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Wednesday Morning Rant

Disentanglement

At the personal scale, the destruction of a relationship is emotionally disturbing and painful. Whether it is some formal means of destruction like a divorce or something informal like just gradually or suddenly severing contact, the relationship is wrecked and there are bound to be hard feelings on both sides. Both sides will feel wronged, and neither side is likely to accept responsibility for whatever caused the failure. That's not fun for anyone involved, but it is rare that there is a big blast radius when an interpersonal relationship is destroyed.

That is not true when the scale increases and the relationship at risk is not inter-personal but inter-national. That failure of relationships between nation-states are usually complex phenomena and require careful management to avoid courting real harm as the relationship unwinds or - even worse - shifts into actual policy-backed animosity. The worst kind of adjustment is from "friendly" to "unfriendly," skipping the much more manageable condition of "neutral but sometimes cooperative." The conversion into unfriendliness or even hostility is particularly bad when the countries involved are geographical neighbors, and so managing the end of the prior era is even more important. That is the point we are now reaching with the country that has long been one of our most important allies: our neighbor to the north.

Canada is doing everything in its power to pivot the relationship with the United States from historical friendliness to active hostility (though Canada would surely swap the country names in that sentence). This is somewhat tragic given the long, rich history of US-Canadian cooperation, essential cultural compatibility and our mutual - if lopsided - economic dependence. Carney has doubled down on everything Trudeau was doing that the US considered untenable to maintaining the status quo. Earlier this year, Canada doubled down on alignment with the CCP, essentially ending any chance at the USMCA surviving - even with changes. As I put it at the time:

Unless something changes, the intermediate-term effects of this breakdown will go well beyond mere trading economics. For generations, Canada and the United States have been vitally important partners to each other. We have been two distinct countries with compatible cultures, economic integration, deep diplomatic ties, stalwart military alliance and general friendliness at the micro and the macro. That is fracturing in real time as Ottawa pursues ever-tighter coupling with Beijing. The obvious distaste Canada's ruling class has for the United States in general and Donald Trump in particular is secondary, but serves to add yet more strain to an already strained relationship.

This strain has likely ended the USMCA. Whether it is also the beginning of the end for generally good US/Canada relations remains to be seen.

It happened much faster than I expected, but it is the end of generally good US-Canada relations. Last week, Carney and the EU announced that they are working toward bringing Canada into the EU - sort of. Canada, not being European, cannot join the EU according to the EU's own rules. Not to worry, though - the EU is the floating the idea of creating an entirely new kind of EU membership just for Canada. They're calling it "associate membership:"

Canadian Prime Minister Mark Carney has welcomed the European Union's ambition for Canada to become its first "associate member", calling for closer cooperation on defence, critical minerals and energy security.

Carney told the European Parliament in Strasbourg on Thursday that Canada and Europe were "stronger together" in the face of "geopolitical rupture".

His comments came a day after European Commission President Ursula von der Leyen proposed "opening the door" to Canada's associate membership, a status that does not currently exist.

This is about one thing: the pissing match between Red China and the EU and the US. Setting aside the laughable quotes like He said a Canada-EU alliance would create a "beacon for other democracies", while stressing the two sides were not seeking to form a new power bloc and "This is about sovereignty, our ability to live as we wish. We do not seek power to dominate others,", attempting to move Canada into the European empire - and the empire's enthusiasm for it - is a clear signal that our status quo ante is now over. Carney is CCP-first and Europe-second, and has helped transform Canada into an adversary.

If we accept that the recent historical norm of close US-Canada alignment is now over - and perhaps we shouldn't, though it looks that way to me - the question for the United States becomes how to deal with it and, by extension, how to deal with the EU. It's a tricky problem because it must balance the mutual pain we can deliver to each other while still marginalizing the other player. There is a lot of trade with Canada and much of it is important. We can live without it, but that would suck and be incredibly disruptive if it happens all at once. Canada is betting that it can replace the US in trade if it disregards its sovereignty and culture and allows itself to be spit-roasted by Beijing and Brussels. Time will tell whether that is true, but the damage will be done regardless.

The funny part of this is that most of the United States' actions to date have been around maintaining the status quo with Canada while implementing new policies more broadly. We want a couple of things from Canada, but most of our focus has been further abroad, mostly focused on Red China, Latin America and the EU. By working to help Red China circumvent US trade policy and by aligning with the both Red China and the EU in direct opposition to the United States' goals in those places, Canada has decided to change its status from "neighbor with generally good but sometimes strained relations" to "adversary."

Much as it pains me to say it - because, for what it's worth, I generally like Canadians and Canada itself - the US must seize the initiative. With Canada now an adversary, the US should preemptively and unilaterally start implementing policies that reflect the new reality. The US must take action to adjust to the new normal and control the terms of disengagement with Canada wherever possible. This US could consider, in no particular order:
- Secure the northern border. An enormous unsecured border with an ally is one thing, but it must not be permitted with an adversary. Border walls, fewer and more-secure border crossings, permanent increase in Coast Guard presence on the Great Lakes, full inspections of all commercial road and rail traffic, etc. all should be implemented.
- Withdraw from the USMCA and immediately replace it with a new deal - or, preferably, a series of bilateral deals - with Mexico and other Latin American countries.
- Forbid any product manufactured outside of Canada, or manufactured in Canada by foreign companies that are not based in the United States, from entering the United States from Canada. Any company found to be mislabeling goods is banned from any export to the United States, in perpetuity.
- If the EU and Canada work out an arrangement to bring Canada into the EU, withdraw from NATO. It is insane to be the military power guaranteeing the security of what is the new Warsaw Pact.
- Require visas from travel from Canada. Many Canadians actually like the United States and it would be stupid to forbid them to come here, but add friction and make it clear that this is a response to Canadian policy changes, not an attack on friendly Canadians.
- Sever cooperation between the Federal Reserve and the Bank of Canada on policy coordination and information exchange.
- Buy as much Canadian energy as possible. The energy-producing provinces are much friendly to the United States than the political power provinces are, and every drop of Canadian oil that flows here is not flowing to Red China or the EU - and it would build goodwill with potential change-agents in Canada.

Are any of those good ideas? I don't know. Most of them probably aren't. Given that Canada has now made its adversarial status crystal clear, however, the US should act first and seize the initiative. It sucks. It would be better for everyone in both countries if Canada's government wasn't doing everything in its power to subvert US policy goals and destroy our once-strong relationship while simultaneously exposing Canadians to tremendous economic pain, but it is. Canada no longer wants to be under the US umbrella, and the US cannot afford tight integration with an adversary - so it is time to begin disentanglement