.S. administration views our level of economic integration as incompatible with our separate sovereignty. I just want to dig into some of the arguments you made there. Let's start with what was on the table when it came to tariffs. So 25% tariffs on steel and aluminum are still pretty steep tariffs. And I take your point that the tariff would have fallen, but there are all reports that

5:09the U.S. wanted to exclude medium and heavy duty trucks. It sounds like it would have been very, very hard on the auto sector. And again, we're talking about reports here, but there have been reports that Ontario premier Doug Ford definitely didn't see this as a good deal given the concentration of auto manufacturing in the province and that he was not keen on the idea of putting U.S. booze back on the shelves because of this. So did Carney really have any choice but to walk away here? He can't force the premieres to play ball. This is like the nature of our federation. Yeah, I would take a couple of things in response. First of all, if that description of events is what actually played out, that is to say the prime minister took the deal back to the premieres and he couldn't secure the support of Premier Ford to restore American alcohol to the shelves. And so we had no choice but to walk away. At minimum, that's a different story than we're being told. Second I would say, although I'm under no illusion that the terms of the deal, as they've

6:14been reported, as you say, would have been extremely challenging for the Canadian auto sector. In fact, I think it's reasonable to assume that over time it would have led to the shift of capital and production to the United States as difficult as it is the terms of the deal still strike me as worth it. Retrade negotiations, which I saw firsthand in my time in the Prime Minister's office involved what are sometimes called offensive issues and defensive issues. You're thinking about trade-offs across sectors, trade-offs across regions. There are winners and losers. I'm under, I totally can see all of that. But I think if you try to just think dispassionately about the significance of the US market to Canada's economy, when you think about the fact that we were operating, that we are operating not in the world of first best options, not even second best options, Jamie, like third, fourth, fifth best options, the deal that Minister LeBlanc and Janice Sharet seemed poised to secure for Canada strikes me as a relatively good one, and all things being equal one that I would

7:16have been inclined to sign myself. What do you make of the Christopher Elandard argument that once you cross the Rubicon, you kind of can't go back? So if you agree to a deal that bakes in tariffs, then you're never able to roll that back. Yeah, it's a terribly important point, but I think in a way it strikes at the heart of my POV if I can put it that way. But I follow American political economy debates in general closely, and I follow the kind of intellectual political debates on the American right in particular very closely. It seems to me really for the past several months, if not longer, that the era of continental free trade is coming to an end, that we are in a world of what sometimes gets characterized as managed trade. But in some ways, I think we've already crossed that threshold.

8:18We are in a world of what we can do to protect Canadian access to the US market as much as possible. But for no other reason, Jamie, to give ourselves the kind of time and the economic wear with all to carry out the diversification efforts that both my former boss, Stephen Harper and the current Prime Minister, Mark Carnie, talked about so much at this past week summit. I come at it from a much more almost cynical point of view, which is given the hand that we've been dealt. How should we think systematically about how to play it? I promise I'll stop rambling in a second, but it seems to me that those who are counseling in favor of putting off this deal and possibly putting off any type of negotiation with the Trump administration for the medium or long term, well, they may be on the side of Canadian popular opinion. I think they do ordinary Canadians a kind of explanation of the logical consequences of that type of thinking, because it seems to me unlikely that the midterm elections are

9:20going to produce an e-c-a political outcome that will fundamentally change the negotiating environment. In fact, there may be an argument that it makes it worse. And then we're in a world where we're waiting to what? The 2029 inauguration of a new president. It's not obvious to me that that will necessarily improve the negotiating conditions, but more importantly, too, it exposes Canada's economy to real harm for the next two or three years. But I think when you pull all that together, it seems to me you end up in a place where you're kind of having, as the Prime Minister is so often put it, have to deal with the world as it is, not with the world you want it to be. Could you elaborate for me a little bit more on why you think the midterms could make things worse? Well, as many pundits and observers are anticipating, I think it's highly likely the Democrats are going to win control of the House. It's not clear to me, in fact, if I had to bet they won't pick up control of the Senate.

10:22I think the Democratic Party is generally more predisposed to America's relationship with Canada for no other reason because of effective polarization because that is in contradiction to the Trump administration's posture. It is clearly not a top priority for an incoming Democratic Congress to prioritize this issue. I think it's also worth recognizing that the presumptive speaker, Hakeem Jeffries, will have a lot of caucus management issues to deal with with the pretty formidable Democratic Socialist Caucus or DSA adjacent caucus. And so again, I think there will be limits on how much Democrats in Washington are advancing these issues. And then there's just the fact, if it's indeed the case that we end up with a fractured Congress, a factured legislative branch where the administration can't move any of its agenda forward, I think that only reinforces the president's focus on those areas where he has executive authority.

11:23And in that sense, I think these issues around trade will only loom larger or possibly to the detriment of Canada. Hi, I'm Natalyn Marcos, Nutrologist and Conductor of the Podcast, the 3 R's. And Cancer De Colón touched me close to my family and taught me to detect it at time can mark a great difference. So let's talk about what it's not about. That's why I'm collaborating with Collegade to tell you that if you have 45 years or more and you have a rice or food question, ask your professional health if Collegade is a proof that you can use at home and detect 95% of the cancer of the Colón. You'll get more information in collogade.co, diagonal prueba. The prueba is designed to detect the colorrectal cancer in adults of 45 years or more, with a rice or food question. Visit collogade.com, diagonal prueba, to get more information.

12:25Just with a medical recipe, make sure the prueba is an act of love for you and your family. Canada is complicated. And help Berda? Well, it has opinions. And Kathleen Betty, the host of West of Center, if you're wondering about separation or the many ways Elberto marches to its own drum, our show will help you understand what's going on out West. Tune in for a no nonsense conversation about the politics that drive this place. Find and follow West of Center wherever you get your podcasts. I want to throw another argument at you in favor of walking away. And I'll just, before I do it, I just want to put down the caveat that it does feel like one of the big challenges talking about this in a clear, right way is that we just were not in the room and we don't have all the information, right? But the county government is presenting this also as more existential than just trade, right? As about Canadian sovereignty.

13:26And you hear the Prime Minister talking about this and you hear reports about this that the Americans wanted to control who Canada does trade with and that they wanted provisions in the deal that would allow them to just change it any time they wanted to. And so how do you respond to the argument that this really is about much more than tariffs? So what you're speaking to Jamie is the conflicting reports that we've had about what ensued after the middle of that week when Jameson Greer, the USTR, posted on X something along the lines of congratulations, Mr. President. You secured a new deal with Canada and by Friday, of course, the deal had fallen apart. We don't know exactly what happened, but I will say what we've heard from US trade representative Jameson Greer, who I've come to interpret as something of a good faith actor is that the Canadians overrepresented those issues that what we're really talking about

14:30was something narrower around aluminum and steel. And on the subject of language and culture, it was really around the online streaming act, Bill C11, which is not merely a grievance with this administration, but was one with the previous Biden one. So that's a long way of saying you're right. We don't know. But I just think that what is in played out in the ensuing weeks is that we were on the cusp of getting a deal that I would be paired to argue to your audience was in the best interests of Canada. And a month later, we seem further away as ever of getting to something like that. And will I understand the emotion? I worry that that is kind of clouding our judgment about thinking carefully about what is ultimately in the Canadian interest. Another thing, Karne, he said about the deal that we've heard many other commentators echo is that the US signature is sometimes written in pencil. Essentially that a deal with Trump isn't worth the paper. It's written on because he isn't untrustworthy, unreliable guy.

15:34Like at the end of the day, it's not Jameson Greer who signs this, right? And so how do you respond to that? It's impossible to disagree with that. I mean, he is over the past year, of course, breaking the deal that he previously negotiated with us. I can see that that is a risk, of course, but it's not obvious to me that that's a rationale for not doing a deal at all, especially because there's like an alternative scenario where he declares victory in his so-called trade war with Canada and shifts his attention elsewhere. And so again, these are kind of one of those no one unknowns that are part of policy-making. And now it's just not obvious to me how we get back to the table. What a resolution looks like. Maybe cooler heads will prevail, but I also worry Jamie that we end up in a kind of escalation. What worries me there is not that we just see retaliation after retaliation on particular

16:38industries or exports, but the administration has it disposal certain kind of non-tariff tools that it could draw on that would really harm Canada. Think everything from the banking licenses for Canadian banks operating the United States. Think of a tax treatise or visas or any other number of issues. So I'm not defending the administration by any means. They are the bad actors in this scenario. I am not minimizing the challenges that all of this represents for anyone on the Canadian side of the table. I guess if I had a single message it would be as understandably angry and frustrated and offended as Canadians are. We kind of owe it to ourselves to try to think as clearly and rationally as we can about how to protect Canadian interests in what is clearly a situation that we ourselves didn't choose. I take your point that there are some real risks here and that the Americans have the

17:41ability to ratchet this up in incredibly harmful ways. The Canadian economy has been weathering this trade war pretty well. Earlier this week, RBC put out a report saying that they remain cautiously optimistic. The Canadian economy is resilient and will improve despite trade risks. For sure, yes, there is going to be pain in some areas. But there would be pain in some areas if we made concessions to get a deal too. So I guess the question I'm asking is what makes you so sure that no deal is worse than negotiating a deal with the US administration? It's a good question. I'm just trying to think through how I'd answer it. Good this isn't live, isn't it? I mean, I like the pause, right? That's good. There are cases where I'm totally open to the argument that no deal is better than any

18:42deal. But I'm not talking about any deal. I'm talking about the deal as it's been reported to us far exceeded my expectations in large part because I've been following these debates really since 2015, 2016 on the American right. So I grew up in a world of conservatism where free trade and free markets were kind of taken for granted. They were the kind of policy furniture if I could put it that way. And what we've seen in the past decade or so, obviously precipitated in large part by Donald Trump's arrival on the political scene is a real scramble on those issues. And it is now not merely on the right that we're seeing this kind of change in orthodoxy. It is playing out on the American left as well, such that it's not obvious to me that when Donald Trump exits the kind of political scene that we're going to ratchet back to a kind of pre-Trumpian era of free trade and warm continental relations.

19:45I think because of that, the terms of the deal that seemed to be on the table a month or so ago strike me as probably the best we're going to get. It's not clear to me that waiting longer is going to change that. On that point earlier this week, we heard Karnie say that he doesn't have any pride here that he's ready to get back to the negotiating table for a mutually advantageous deal. On the other hand, though, he's now seen that the public is on side here. And they are overwhelmingly supportive of his decision to walk away. So on a political level, why do you think he would be in any rush to get back to the table? Might it be more politically advantageous for him to wait this out? One can certainly make that argument. And it's not an accident or a coincidence. It seems to me that the Prime Minister's support has got up in parallel with the kind of expression of support that we've seen play out since he delivered those remarks. I thought in such a statement like, way, the Saturday morning after the talks had broken

20:49down, we can't control the storm that blows in from Washington. We can, however, chart a new course by building Canada strong at home and diversifying our trading relationships abroad. The counter pressure, though, for the Prime Minister, Jamie, is his ambitions around investment in Canada. Although this week's summit had a lot of good vibes and we saw some kind of big, goddessious numbers put out one who's heard behind the scenes that a lot of global investors remain apprehensive because of the ongoing uncertainty about the Canada-US relationship and access to the US market. When companies are investing in Canada, it's rarely to serve the Canadian market alone. It is to serve the continental market. And so I think one of the reasons the Prime Minister was aiming to secure a deal when he was was to try to have it in place before this week's summit. And I think as him and his team go about trying to kind of build on the momentum at this week's summit and they hear more and more that access to the US market is a kind of key

21:51consideration for a lot of the investors and companies with whom he's speaking. It may be the instead of he needs to get back to the table, even if the pollsters and political advisors are saying that this issue continues to have a lot of juice for him in the Liberal Party. I wonder if I could ask you how it feels publicly to be kind of going against the grain in the way that you are not just say that you're not making a lot of nuanced arguments here today, but I really have been noticing this rally around the flag effect. Public opinion is so strongly in lockstep with walk away, stand up to Trump. And I wonder if it's been difficult for you to be standing apart from that to actually not at least publicly be in lockstep with your former boss, Steven Harper. And to not kind of I guess be sort of this united front Canadians are putting out.

22:54Yeah, I don't have a contrarian bone on my body. I am inherently conventional. And so this is an uncharacteristic position I find myself in. And it's not it wasn't obvious to me that it's where I would end up. I've just tried my best to think about these issues as dispassionately as I can try to make sense of the kind of positioning of the different players. And I will say to the credit of the CBC, Rosemary Barton's interview with Jamison Greer, the US trade representative, is a kind of big part of what has shaped my thinking on this. And to me that Greer, someone who your listeners will recall was integral in negotiating the USMCA. Someone who according to reports was pushing back on his colleagues when they were insisting on issues that he knew would be kind of non starters for the Canadians. Seems to be at least relatively good faith actor at all of this. And you do get the sense Jamie, particularly in that interview with Barton, that he seemed

23:56kind of genuinely disappointed and upset that this had failed. I'm not trying to be provocative for provocation sake. I'm not minimizing what has got us to this place. I'm just encouraging my fellow Canadians to try to keep their heads because if we go head first into an escalating trade war with the United States, there may be something noble about that, but I'm not sure that I don't personally make good decisions when I'm mad. And I think that that scales to the world of policy making and government. And there's a kind of onist I think on policymakers and on public commentators to try to minimize the extent to which our understandable anger is shaping the way we're thinking and talking about these issues. That feels a good place for us to end today. Sean, it was a pleasure having you on the show. Thank you. Thanks again to your team. It was a real pleasure. I'm happy to do it again sometime.

25:03That is all for today. Frontburner was produced this week by Dr. Sheng Gupta, Matthew Amhag, Kevin Sexton, Sam McNulty, Mitchell Stewart, and Mackenzie Cameron. Our YouTube producer is John Lee. Our music is by Joseph Shabison. Our senior producer is Imogen Bertrand. Our executive producer is Nick McCabe Locos and I'm Jamie Poisson. Thanks so much for listening. Talk to you next week. For more CBC podcasts, go to cbc.ca slash podcasts.