Why aren’t Canada and the U.S. officially talking trade?

Summary

Front Burner (CBC) Episode: Why aren’t Canada and the U.S. officially talking trade? Date: May 26, 2026 Host: Jayme Poisson Guest: Eric Miller, President, Rideau Potomac Strategy Group; Fellow, Canadian Global Affairs Institute

---

Episode Overview

This episode dives into the escalating tensions and lack of formal negotiations between Canada and the U.S. regarding trade, as the July 1 CUSMA (Canada-United States-Mexico Agreement) review deadline approaches. With recent public disputes—ranging from new tariffs and regulatory frustrations to high-level diplomatic snubs—host Jayme Poisson and guest Eric Miller analyze what’s happening behind the scenes, what's at stake for both economies, and why meaningful, official dialogue has yet to begin.

---

Key Discussion Points

1. State of Canada-U.S. Trade Relations

• Lack of official negotiations: Despite informal talks, there are no formal, structured negotiations underway as the CUSMA review deadline looms. (00:22)
• Backdrop of worsening relations: Recent U.S. actions include slamming Canadian content requirements on streamers, suspending a longstanding defense board, and imposing new tariffs on Canadian mushrooms. (00:22–01:47)
• Quotes & Tone:
  • “The trajectory is toward a worsening of the bilateral relationship... fundamentally the relationship is on a bad and worsening trajectory.” — Eric Miller (02:53)

2. Rhetoric and Diplomacy

• Aggressive U.S. posturing: American officials, including Ambassador Pete Hoekstra and Secretary Scott Besant, have publicly criticized Canadian policies and leadership, directly targeting Prime Minister Carney. (02:18–03:24)
• Mutual frustration:
  • "You've got folks who are doing everything they can to get the Canadian public to rally against America. Just doesn't make any sense." — U.S. Ambassador Pete Hoekstra (03:49)
  • “They have told the Americans that they're ready when they are, but when and how is this thing going to get to something more official?” — Jayme Poisson (24:12)

3. Special Nature of Canada-U.S. Trade

• Co-production and integration: The significant intertwining of industries and supply chains makes the Canada-U.S. relationship different from other U.S. trade partners. (04:24–06:10)
  • "US trade with Canada and with Mexico... you're looking at 30 to 40% US content on average... a kind of co-production relationship..." — Eric Miller (04:24)
• Retaliation context: Miller underscores that broad U.S. tariff policies don’t suit the North American context and that treating the region as “just another trade partner” is misguided. (05:15–06:10)

4. Mexico-U.S. Formal Talks; Canada's Exclusion

• New U.S. approach: U.S. is pursuing a trilateral core with bilateral side agreements; Mexico is currently further along in talks, but faces its own internal challenges. (07:12–09:10)
  • "I do not expect them to glide to an easy agreement anytime soon... the environment has just got a lot more complicated for Mexico." — Eric Miller (08:16)

5. Canadian Regulation of Tech Companies: Flashpoint

• CRTC streaming levy: Tripling of required Canadian programming investment from big streamers—from 5% to 15% of Canadian revenues—has drawn sharp U.S. criticism and is seen as a provocation. (09:10–10:29)
  • "For God's sakes, let people come home and relax... without paying yet another Liberal tax hike." — Political Commentator/Conservative leader Pierre Poilievre (10:07)
• U.S. response: Both U.S. Democrats and Republicans are likely to oppose this, as many tech giants are based in California. (10:37)
• Negotiation implications: Miller predicts the streaming levy will be a major battleground in talks, with both sides escalating. (12:00–13:14)

6. Defense Spending and Security Tensions

• Joint Board suspension: U.S. paused the 80-year-old Permanent Joint Board on Defense—an unprecedented move, seen as a “milestone on the worsening of the relationship.” (14:13–14:57)
  • "[It] is essentially what it can be seen as... an expression of broad frustration with Prime Minister Carney in Washington." — Eric Miller (14:57)
• Canada’s military commitments: Although Canada met its 2% NATO defense spending target and is aiming for 3.5%, the U.S. signals it’s not enough and publicly questions Canada’s credibility. (15:49–16:53)
• Underlying motives: Miller notes U.S. frustration is likely linked to weapon sales as well, specifically Canada’s hesitance to buy F-35 fighter jets. (17:35–18:51)

7. New Tariffs and Tactical Pressures

• Tariffs on mushrooms: A 2.84% U.S. tariff on Canadian mushrooms is another sign of escalating trade irritants, though Miller positions it as part of the normal “drama of regular processes.” (19:13–19:44)
• Leverage over infrastructure: Trump threatens to block the opening of the Gordie Howe International Bridge, which Canada funded, using it as negotiating leverage. (19:46–20:14)

8. Alcohol, Provincial Politics, and Bilateral Tensions

• U.S. frustration over alcohol ban: Ambassador Hoekstra criticized Canada’s ban on American wine and spirits, indicating it’s become a sticking point for U.S. negotiators. (21:43–22:21)
• Negotiating chips: Provincial premiers—not just the federal government—hold significant sway over this issue, making resolution complex and deeply intertwined with other trade demands. (22:41–24:12)
  • "I don't see many of the provinces agreeing to put US wine and spirits back... without at least some sense that there's going to be an imminent agreement..." — Eric Miller (23:30)

9. Why No Formal Talks?

• Cycle of concessions: U.S. repeatedly asks for concessions upfront before agreeing to formal negotiations, leaving Canada wary of preconditions and feeling burnt by lack of reciprocity (e.g., withdrawal of the digital services tax achieved little). (24:50–26:11)
• Risks of deadlock: Miller warns that the absence of talks opens the door to a trade relationship spiraling “out of control.” (25:30)

10. Canada’s Stakes and Strategy

• Holding out vs. economic risks: While Carney’s government is determined not to give more ground before talks, critics argue it’s risky, given Canada’s deep economic ties to the U.S. (26:11–27:04)
  • "Canada is put in a structurally disadvantageous position... because these agreements are more like U.S. products pay nothing to go into their markets, and their products are charged 15% to go into the U.S.” — Eric Miller (28:30)
• Integration cuts both ways: Miller notes U.S. refineries are as dependent on Canadian oil as Canada is on American markets. Any breakdown would be mutually painful. (27:04–30:28)
  • "Integration goes both ways... those refineries need Canadian crude just like Canada needs to sell that crude to them." — Eric Miller (28:01)

---

Notable Quotes & Memorable Moments

• On the distinctiveness of Canada-U.S. trade:

  • “This treatment of North American neighbors and the supposition that our trade within the region is something that is the same as everybody else's is just flat wrong.” — Eric Miller (05:15)

• On U.S. negotiating tactics:

  • "Canada having paid what it regarded as a major concession on the digital services tax and gotten effectively nothing for it, it's once bitten, twice shy." — Eric Miller (25:13)

• On the risks to Canada:

  • "If you had that sort of a situation where a U.S. product from Buffalo or Detroit could come to Toronto and pay nothing and a product from Toronto going into the U.S. had to pay 15%, that would be very, very challenging for the Canadian economy." — Eric Miller (29:25)

---

Important Timestamps

• 00:22 — Episode theme: lack of formal trade talks and escalating bilateral frustration
• 02:53 — Eric Miller on the worsening bilateral trajectory
• 04:24 — Miller on North American economic integration
• 07:12 — Mexico-U.S. formal negotiations begin without Canada
• 09:10 — New CRTC streaming levy becomes trade flashpoint
• 14:13 — U.S. suspends Permanent Joint Board on Defense
• 19:13 — U.S. announces tariffs on Canadian mushrooms
• 19:46 — U.S. threats regarding Gordie Howe International Bridge
• 21:43 — U.S. Ambassador criticizes Canada’s alcohol policy
• 24:50 — Why there are no formal negotiations; cycle of concessions
• 28:01 — Miller on integration and mutual dependency
• 30:28 — Canada’s ultimate goal: return to the status quo

---

Summary Conclusion

This episode paints a picture of a relationship at a crossroads: while economic integration makes both Canada and the U.S. deeply reliant on each other, political and diplomatic tools—from tariffs and regulatory changes to threatening major infrastructure projects—are being used by both sides to gain advantage in the absence of real negotiations. Miller underscores both the dangers and the unique leverage each country holds, explaining that while Canada may be damaged by a breakdown, so too would key sectors of the U.S. economy. The ultimate challenge: avoiding a situation where Canada is left structurally disadvantaged for decades to come.

For anyone interested in the real-time evolution of North American trade relations—and the personalities and power plays defining them—this episode is essential listening.

Transcript

[Advertisement Voice]

Want to be a star? No problem. Anyone can shine on TikTok. Post your first video today. Real life, real story, real you download TikTok and get started.

[Eric Miller]

This is a cbc podcast.

[Jamie Poisson]

Hey everybody, it's jamie. As we inch closer to the July 1 CUSMA review deadline, the fact that there aren't any formal talks between Canada and the U.S. on the trade front grows more glaring by the day. The government will say that there are informal talks happening at different levels. For example, Canada U.S. trade Minister Dominic LeBlanc spoke this week with the U.S. trade Representative, Jameson Greer. It's hard to get a read on whether anything substantial is happening behind the scenes, but there have been some recent public developments that really aren't great. US Officials have blasted a substantial hike in what big streamers have to pay into Canadian content. The U.S. suspended a joint defense board that's been around for 80 years. There's a new tariff on Canadian mushrooms. And this week, as talks between the US And Mexico begin, Canada is excluded. To help us make sense of the latest trade war news and read the tea leaves and what's turning into a kind of quarterly check in, I'm joined again by Eric Miller, the president of the Rideau Potomac Strategy Group and fellow at the Canadian Global Affairs Institute. Eric, it's always great to have you on the show. Thank you so much.

[Eric Miller]

Thank you for having me, Jamie.

[Jamie Poisson]

So when we last had you on back in February, the Trump administration seemed to be taking more aggressive shots at Canada and directly at Mark Carney. Howard Letnick at the time was on this bender about deals Canada was making with China, namely electric cars.

[Eric Miller]

There he is complaining that he's going to go to China and improve it. What's he going to do? China's delighted to sell to him, but do you think China's going to open their economy to accept exports from Canada? This is the silliest thing I've ever seen.

[Jamie Poisson]

They have the second US Ambassador, Pete Hofstra, was telling us that if we don't buy US jets, we're going to have a problem on our hands. Treasury Secretary Scott Besant was taking aim quite directly, directly at Carney himself, basically telling him to fall in line.

[Political Commentator]

In my investment career, I've seen what happens when a technocrat tries to pivot and become a politician. Never really works out well. So I would just encourage Prime Minister Carney to do what he thinks is best for the Canadian people, not his own virtue signaling.

[Jamie Poisson]

Have you seen the rhetoric change at all since then?

[Eric Miller]

Well, you've had different people who've been saying different things, but fundamentally the trajectory is toward a worsening of the Biden bilateral relationship. And so the issues are different. For example, the US Suspension of the Permanent Joint Board on Defense, that's something which we hadn't seen before. And certainly we have an ongoing challenge with tariffs. But fundamentally the relationship is on a bad and worsening trajectory.

[Jamie Poisson]

I saw last month Howard Lutnick did say that our negotiators suck was, I believe the word that he used. I want to come back to the Joint Board of Defense with you in a minute. But U.S. ambassador to Canada Pete Hoekstra just gave an interview this week to CBC's Radio Canada. He said a bunch of stuff that I'm sure we'll get into in more detail throughout this conversation. But a few standout moments included him

[Political Commentator]

saying, you've got folks who are doing everything they can to get the Canadian public to rally against America. Just doesn't make any sense.

[Jamie Poisson]

But do you understand where that frustration is coming from?

[Political Commentator]

Absolutely no.

[Jamie Poisson]

In Canada, because you know, a lot of Canadians are saying he said tariffs are here to stay. He believes Canada and the US could be further along in negotiations, but expressed frustration and disappointment with the Carney government. I'd just be curious to hear your read on the interview in its entirety. What did you think the ambassador was trying to accomplish here?

[Eric Miller]

Well, Ambassador Hoekstra is correct that the US has put tariffs on pretty much everybody. But the reality of Canada US Trade is that it is not like that with any other country. And so if you look at U.S. trade with China, U.S. content in that trade is in the single digits. If you look at US trade with Canada and with Mexico, you're looking at 30 to 40% US content on average. Why? Because we have a relationship that is built on shipping intermediate inputs to the most economic sources where they are manufactured. And so a kind of co production relationship is very, very different than the relationship that the US has with Europe or Korea or China or any other country. And so just like the ambassador has

[Political Commentator]

said, we put tariffs on everybody in the world.

[Eric Miller]

That's true. But when you do not recognize the distinctive nature of that relationship and the fact that US content in North American inputs enormously benefits the US when it is sold Canada or in Mexico, just like Canadian content benefits Canada when it's sold in the US Or Mexico, this, this is something that's very, very different. And so this treatment of North American neighbors and the supposition that our trade within the region is something that is the same as everybody else's is Just flat wrong. And so the ambassador said, why don't you fall in line with everybody else's reality instead of our own reality?

[Political Commentator]

There are two countries that have retaliated against.

[Eric Miller]

Okay, China and Canada.

[Political Commentator]

You said it, I didn't.

[Jamie Poisson]

Do you think he understands that there's a special and unique relationship, this guy?

[Eric Miller]

Well, the ambassador may or may not understand it, but he is speaking the view of the administration. And as you cited Secretary Lutnick's inelegant description of Canada and its negotiating views and so on, he's putting that position forward. But fundamentally, those who are making decisions within the Trump administration either don't acknowledge or just don't accept the fact that trade within North America is different than trade with everybody else. So he may understand it intellectually, but when you're an ambassador, your job is to project the views of your own government in the country where you're serving, as well as, I would assume, gathering information about the thoughts, feelings, and interests of that other country vis a vis your own.

[Jamie Poisson]

Speaking of Mexico, Mexico and the United States are already beginning formal negotiations. They start this week in Mexico City. And U.S. trade Representative Jameson Greer said that they will focus on rules of origin, which I think is mostly automobiles. Right. And economic security. These talks exclude Canada. And are we at risk of being left behind here? Are you concerned about this?

[Eric Miller]

I'm not wildly concerned about it. So, first of all, the US has. Has finally, I think, laid out what it sees as a vision for this renewal process, because, of course, we have the agreement it remains in. What nobody was clear about for a while was what would the modalities of these negotiations look like? And essentially what Jamison Greer seems to have come to is we would like to see the maintenance of a trilateral core, but have separate bilateral agreements on issues that are of interest. And so that's something which he has now come to the conclusion that he wants to pursue. And so what that means is that the US Is talking to Mexico separately. Now, there's been a lot of discussion around, is Mexico doing it better than Canada? Is Mexico playing its relationship with the US In a better way because there seems to be less tension? Well, what we've seen recently is that the tension between the US And Mexico has ratcheted up. Mexico is formally ahead in its bilateral discussions, but I do not expect them to glide to an easy agreement anytime soon, because the environment has just got and a lot more complicated for Mexico. And Claudia Sheinbaum has to watch her left flank because there are those in her own party who are deeply frustrated at what they see as her going too easy on the Trump administration.

[Jamie Poisson]

Okay, I want to dig into some of the latest developments a little bit more with you now, sort of on the subject of trade irritants with the U.S. one of the things the U.S. has been banging on about for a long time is the regulation of their tech companies. Last year, Carney scrapped a digital services tax, a 3% levy on tech giants, essentially in a bid to restart stalled trade talks. Last week, the Canadian Radio, Television and Telecommunications Commission, the crtc, decided to triple the revenue that big streaming platforms like Netflix, Disney and Amazon have to set aside for Canadian programming. So it was 5%, and now I guess it's set to go to 15%. The streaming industry has predictably slammed this. The US administration has identified this as a problem as well. And Pierre Poliev, even the Conservative leader, has warned that this could lead to a backlash from the U.S. for God's

[Political Commentator]

sakes, let people come home and relax and enjoy their favorite binge watching experience without paying yet another Liberal tax hike. We might see more steel, auto, aluminum, and lumber workers lose their jobs because of the retaliation that the Liberal tax hike might provoke.

[Jamie Poisson]

Hoekster, for example, is saying it's making a bad situation worse. How big a deal could this be, do you think?

[Eric Miller]

So in Washington, the tech companies are very, very powerful, and there will not only be opposition to this from the Trump administration, but from both sides in Congress. And so many tech companies are headquartered in California. California is a Democratic state, and the Democrats in that state will gladly join Republicans in opposing this measure. Now, for the understanding of listeners, you have the Online Streaming act, which was passed by the Trudeau government a few years ago, which was basically meant to bring the contribution arrangements toward Canadian content into the new era. So to date, you've had a situation where you had CBC and CTV and the big broadcasters contributing, in some cases up to 45% of their revenues to the production of Canadian content. That is being reduced under this particular measure. But under the Online Streaming act, you had an introduction first last year of a 5% levy, and now it's going to 15%, because the idea is to align the fee with where people are actually consuming content. And a lot of people spend their Friday nights watching Netflix instead of watching ctv. And so thus, the government wants those companies to pay. Now, those companies are rightly, from their perspective, opposing this because it means that they have to start paying significant shares of their Canadian revenue. And this is 15% on their Canadian revenue. This is going to be a very big issue, and particularly the Trump administration having successfully pushed back on the digital services tax, they're going to go all in to try to overturn this. This will absolutely be part of the negotiation. But again, on the other hand, if the Trump administration pushes too hard and the Kuzma process falls apart, this will be another example of where a close Canada US Relationship disintegrating comes back to hurt the US and so Canada will have zero incentive to take any US Concerns on board if somehow the bilateral trade agreement falls apart.

[Jamie Poisson]

With Vrbal's last minute deals, you can save over $50 on your spring getaway. So whether it's a mountain escape with friends, a family week at the beach or sightseeing in a new city, there's still time to get great discounts. Book your next day Now. Average savings $72 select homes only.

[Advertisement Voice]

Still chasing payments with paper invoices There's a better way with invoicesimple. You can put your phone to work, download the app, and put professional invoicing in the palm of your hand so you can run your business anywhere. Invoice simple lets you create estimates in seconds on the job site, send and manage invoices from your favorite lunch spot, or collect payments in person or online 24. 7 all from your phone. Download Invoice simple today.

[Jamie Poisson]

Try it free so another thing the Americans have been very seized about is our defense spending. Earlier this month they announced that they were pausing this 80 year old permanent Joint Board of Peace, which I had never heard about before but is basically this board that meets a few times a year to discuss bilateral defense issues. Carney has said that the board has

[Political Commentator]

a long heritage, but I wouldn't overplay the importance of this. What we have many aspects of very close defense cooperation with the United States. As you know, our closest defense cooperation I'll give you the example of norad.

[Jamie Poisson]

Is he downplaying it and do you see the pause of the board as a big deal here? How does it relate to the Q mine negotiations?

[Eric Miller]

It's a milestone on the worsening of the relationship is essentially what it can be seen as it it was created in 1940 before the US entered World War II. But when the Franklin Roosevelt administration could clearly see that war was coming and so Mackenzie King and President Roosevelt met in Ogdensburg, New York and this institution was created and over time it had come to meet a couple of times a year and it did some important work from time to time. But fundamentally this is an expression of broad frustration with Prime Minister Carney in Washington, because on a fact basis, Canada did hit its 2% target. And even Ambassador Hoekstra said this in

[Political Commentator]

his interview that, yeah, we're thankful that what. And I think these are, again, the Prime Minister's words, that for the first time in 37 years since the fall of the Berlin Wall, Canada has finally met its defense responsibility.

[Eric Miller]

The Carney government has made clear that it's on track to go to 3.5% by 2035. And so one would think that would suggest that Canada is moving in the right direct.

[Political Commentator]

But at the same time, we're also hearing from the Finance Minister that there's not a plan that would enable them to get to 5%. So we just get to 2%. And now we're talking about the next target. And Canada's already starting to potentially walk back its commitment from 5%.

[Eric Miller]

But then we look at Eldridge Colby, who's the Undersecretary of Policy at the Pentagon, who announced U.S. canada has failed

[Jamie Poisson]

to make credible progress on its defense commitments, said a senior U.S. official. And so the U.S. is pausing the Permanent Joint Board on Defense, adding, we can no longer avoid the gaps between rhetoric and reality.

[Eric Miller]

And Mr. Colby is known for hard knuckle tactics. He has actually an interesting background. He's the grandson of William Colby, who was Director of Central Intelligence, the CIA director in the 1970s. And Mr. Colby first came to popular awareness in the US for his meeting with Cardinal Christophe Pierre in January, when, as was later leaked, he basically told the Vatican to get on board. He said the US can do whatever it wants. He even cited the Avignon papacy. Yes.

[Jamie Poisson]

I didn't know it was that guy. Okay, great.

[Eric Miller]

Yeah. From 1309 to 1376, where the French essentially used their power to control the papacy. And so, yeah, it's the same. It's the same person. And he is somebody who's not afraid to throw his weight around or the US Weight around. And he's somebody who has as his tactics, among his tactics, the hardball threats that. That come from a great power to others. And so this is something that is unfortunate. It's also, I think, again, the US may be thinking this will force Canada to change its direction. But what ultimately happens when these things occur is that Canada takes it as evidence that Prime Minister Carney was correct and that the US really is using integration as a weapon. And maybe we shouldn't buy the F35 fighter, for example, whereas the US intention is to make clear what Canada will lose if they don't buy the F35 fighter. And so you have this differential between what is intended by the threat and what is heard by the other side.

[Jamie Poisson]

Right. And just to be clear here, sort of the public reason for the pausing of this board from the administration has been because we are not making sort of credible progress on our defense commitments. But what a lot of people are speculating is that it's really about whether or not Canada makes good on buying these American jets from Lockheed Martin.

[Eric Miller]

Yes, yes.

[Jamie Poisson]

Last week, the US Also announced tariffs on Canadian mushrooms, an agricultural product we haven't heard come up very often. Compared to dairy, for instance, boxing up

[Eric Miller]

their bounty of oyster and shiitake mushrooms, it's business as usual at Fish Frank Zhang's family farm. For now, Zhang is worried a new 2.84% tariff slapped on his produce by the Americans could lead to a decrease in sales. You don't know how much sales you're

[Jamie Poisson]

going to lose and you might have

[Eric Miller]

to cut some positions.

[Jamie Poisson]

There's also Trump threatening to block the opening of the Gordie Howe Bridge between Windsor and Detroit, which Canada paid for in full.

[Advertisement Voice]

As light testing continues on the Gordie Howe International Bridge, Windsor's mayor is worried decision makers will sacrifice the long game

[Jamie Poisson]

for the short term opening of the city's second bridge.

[Political Commentator]

If it means our country has to take a bad deal to satisfy the president, the United States. I would wait until there's a time when there's a good deal because we do have lots of leverage.

[Jamie Poisson]

And do you see these tactics in a similar vein to what they did for, to the Defense Board ultimately as a kind of warning shot or a way of softening, an attempt to soften us up before the accusement deadline.

[Eric Miller]

The bridge for sure. You know, certainly it was, it's been widely reported that the owners of the incumbent bridge, the Ambassador Bridge, have, have met with President Trump and, and they've sought to, to bring pressure to, you know, on the, the opening of, of the Gordie Howe Bridge. And so that's something which is, is very much in the, in the, in the vein of on mushrooms. I think this is also an important reminder that even while we have this high drama conflict between the Prime Minister and the President that also spills out to ministers and ambassadors and other representatives, you also have regular processes that are going on. This is more in the vein of traditional Canada, U.S. relationship. It's just taking on a bigger significance because it is happening now. But otherwise this would be on page 11 of the Business section of the Globe and Mail.

[Jamie Poisson]

Let's talk about Canada's strategy more now, in that Radio Canada interview, Hoekstra was pretty. He talked about booze quite a bit, actually.

[Political Commentator]

We think the alcohol ban is totally unfair. It's a clear indicator of how 11 provinces feel about trade with the United States, sending a very, very clear message about how doing business with the United States doesn't appeal to them. The prime minister has reinforced that message. Okay. And so it creates some questions about, you know, does Canada really want to do business with the United States?

[Jamie Poisson]

He complained about how their strategy hasn't been to tell Americans not to buy Canadian or travel to Canada. He also said that the Americans are not willing to trade the alcohol ban for relief of any tariffs, like the ones on steel, for example. And do you think that overall, this has been a good strategy for us?

[Eric Miller]

It is something which very clearly has rankled the US if you are, for example, the California wine industry, which I guess the Trump administration is not particularly seized with. But Canada is by far their largest export market, and a lot of those exports have really dried up. And so they are paying a terrible price for this. And the ambassador is expressing concern and frustration. But the reality is that it's not Mark Carney who has to be satisfied in order for U.S. wine and spirits to go back on the shelves of the Liquor Control Board of Ontario or its counterpart in B.C. or in Newfoundland. It's the premiers. And the premiers also have concerns and interests in these trade talks, just like anyone else. And so it's understandable if you're in the ambassador's shoes, why he'd be frustrated. But he has actually a lot of different interests in people to satisfy. And I don't see many of the provinces agreeing to put US Wine and spirits back on the shelves without at least some sense that there's going to be an imminent agreement to bring stability and predictability to the relationship, because the provinces know this has gotten under the US Skin. And therefore it's become a negotiating chip, because everything in the age of Trump is about negotiation. And so why are they going to give that up?

[Jamie Poisson]

Okay, well, just on that point, this is, this is something that you would negotiate informal talks, much like a lot of what we have talked about today. And I just want to try and get to the crux of what I think the biggest issue is here, which is that we are not getting to these formal talks. And I know when I talk to people in government, they say that there is communication at various levels and that they have told the Americans that they are ready when they are, but when and how is this thing going to get to something more official and what is the risk of not actually getting there?

[Eric Miller]

Well, one of the things that, that, that we have have seen is that the U.S. has asked Canada to essentially pay concessions in order to restart the talks. That's what the tactic of the Trump administration was last June when the digital services tax was done away with and Canada did that and talks got restarted until they stopped again in October. And so Canada's basically saying we've tried this strategy and we don't see that you're willing to carry through with the talks and you're just going to little by little ask for more and more concessions. And so this is a situation where first and foremost, you have to have some agreement that we're going to have talks without preconditions because Canada having paid what it regarded as a major concession on the digital services tax and gotten effectively nothing for it, it's once bitten, twice shy kind of situation. When do we get the beginnings of official talks? We'll have to. This is why the situation is so concerning, because there's a lot that can go wrong that could lead to this situation spinning out of control.

[Jamie Poisson]

Yeah. And look, I know that you have been, when we've talked in the past, quite supportive of Canada's strategy when it comes to approaching these negotiations. And Mark Carney does certainly seem very confident and his strategy of holding out for the right deal and not capitulating anymore before they get to formal talks. But I just want to throw to you like the opposite perspective here. You know, for example, the New York Times reported that Rick Switzer, a deputy US Trade representative, said at an event recently hosted by the Council on Foreign Relations that Mark Carney's actions amount to political malpractice, saying that Canada is dependent upon the US Economy. That's just a fact. It's not hubris. And just like, does he have a point, this idea that this is potentially way more damaging for us, even if it is also damaging for the United

[Eric Miller]

States, it is certainly damaging for Canada if this falls apart. I mean, this would be something that would be horrendously challenging for the Canadian economy. But I guess there's a couple of, of counterpoints to that. Number one, dependence cuts both ways. And so I spoke at an event recently where a former US Diplomat said, well, Canada just has to get on board with a US led deal because it sells 97% of its oil to the US and doesn't have anywhere else where it can sell it. And it's fully dependent and My retort to that is, yes, it's true. Canada sells 97% of its oil to the U.S. but those refineries in the Midwest and in the Mountain west that take that crude are configured to take only Canadian crude and have zero other prospective sources which can supply them. So you take a situation where you're already seeing gasoline above $6 a gallon in large parts of the US and you drive that price significantly higher. And so integration goes both ways. Those refineries need Canadian crude just like Canada needs to sell that crude to them. The other thing I would say is that Canada's fondest view would be to retain the status quo, to have free trade going both ways in North America. And the challenge that you have if you agree to have tariffs is that Canada is put in a structurally disadvantageous position to vis a vis the US in the quest to attract investment and all the rest of it. Because what we've seen with other jurisdictions is that these agreements are more like US Products pay nothing to go into their markets and their products are charged 15% to go into the U.S. that's what Europe negotiated. That's what Japan negotiated. That's what Korea negotiated. If you had that sort of a situation where a US Product from Buffalo or Detroit could come to Toronto and pay nothing and a product from Toronto going to those cities or others in the US had to pay 15%, that would be very, very challenging for the Canadian economy. And because the Canadian economy, like other parts of North America, has been set up to sell intermediate inputs into bigger supply chains, that is something that would put a long term, really terrible weight on the Canadian economy and its ability to be competitive. And so Canada didn't ask to be in this situation. The only reason why it has a surplus of trade with the US Is because of energy, which the US Needs. And those refineries have to take Canadian heavy crude from Alberta. But this is what happens when you begin to start to. To break that apart. And so, yeah, Canada would. Would be hurt very, very badly. But I think what it's. What its ultimate goal would be would be how do we find a way back to the status quo or something that looks like it. And how do we not have a situation where Canada is structurally uncompetitive compared to the US for the next 50 years?

[Jamie Poisson]

Yeah. All right, Sounds like quite a task. Eric, thank you so much for this.

[Eric Miller]

My pleasure.

[Jamie Poisson]

All right, that is all for today. I'm JB Poisson. Thank you so much for listening.

[Eric Miller]

For more cbc podcasts, go to cbc ca podcasts.