Amid the controversy and uncertainty, themes are emerging from the gong show, otherwise known as the CUSMA renegotiation breakdown.
The first is not a surprise — President Trump lacks integrity, dishonouring the deal he negotiated during his first term — after bragging about it at the time.
But with a short attention span, this sociopath is incapable of understanding that others have interests, and a future together requires regard for the long-term outcome for all counterparties. He also exalts his persona and power by demeaning and damaging even long-term friends.
Flattering him effectively is Howard Lutnick, the Secretary of Commerce, who introduced the difficult last-minute changes undermining the hard work and progress by both camps. Current but not substantiated information is that Lutnick intervened to impose ridiculous conditions on Canada, the primary cause of the last-minute breakdown.
A further learning, increasingly obvious, is the questionable braggadocio of Mark Carney with comments like “I understand these things better than others” and “I know how to negotiate.” Does performance to date support either?
The first rule of a successful negotiator is to ‘know Thyne self.’ Except for his tenure at Goldman Sachs, where his disregard for market principles would not have played well, Carney is a bureaucrat. Obviously intellectually strong and educated, he rose to a senior position in the Department of Finance, leading to his appointment as the Governor of the Bank of Canada, then onto a similar role at the Bank of England.
Notwithstanding his control of the Liberal Party, the federal government, and in many ways our country, even Carney is not always destined to maximize outcomes. Humility is often more effective than hubris.
The second rule is ‘know Thyne adversary.’ Carney made several significant mistakes by disrespecting Trump, another sign of an overconfident negotiator.
As the saying goes, Trump has ‘rabbit ears,’ which means no tolerance for criticism. Worse, always in need of a win, he plays to acolytes like Lutnick. His transactional approach seeks confrontation, attention, and winning without adequate concern for long-term outcomes. His prickly personality, suggestive of deep insecurity, has also been evident throughout his career as a New York real estate entrepreneur and even more so in the world's highest office.
Carney overlooked the nature of his adversary during his speech at Davos. Repudiating Trump (even without naming him), he received a standing ovation from his peers (Carney was a director in the World Economic Forum), likely one of the highlights of his career.
But it offended Trump, who publicly warned “Mark” about his lack of “gratitude” for all that the US has done for Canada.
Carney further defined himself by demonstrating weakness by acquiescing to the renegotiation of the Gordie Howe Bridge. It was wrong for Canada to accept Trump's renegotiation tactics after investing the capital and leading this project according to the agreed contract. Carney missed an opportunity to resist and pressure Trump with the huge bridge sitting unused, surely a powerful visual irritant leaving him vulnerable over time in a ‘swing state.’
With Lutnick praising Trump for his “art of the deal”, the title of Trump’s book, for upsetting the original deal, Carney created an expectation that he would again crater to similar last-minute antics regarding CUSMA.
Carney is very aware of Trump's displeasure that the dairy cartel was not settled in the original CUSMA agreement, publicly criticizing Chrystia Freeland, who headed up the Canadian team. But Carney rushed to enshrine this anti-free trade legislation (with disappointing support from half of the Conservative caucus), harmful to several swing states along the border, also major dairy producers. This frequent egregious political pandering to Quebec also disappoints Canadians who believe in free trade and expect sincere policies by our leaders to represent all Canadians fairly.
So, Carney breached the first two basic rules of negotiation — overrating himself and misunderstanding his adversary.
This could have and should have been managed differently. This failure will damage specific industries such as steel, aluminum, and automobile parts and assembly, and likely ensure that Canada’s lost decade of low growth, flat productivity, flight of capital, departure of entrepreneurs, and much more will endure, if not augment.
Leadership matters, and the self-confident Carney also damaged the narrative he perpetuated (critical to winning both the leadership and the federal election) as ‘the one’ to deal “elbows up” with President Trump.
The “nasty” President of the United States — crude, dishonest, and the need for short-term wins — has also said many things about Canada that are true. Those truths, including the Trump assertion that we are not really a country, are among the topics of the next column…
