DAVID FRUM: SUMMARY VERSION

The Hidden Economic Shift Behind Trump’s Canada Comments

The Surface Story vs. Reality:

• Trump’s sudden praise for Mark Carney appeared to be about personal admiration
• The deeper truth: Canada gained enough economic leverage to make U.S. confrontation risky
• This reflects a fundamental shift in North American power dynamics that happened quietly through markets, not politics

How Canada Built Leverage:

• Canadian dollar strengthened while investors shifted toward Canadian industries
• Resource prices rose; Bank of Canada held firm while U.S. Federal Reserve cut rates
• Canada’s terms of trade improved alongside immigration policy reforms focused on productivity
• Most Canadian exports were protected by trade agreements, so U.S. tariffs backfired, causing American inflation and supply chain problems

The Auto Sector Pivot:

• U.S. automakers struggled under protectionism; Canadian suppliers felt the impact
• Instead of pleading for stability, Canada pivoted strategically
• Canadian firms began exploring defense manufacturing, aerospace, robotics, and advanced components
• Focus shifted from U.S. dependence to selling to NATO allies across Europe
• Federal procurement now prioritizes Canadian production

Resource Independence:

• Nova Scotia reversed course on development, lifting bans and accelerating critical mineral exploration
• This wasn’t random—it was a strategic response to U.S. and Chinese supply chain tightening
• Canada is treating resources as sovereignty tools, not just export commodities

The Real Cost of U.S. Unpredictability:

• Trump’s tariffs became political instruments rather than policy tools
• This created fragility: delayed investment, higher costs, uncertain supply chains
• Canadian dependence on U.S. political mood became a liability once that mood shifted
• Workers, small suppliers, and communities absorbed the economic shocks

Canada’s Strategic Response:

• Deliberate diversification toward Asia and Europe
• Renewed focus on domestic manufacturing capacity and productivity
• Emphasis on critical minerals and clean energy
• Building resilience rather than assuming U.S. stability

The Deeper Lesson:

• Economic structures reward strength and punish fragility
• Canada is reclaiming sovereignty by reducing dependence on a single volatile partner
• This isn’t isolationism—it’s strategic engagement on different terms
• Markets are reinforcing this shift by rewarding stability over proximity

Bottom Line: Trump didn’t back off because he likes Carney personally. He backed off because Canada’s economic fundamentals improved to the point where escalation would hurt the U.S. more than Canada. The old North American model of tight integration is fracturing because maintaining it has become too costly.