David Frum: The FULL VERSION

I want to start with something that should make you stop for a moment, because on the surface it sounds almost trivial. A former president of the United States says he suddenly likes a Canadian Prime Minister, and at first glance, the comment feels like political noise. But if you listen closely and pay attention to what is happening underneath North America’s economy right now, you realize that this harmless little remark is actually the final echo of a much larger shift in power.

It is the kind of shift that doesn’t come with a press conference or a dramatic showdown. It comes quietly through currency markets, supply chains, investment flows, and the decisions companies make when the cameras aren’t on them. The shift is so profound that even someone as confrontational as Donald Trump has been forced to step back. And the remarkable part is that many people saw the headline without understanding the story.

You probably heard the surface explanation: Trump likes Mark Carney. Carney is respectable, worldly, calm, and therefore apparently acceptable to a president who has never shown much affection for Canada. That was the official narrative—a personal whim, a sudden admiration, a softer tone. But surface narratives often exist to distract from deeper realities, and this one does exactly that.

The truth is that Trump backed off because Canada gained enough economic strength to make a confrontation risky for the United States itself. That is the part no one says out loud, because admitting it would mean acknowledging that the North American balance of power isn’t what it used to be.

Let me walk you through what actually happened in financial markets, in trade data, in energy investment, and in the auto sector. Canada began to accumulate leverage—not loud leverage, not the kind countries boast about, but structural leverage rooted in fundamentals. The Canadian dollar rose. Investors shifted toward Canadian industries. Resource prices turned upward. The Bank of Canada held its ground while the US Federal Reserve cut rates. And once those conditions lined up, the political reality shifted too.

Because despite all the tough talk about tariffs and reciprocal punishment, economic strategy is always disciplined by the question every president eventually has to ask: Can we afford this fight, and what happens if we lose it? In this case, the math was unforgiving for Washington.

The official story you were given is that Trump decided to like Carney. But the deeper story is that he realized Canada was no longer the vulnerable junior partner he could pressure without consequence. And that realization didn’t come from diplomacy—it came from the markets. When a country’s fundamentals improve quickly and visibly, even political actors who thrive on confrontation adjust their behavior. They may not say the quiet part out loud, but they feel it. And Washington felt it.

The reason the surface story fails is because it pretends this moment is about personalities. It ignores the years of structural change behind it. It ignores the recovery in Canada’s terms of trade, the recalibration of immigration policy toward productivity, the surge in investor confidence as tech and energy firms expanded operations northward. It ignores the fact that most Canadian exports targeted during earlier tariff rounds were shielded by trade agreements, leaving the United States absorbing much of the self-inflicted damage.

When inflation pressure built inside the US, when automakers adjusted their production downward, when supply chains strained, the White House suddenly discovered that escalation could hurt them more than it hurt Canada. And while the public conversation focused on whether Trump liked or disliked a foreign leader, policymakers and analysts who follow the data understood that the real story was structural: a rising currency, stronger fundamentals, a government budget that earned rare praise for its focus on productivity. These were the elements that flipped the calculus. These were the reasons Trump retreated without theatrics.

What we are watching now is not a one-off event. It is the exposure of a deeper system that shapes how nations interact even when their leaders would prefer a different outcome. The North American economy no longer revolves around a single gravitational center, and for the first time in a generation, Canada is acting like a country that understands that.

You can see the consequences of that shift most clearly in the places where economic pressure shows up first: the industries that rely on long-term planning, the sectors that depend on cross-border stability, and the companies that cannot afford to gamble on political whims. The auto sector is one of those sectors, and it has become the perfect lens through which to understand this moment.

As US automakers began stumbling under the weight of Trump’s renewed protectionism, Canadian suppliers felt the tremors immediately. Orders slowed, production forecasts slipped, and companies found themselves caught in the uncertainty created by tariffs that could change with a press release or a rally speech. But what happened next was not what Washington expected. Canada did not plead for stability—it pivoted. And that pivot was not an act of desperation; it was an act of strategy.

When the head of Canada’s automotive parts manufacturers association explained the state of the industry, he made it clear that relying on an unpredictable partner was no longer sustainable. Canadian firms began exploring alternatives. They looked to defense manufacturing, aerospace, tooling, robotics, and advanced components. They began preparing to sell not just to the United States but to NATO allies across Europe. And the federal government sent a message that resonated far beyond the auto sector: Procurement will prioritize Canadian production. The era of relying on American equipment because it is the comfortable choice is ending.

This is the part of the story that transforms a policy disagreement into a terminal shift. When a country rewires its industrial strategy, it is not reacting to a single round of tariffs—it is responding to a pattern of volatility. Trump’s trade policy was framed as decisive action to restore American manufacturing, but the effect has been something different: higher input costs, stalled investment, and growing uncertainty have made US supply chains fragile. And in that fragility, Canada saw both a warning and an opportunity.

The warning was simple: If you stay dependent on a partner that keeps changing the rules, you inherit their instability. The opportunity was even clearer: If you build resilience at home and expand your markets abroad, you gain leverage that no amount of political bluffing can offset.

That is why the pivot is so important. It shows that Canada is no longer waiting for Washington to behave predictably. It is building a strategy that assumes the opposite. And as Canadian companies reorient themselves, something subtle but powerful is happening: the old North American model—the one built on tightly integrated supply chains—is fracturing. Not because Canadians wanted it to fracture, but because the cost of maintaining it has become too high.

You can see this pattern not only in manufacturing but in resources, where Nova Scotia has become an unlikely symbol of the new moment. A province that had spent years resisting major development suddenly reversed course, lifting bans, accelerating exploration, and pushing forward aggressively on critical minerals. This was not a random shift. It was a reaction to a world where the countries that control essential resources control their own fate.

As the United States tightened its grip on its supply chains and as China limited exports of strategic minerals, Nova Scotia acted before it became dependent on decisions made elsewhere. This is where the bigger system becomes visible. When geopolitical pressure rises, countries rediscover the importance of sovereignty. And sovereignty is not an abstract idea. It is built on energy security, resource security, industrial independence, and the ability to make long-term decisions without waiting for another government’s approval.

Nova Scotia’s drilling may look like a local story, but it is actually part of a national awakening. For the first time in decades, Canada is treating its resources not as something to be politely offered to global markets but as the foundation of a future that cannot be outsourced.

And all of this ties back to the moment that seems so small on the surface—the moment when Trump suddenly decided he liked Mark Carney. Because whether he meant to or not, that comment revealed his recognition of the shift underway. Not admiration, not personal warmth—recognition. The economic balance of power in North America has changed, and even a president who prides himself on dominance has found himself adjusting to the new reality.

The truth is that none of this was inevitable. It happened because Canada stopped assuming that the United States would remain a stable economic anchor forever. It happened because Canadian policymakers looked at the mounting unpredictability south of the border and asked the questions that too many countries avoid until it is too late: What do we control? What do we need to control? And what happens if we do nothing? The answers to those questions are shaping this era more than any press conference ever could.

As this new landscape takes shape, you begin to see who benefits from it and who pays the price. These shifts are not distributed evenly—economic change never is. On one side, you have the industries and regions that stand to gain from a more self-reliant Canada: energy producers who see renewed investment, tech firms that are expanding data centers into a more stable regulatory environment, manufacturers who want predictable rules instead of sudden tariff shocks, and communities that depend on long-term industrial projects rather than imported volatility. These are the actors that thrive when a country strengthens its fundamentals and asserts control over its supply chains.

But on the other side, there are the groups that absorb the cost of the old model collapsing. Workers in auto-adjacent sectors who depended on US volume find themselves caught in a slowdown they did not cause. Small suppliers who had structured their entire business around cross-border orders feel the pressure immediately when American production sneezes. Households that are already dealing with higher costs of living experience every ripple as a new source of uncertainty. And regions that relied heavily on frictionless US access discover that diversification requires time, investment, and political resolve.

In moments like this, the winners and losers emerge not from individual choices but from systemic pressures that reshape the ground beneath everyone. The deeper you look, the clearer the legacy of decades of integration becomes. Canada built an economy intimately tied to the assumption that the United States would remain stable, predictable, and committed to shared prosperity. For a long time, that model delivered.

But incentives inside the American political system shifted, and under Trump they shifted dramatically. Tariffs became a political instrument, not a policy tool. Supply chains became leverage, not partnerships. And trade rules became subject to domestic cycles, not long-term commitments. This is what happens when economic institutions become subordinated to short-term political performance.

That shift did not just change the relationship between Canada and the United States—it exposed how fragile the underlying system had always been. When one country becomes dependent on another’s political mood, that dependence becomes a liability the moment the mood changes. And once that liability is revealed, rebuilding independence is not optional. It becomes a survival strategy.

You can trace the power dynamics by following the incentives. In Washington, tariffs reward political theatrics. They allow leaders to frame economic struggle as foreign sabotage rather than domestic policy failure. In corporate boardrooms, those same tariffs create uncertainty, delay investment, and inflate costs. In state and provincial governments, they expose vulnerabilities that accumulated slowly over decades. And for ordinary people, they show up in layoffs, higher prices, weaker supply lines, and a sense that economic life is becoming more brittle.

Meanwhile, in Canada, the incentives reward resilience. When investors move capital toward stability, countries that demonstrate long-term planning benefit. When energy markets tighten, countries with strong resource sectors gain leverage. When supply chains fracture, countries that can produce more at home feel less pain. And when geopolitical turbulence grows, countries that avoid the chaos become appealing partners. None of this is about romantic nationalism. It is about structural advantage.

The risk is that none of this appears clearly in mainstream narratives. Instead of examining the incentives, the media often frames the story as a matter of personal conflict or simple diplomacy. They focus on who said what, who smiled at whom, who backed off, who pushed forward. But that kind of framing blinds people to the larger machinery at work—the machinery that determines whether workers have stable jobs, whether currencies strengthen or weaken, whether industries thrive or decline, and whether countries act from a position of confidence or vulnerability.

What the public rarely hears is the question that actually shapes these outcomes: Who gains power from this arrangement, and who loses autonomy? When Canada begins to diversify its markets and strengthen its resource strategy, it is reclaiming a form of power that has slipped away over the years. When the United States uses tariffs to force compliance, it is asserting a form of power rooted in past dominance rather than present stability. And when markets begin to favor one side over the other, they are reflecting the reality that political posturing cannot hide economic fundamentals forever.

For ordinary Canadians, these shifts are not theoretical. They shape the price of groceries, the security of manufacturing jobs, the stability of housing markets, and the viability of small businesses. They determine whether a community survives a downturn or gets hollowed out by forces it cannot control. And they influence whether the next generation grows up in an economy that feels increasingly unpredictable or in one that is reclaiming its capacity to plan for the future.

This is why understanding the system behind the headlines matters. It is not about being cynical. It is about recognizing that economic structures are not neutral. They reward some decisions and punish others. They elevate some regions while sidelining others. And when those structures change, the ground shifts beneath everyone, whether we notice it or not.

When you translate all of these forces into daily life, the scale of the shift becomes impossible to ignore. You feel it when a factory reduces hours because a US automaker has paused a production line. You feel it when supply shortages raise the cost of essential goods—not because demand changed, but because tariff-driven disruptions ripple through distribution networks. You feel it when housing markets tighten as investors redirect capital toward regions that seem more secure. And you feel it when communities built around a single industry suddenly realize that their economic future depends on decisions made hundreds of miles away in a country whose political priorities can change overnight.

This is what economic dependence looks like when it reaches its breaking point. For years, Canada lived with the comfort of proximity. It assumed that the United States would remain a consistent partner, even through political cycles, even through ideological swings. But the moment tariffs became a bargaining weapon, the relationship shifted from stability to exposure. And for ordinary Canadians, that exposure showed up not in abstract trade figures but in the fragility of everyday life. Jobs felt less secure. Prices felt less predictable. Communities felt less anchored.

That fragility is precisely why the Canadian pivot is happening now and not later. When a country sees the cost of dependence rising faster than the benefits of integration, the logic changes. Policymakers begin to ask different questions. Instead of asking how to align seamlessly with a larger partner, they ask how to build resilience in case that partner changes strategy again. Instead of prioritizing convenience, they prioritize sovereignty. And instead of assuming continuity, they prepare for rupture—not because they wanted it, but because the evidence forces them to.

This is also where the failures of mainstream framing become clear. The public conversation remains stuck on personalities. Trump is unpredictable, so the narrative suggests Canada must react to him specifically. Carney is competent, so the narrative suggests he inspires confidence through charisma alone. But this framing obscures the real lesson. The problem is not the temperament of one president. It is the structural incentives of an economic system that allows volatility to cascade across borders. And the solution is not the personality of one Prime Minister. It is the deliberate construction of an economy that can withstand instability no matter who governs in Washington.

By focusing on drama, the media misses the machinery. It fails to ask why the auto sector became so vulnerable in the first place, why supply chains became so delicate, why resource development became so politically constrained, and why Canada spent so many years underestimating its own leverage. These are the questions that matter, but they are also the questions that challenge entrenched assumptions about globalization and North American integration, which is why they so often go unasked.

If you follow the incentives long enough, you start to see why the system produced these outcomes. Corporations build supply chains based on cost efficiency, not resilience. Governments design trade agreements based on predictable partners, not volatile ones. Investors chase stability until it disappears, and then they chase the next version of it. And when political leaders discover that tariffs generate headlines, the temptation to use them grows, even when the long-term damage outweighs the short-term gain.

The result is a continent where economic partnerships once seen as unshakeable now feel fragile. But fragility does not have to be destiny. This is where the deeper lesson emerges: Economic structures are not immutable. They evolve with policy choices, with investment decisions, with cultural shifts, and with public pressure.

When Carney frames the moment as a rupture, he is not indulging in rhetoric. He is naming a reality that was already unfolding. And by naming it, he invites Canadians to understand that rebuilding independence is not a retreat from the world. It is an engagement with it on different terms.

That rebuilding is already taking shape. You see it in the renewed focus on productivity, in the emphasis on domestic manufacturing capacity, in the push for critical minerals and clean energy, and in the deliberate effort to seek new markets in Asia and Europe. These are not acts of isolationism. They are acts of strategic diversification. They reflect a recognition that relying on a single partner is not resilience. It is vulnerability disguised as convenience.

And what makes this moment so significant is that the shift is not being driven only by political elites. Markets are reinforcing it. Investors are rewarding stability, not proximity. Companies are preparing for long-term turbulence, not short-term clarity. And households are increasingly aware that the economic landscape they grew up with is changing, whether they welcome that change or fear it.

This is the part of the story where the larger logic of capitalism reveals itself. It rewards strength, punishes fragility, and reshapes alliances based on incentives rather than sentiment. Countries that adapt to this logic early tend to fare better. Countries that cling to old assumptions tend to find themselves reacting rather than shaping their destiny. And Canada, for the first time in a long time, appears to be choosing the former path.