REGINA, Sask. — We look at new research warning that Washington's trade isolationism is fracturing the West and empowering global rivals, and hear why dropping interprovincial trade barriers could add thousands of dollars to the pockets of everyday Canadians.
Podcasts are available now on GX94, Yorkton, or on 620 CKRM, Regina, hosted by Steven Wilson. Or read the transcript below:
Steven Wilson — Welcome to Trade Dispute: Impact on the Prairies. I'm Steven Wilson. The diplomatic crisis between Canada and the United States reaching a chilling new benchmark.
In a lengthy interview published by the New York Times, Prime Minister Mark Carney acknowledged his government has studied the risk of an American-led military action against Canada. Carney declined to detail the preparations but said it would be irresponsible not to prepare for what he called an extreme tail risk. Following previous musings by President Donald Trump about using economic force to compel Canadian integration.
However, the concept was downplayed by Federal Defense Minister David McGuinty. He pointed out it is standard for Canada's military to consider how it would respond to military action by other countries, a practice conducted by most of the world's militaries. Despite the heavy reciprocal tariffs and the collapse of trade talks in August, Carney says he and President Trump still speak frequently, compartmentalizing issues such as the war in Ukraine.
But the public rhetoric remains hostile. President Trump took to social media to claim Canada is destroying itself with unvetted immigration, calling it a liberal takeover. Meanwhile, Carney's government continues a political review of Canada's plan to procure a full fleet of American-made F-35 stealth fighters, a review explicitly launched in response to the trade war.
Reflecting the shifting landscape, former Canadian ambassador to the United States, Kirsten Hillman, told the Global Business Forum in Banff that businesses shouldn't bet on the cross-border relationship returning to what it was. She added she was surprised to hear leaders in the business community say they expect things to settle out eventually, suggesting Canadians have taken the deep economic relationship with the United States for granted, considering it a strength. That changing global dynamic is the focus of a new independent agri-food policy note released by Agri-Food Economic Systems.
The research investigates the effect of a United States withdrawal from a traditional alignment with Western democracies. Al Mussell is the research lead and co-author of the paper. He says the multilateral rules-based trading system is eroding, forcing the world into competing geopolitical blocks governed by resource nationalism.
Al Mussell — Throughout my career, what we've been concerned with has been rules-based trade, increasing movement toward trade liberalization, freer trade, removal of trade barriers, all those sorts of things. Suddenly, in just a short period of time, we're off in a completely different place entirely. One term I heard used for this is resource nationalism.
This is different countries rather than rules-based trade. We've got countries that are trying to tie up, whether it's energy or rare earth metals, but also agricultural products. And attempting to ensure food security for their various populations by influencing the agricultural economy in some fashion or other.
Steven Wilson — Mussell and his team mapped production and international trade data into geopolitical blocks looking at staple foodstuffs, fertilizers, and oil. He says when the United States is partitioned from its allies, the Western bloc becomes fundamentally weaker against rivals like China and Russia.
Al Mussell — What's really quite revealing is in food, when you look at the West versus either China or Russia, we look pretty strong and pretty well balanced. But boy, once you take the U.S. out of it, I mean, the U.S. accounts for a high proportion of our trade surplus relative to others in feed grains like corn and barley. And also oil seeds, when you combine the canola with soybeans, that's a lot with the U.S.
Now, once you take the U.S. out, you begin to see just how important Canada is among the remaining countries. But the point is, this is kind of a lose-lose situation. And it carries over also, we looked at fertilizers, we looked at urea, MAP and DAP blends, potash, and it's kind of the same story.
We're much stronger together as the West with the U.S. in than with the U.S. out. And the U.S. is worse off too.
Steven Wilson — The data shows that without the United States, Canada stands out as the central contributor within the Western alliance for oil seeds, crude oil, and potash. Mussell says the United States faces a structural deficit in potash, which makes President Trump's recent botched scheme to buy Belarusian fertilizer instead of Canadian product completely illogical. Mussel commended Premier Scott Moll for pointing out the absurdity of the threat.
Al Mussell — I thought Premier Moe, from what I could tell, I thought he captured it pretty well. He didn't use the term preposterous for what was being proposed, but I think he pretty well implied it. He certainly raised the point that how on earth could it be in the U.S. interest to purchase potash from a country that has been sanctioned for war crimes and in so doing, throw one of your allies under the bus?
Not sure how that makes sense. And I think that's a very valid point.
Steven Wilson — With international trade routes choked by tariffs, business leaders say it is time to drop domestic boundaries. A major report commissioned by the Calgary Chamber of Commerce estimates that removing interprovincial trade barriers and labour mobility restrictions could add $5,100 per person to Canada's gross domestic product. Chamber Chief Executive Officer Deborah Yedlin says that with Canadian businesses confronting new barriers abroad, reducing red tape between provinces and territories is increasingly important to strengthening economic resilience.
That economic strength was highlighted in a new financial outlook. The report projects Alberta's real gross domestic product will grow by 2.6 per cent in 2026, far outpacing the 0.9 per cent projected nationally. The report notes that while tariffs remain a major constraint, Alberta faces a lower burden due to energy exemptions and less exposure to heavily targeted goods like steel and autos.
The positive forecast comes as the pro-independence Alberta Transition Council released reports arguing separation would cost roughly $5 billion over three years, while predicting a massive annual surplus. However, critics were quick to note the fiscal model completely ignores any impacts on trade agreements and international market access. We will keep tracking the political divisions and economic shifts as they happen.
I'm Steven Wilson. Have a great weekend and thank you for listening to Trade Dispute: Impact on the Prairies.
