Podcast Summary: The Prof G Pod with Scott Galloway – "Canada’s Role in a Shifting Global Order" featuring Mark Carney

Introduction In the 344th episode of The Prof G Pod, hosted by Scott Galloway, the discussion centers on Canada's evolving role within the global economic landscape. The guest for this episode is Mark Carney, Canada’s 24th Prime Minister and leader of the Liberal Party. Carney brings a wealth of experience from his previous roles, including Governor of the Bank of England and UN Special Envoy to Climate Action Finance. The conversation delves into the strained US-Canada trade relationship, the impact of tariffs, Canada's strategic economic initiatives, and broader implications for the global order.

1. Background and Current State of US-Canada Relations

• Mark Carney’s Journey: Carney provides an overview of his career, highlighting his tenure as the Governor of the Bank of Canada during the 2008 financial crisis and his subsequent role as the first non-British Governor of the Bank of England. He emphasizes his recent election as Prime Minister of Canada and his focus on navigating the country through complex economic challenges ([17:15]–[19:28]).

• Trade Relations Overview: Carney outlines the critical nature of the US-Canada trading partnership. He notes that Canada is the United States' largest trading partner, with significant implications for both economies. The imposition of tariffs by the US has introduced substantial strain into this relationship ([23:54]–[26:58]).

Notable Quote:

"We have basically 13 economies here, 10 different provinces and territories, all with their own rules. It's hard to move credentials and sometimes goods and services across the country, far harder than it should be."
— Mark Carney, [21:39]

2. Impact of US Tariffs on Canadian Economy

• Types of Tariffs Imposed: Carney details the various tariffs imposed by the US, including:

  • Fentanyl-Related Tariffs: Initially justified by concerns over fentanyl imports, these tariffs have broader economic repercussions despite fentanyl accounting for less than 1% of imports ([26:58]–[29:20]).
  • Steel and Aluminum Tariffs: Labelled as "national security tariffs," these affect industries where Canada is a major supplier to the US.
  • Auto Tariffs: The integrated North American automotive supply chain faces a 25% tariff, severely impacting margins in an already tight industry ([26:58]–[29:20]).

• Economic Consequences: The tariffs impose hefty costs on Canadian exporters, forcing businesses to absorb increased expenses or pass them onto consumers. Carney warns of significant declines in room rates in the luxury hospitality sector as an analogy for broader economic impacts ([29:20]).

Notable Quote:

"These tariffs hit a wide range of goods and there's a few carve outs for that. But you know, it's hitting hundreds of billions of goods."
— Mark Carney, [26:58]

3. Strategic Responses and Future Trade Relationships

• Negotiation Efforts: Carney mentions recent discussions with former President Trump, indicating the possibility of renegotiating the US-Canada trade relationship post-election. These negotiations aim to address the imbalances and restore mutual trade benefits ([26:58]–[29:20]).

• Diversifying Trade Partners: In response to strained US relations, Canada is exploring deeper trade ties with other G7 and G20 nations. Emphasizing a positive-sum approach, Canada seeks to reinforce existing trade agreements and establish new ones with like-minded countries ([27:41]–[29:20]).

Notable Quote:

"We can play a role as a country that believes in open markets, open systems, believes in trade, open ideas, diversity."
— Mark Carney, [19:47]

4. Global Order and Economic Competitiveness

• Shift in Global Trade Dynamics: Carney discusses the broader implications of US tariffs, likening them to Brexit's economic impact on the UK. He anticipates that the US actions are reshaping the global trading system, leading to increased costs and reduced cooperation among nations ([36:59]–[41:51]).

• Risk Premiums and Investment: The imposition of tariffs introduces a risk premium on US assets, which affects global investment patterns. Carney highlights the potential for higher costs of capital worldwide and the implications for international trade relations ([45:12]–[48:14]).

Notable Quote:

"This is going to be a world that's more expensive and it's more... You're putting much greater emphasis on taking care of yourself."
— Mark Carney, [45:12]

5. Domestic Economic Initiatives

• Housing Crisis Solutions: Addressing Canada’s severe housing affordability issues, Carney outlines a comprehensive plan involving:

  • Cutting Development Charges: Reducing fees to incentivize construction.
  • Promoting Modular and Prefab Housing: Encouraging innovative building techniques to increase efficiency and affordability.
  • First-Time Homebuyer Tax Breaks: Providing financial incentives to make homeownership more accessible ([57:16]–[58:01]).

• Climate and Energy Policies: Transitioning from the consumer carbon tax, Carney emphasizes strengthening the carbon market for large emitters and investing in green technologies. Canada aims to position itself as an energy superpower by leveraging its strengths in critical minerals, small modular reactors, and carbon capture technologies ([60:59]–[63:44]).

Notable Quote:

"We're going to build huge amounts at that level and set the specs, if you will, for that."
— Mark Carney, [57:16]

6. Societal and Cultural Considerations

• Diversity and Talent Attraction: Carney highlights Canada's commitment to diversity as a strategic advantage. By fostering an inclusive environment, Canada aims to attract global talent, which is essential for thriving in sectors like AI and life sciences ([60:59]–[63:44]).

• Skilled Trades and Workforce Development: Emphasizing the importance of skilled trades, Carney outlines initiatives to support apprenticeships and vocational training, ensuring a robust workforce to support the country’s ambitious infrastructure and housing projects ([57:16]–[58:01]).

Notable Quote:

"This is going to be a great time for a career in the skilled trades in Canada. Because we're going to build for the next 25, 30 years."
— Mark Carney, [58:01]

7. Personal Insights and Vision for the Future

• Legacy and Values: When discussing personal aspirations, Carney emphasizes the importance of values and the impact one leaves on others. He envisions a legacy built on influencing positive change and fostering ethical treatment among those he works with ([64:13]–[64:29]).

• Advice to Younger Self: Carney advises his younger self to "relax and stay focused on what you like," reflecting on the importance of pursuing passions over societal expectations ([63:55]).

Notable Quote:

"You're proud of the values of your children and people who worked with you."
— Mark Carney, [64:29]

Conclusion The episode provides a comprehensive exploration of Canada’s strategic responses to the shifting global economic landscape, particularly in light of strained US-Canada trade relations. Mark Carney articulates a vision focused on diversifying trade partnerships, addressing domestic economic challenges such as the housing crisis, and leveraging Canada’s strengths in critical minerals and green technologies. The conversation underscores the necessity for Canada to adapt proactively, ensuring economic resilience and maintaining its competitive edge on the global stage.

Final Notable Quote:

"This is going to push up prices on the margin. And so slower economy, higher inflation, higher interest rates, all things being equal."
— Mark Carney, [29:20]

Episode Highlights:

• Understanding the depth and impact of US-imposed tariffs on Canadian industries.
• Strategic initiatives to strengthen domestic economic foundations and diversify global trade.
• The importance of diversity and skilled trades in fostering long-term economic growth.
• Insights into building a resilient and competitive economy amidst global uncertainties.

This episode serves as a critical examination of the intricate balance between maintaining a strong trade relationship with the US and pursuing independent economic strategies to navigate a rapidly changing global order.