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Speaker of the House of Commons Anthony Rota looks on during Question Period on Parliament Hill in Ottawa.
Dead cats, Nazis, and murder
Has politics ever been this interesting? In trying to understand wild stories about a Nazi in Canada’s Parliament and allegations that India assassinated a man on the steps of a temple in Surrey, British Columbia, I started to think about dead cats, wagging the dog, and flooding the zone with sh-t.
Dead Cats? Let me explain.
There are various ways to describe strategies that governments use when they want to distract public attention from one crisis. Often, they simply introduce another.
The Dead Cat Strategy was made famous by an Aussie political operator named Lynton Crosby, who used it to help Boris Johnson shift attention away from his shambolic UK leadership stumbles. Johnson actually wrote about it once, saying that when losing an argument the best thing to do is to deploy Crosby’s strategy and throw “a dead cat on the table.”
“Everyone will shout ‘Jeez, mate, there’s a dead cat on the table’,” he said, “and they will not be talking about the issue that has been causing you so much grief.” Johnson’s entire political career was, essentially, a buffet of dead cats.
Where there is a political cat, there must be a dog. “Wag the Dog” was the name of a 1997 Hollywood film about a fictional government that used military action to distract from a president’s troubles. Life imitates art. The next year, after the revelations about the Monica Lewinsky scandal blew up, President Bill Clinton ordered the bombing of a Sudanese pharmacy factory. His secretary of defense was immediately asked if the attacks were just “wag the dog” distractions from the sex scandal. Either way, it didn’t work. Do you remember the bombs or the blue dress?
And, of course, during his time as Trump whisperer, Steve Bannon infamously told writer Michael Lewis that the way to undermine the media was simply to “flood the zone with shit.” And flood the zone he did. That phrase, in my view, marked the unofficial declaration of the Disinformation War that is still raging today.
What does this have to do with the political difficulties Prime Minister Justin Trudeau is facing with India in the wake of the June 18 murder of Canadian citizen Hardeep Singh Nijjar, or why the Speaker of the House invited a man who was an actual Nazi to be celebrated in Parliament during the visit of Ukrainian President Volodymyr Zelensky? (You would have to work very hard and forget some key moments in history to do something as insulting, damaging, and embarrassing as inviting a guy who was in an SS unit to Parliament to celebrate fighting … the Russians, but that is what the Speaker actually did. He apparently missed the part in World War II where the Russians were allies in the fight against the Nazis. And they say kids don’t know their history … sigh). It was not a planned channel change a la “Wag the Dog,” but the Nazi story has become a major distraction from the ongoing fallout of the Indian assassination scandal and the war in Ukraine, and that’s a huge problem.
As I outlined in my column last week, Trudeau says there are “credible allegations” that the Niijar murder was orchestrated by “agents of the” Indian government. While India denies involvement in the death of a man they regarded as a terrorist, the evidence is now overwhelming. There are recordings of Indian diplomats talking about it beforehand, and there is video of the assassination squad conducting the bloody killing — using between 40 and 50 bullets. This was a political statement, not just murder.
In the immediate aftermath, it looked like Canada would stand alone, as most countries need a close relationship with India as a hedge against China. But definitive evidence of an extrajudicial killing has a way of chilling a courtship, so now its India feeling the pressure to provide a way out.
I spoke with senior intelligence sources this week about India and Canada, and they tell me that allies like the US, France, Germany, and Australia have all urged India behind the scenes to cooperate with an investigation, even as PM Narendra Modi has escalated the diplomatic war with Canada.
Sources also tell me the US is heavily pressuring India to cooperate with Canada and find someone accountable for the murder. “There is room for accountability that does not involve Modi himself,” a senior intel source said. In other words, get some people to take the fall, show respect for the rule of law, and don’t sour more G7 relations. That way, we can all get productive on other issues. Over to you, Mr. Modi.
Canada too is feeling the pressure to do more to crack down on Khalistani-related security issues, but sources say that what India wants Canada to do in terms of monitoring and arrests could violate the Canadian rule of law. As a source told me, “India is right to say that there are extremists in Canada, but India can be dismissive about our belief in freedom of speech and the right to freedom of assembly, and we won’t violate that.”
The other thing to watch for? Arrests.
The Royal Canadian Mounted Police is conducting an independent investigation, and when they make arrests — it could take a while — India will be forced to be made accountable. Intel sources say they are concerned those arrests might lead to more domestic violence, so this is far from over.
In the meantime, as this killing is forcing India to decide what kind of player on the global stage it will be, Canada is consumed by the invitation of a Nazi to Parliament. There is no sugar coating this. It was a humiliating, damaging, and painful moment, and it handed Russia – which has long tried to justify its illegal, murderous invasion of Ukraine as a battle against Nazis – a huge propaganda victory.
It has also allowed the fight for continuing support for Ukraine to get bogged down in old wounds and historic battles that remain agonizing generations later. Besides exposing Canada’s hideous past in terms of allowing Nazis to come to Canada — ”There was a point in our history where it was easier to get (into Canada) as a Nazi than it was as a Jewish person,” said Canada’s Immigration Minister Marc Miller — our eyes are now off the main thing: Russia’s invasion and how to get them out.
No one wagged the dog, tossed a dead cat, or flooded the zone here as a strategy of distraction. This time it was just pure incompetence, but the result is the same: Distortion. Disinformation. Flooding the zone with … crap.
At a time when we need to get serious about urgent issues, the timing couldn’t be worse.
Former US President Donald Trump talks with Canada's Prime Minister Justin Trudeau.
Canada braces for a Trump presidency
Canada’s Foreign Minister Mélanie Joly says Justin Trudeau’s government is working on a “game plan” for how it would respond to a right-wing, protectionist government in the United States after the 2024 election – just in case. She said she would work with local and provincial leaders as well as the business community and unions to do so.
Joly also referenced the efforts Canada made the last time, when Trudeau launched a charm offensive in 2016 in a bid to keep Trump sweet. Canadian political and business leaders made an unprecedented push to communicate with different levels of the US government and the business community about the value of the trade relationship. They eventually negotiated a new deal similar to NAFTA, the United States-Mexico-Canada Agreement.
The possibility of a second round with Trump, who forced Canada to renegotiate its crucial trade relationship with the US, is widely seen as a threat to the countries’ trading partnership.
And Trump is not doing anything to calm the waters. The former president met recently with advisers at his Mar-A-Lago compound in Florida to discuss his plans for the 2024 election, according to the Washington Post. They discussed the idea of a “universal baseline tariff” on imports to the US, with Trump interested in putting a “ring around the U.S. economy.” This, Trump told Fox News, could entail a 10% tariff on all imports.
Under the terms of USMCA, most trade between Canada, the US, and Mexico is currently conducted without tariffs. But that deal is due to be reviewed and renewed in 2025-2026.
More than $3 billion in goods and services cross the border each day, everything from auto parts to building supplies to Amazon packages. In 2016, the two countries did $627.8 billion worth of trade. By 2022, it had increased to $1.2 trillion – so any disruption could have cataclysmic effects on the trade-dependent Canadian economy, as well as serious effects on the US economy, particularly in border states.
Canadian PM Justin Trudeau and former President Donald Trump
Why Trump 2.0 could be bad news for Canada
When Donald Trump was elected in 2016, Justin Trudeau launched a charm offensive carefully calibrated to try to keep the crucial trade relationship on track. There were gifts, phone calls, and visits, and it worked, to a point.
The Trudeau team managed to develop a friendly relationship with Trump’s daughter, Ivanka, and his son-in-law, Jared Kushner, opening a crucial back channel.
By 2018, though, as Trump and Trudeau tussled over a new trade arrangement, tempers frayed. After the leaders of the rest of the free world ganged up on Trump at a G7 meeting in Quebec – he didn't want to sign the communique the rest favored, which left him angry and isolated – the US president lashed out at Trudeau on Twitter from Air Force One. According to a memoir by John Bolton, then Trump’s national security adviser, when Trudeau said that American “tariffs threaten to harm industry and workers on both sides of our border,” Trump’s blood boiled.
Trump, Bolton wrote, directed his aide Larry Kudlow to attack Trudeau on the Sunday shows: “Just go after Trudeau. Don’t knock the others. Trudeau’s a ‘behind your back’ guy.” Peter Navarro went further on Fox News Sunday, saying there is a “special place in hell” for Trudeau.
The blow-up in Quebec was a low point in the Canada-US relationship, which normally consists of politicians exchanging friendly pieties while officials and businesspeople on both sides of the border aim to maximize trade and minimize tension. That was true when the leaders were politically like-minded — the Trudeau-Barack Obama bromance — and during periods where the leaders met across an ideological divide, as when Jean Chrétien and George W. Bush led their countries.
Finding leverage in USMCA review
If Trump is the nominee in November, and the polls say he will be, and if he defeats Joe Biden, which polls say he might, we can expect craziness, says Bruce Heyman, who served as Obama’s ambassador to Canada.
“That craziness is not good,” he said. “Not good for the world order and not good for the Canada-US relationship.”
Trump mobilized a coalition of blue-collar workers against NAFTA – the standing trade agreement between Canada, the US, and Mexico – as the reason for the economic pain many working class voters experienced as manufacturing jobs moved to Mexico and overseas. Once in the White House, Trump forced Canada and Mexico to negotiate the USMCA, a deal similar to NAFTA except with some added bonuses for US dairy farmers.
The USMCA comes up for review next year, and while Trump hasn’t indicated that he plans to renegotiate it, Heyman thinks a re-elected Trump might decide to let it lapse.
“Donald Trump doesn't have a large appetite for Canada-US relations. If we revert back to isolationism, and autocracy, and a King-of-the-Hill kind of attitude, then alliances get thrown under the bus.”
Jon Lieber, Eurasia Group's head of research and managing director for the United States, who worked as a Republican economic policy advisor, agrees that we should expect conflict from Trump 2.0. “His modus operandi is to use whatever leverage he has to get what he wants. We don’t know exactly what he wants yet, because he hasn’t articulated a vision for North American trade, but we know there’s these pre-existing irritants, and a big part of his political coalition is going to be auto workers in the Upper Midwest.”
Trump will need to say something that contrasts with Biden on the campaign trail, and “things that you say on the campaign end up being enacted as policy,” Lieber adds.
Poster boy for a frozen blue state
Trump was an unknown quantity in his first term, and it took him some time to find his footing as he slowly figured out how to manipulate the levers of power. As Bolton wrote: “It is undeniable that Trump’s transition and opening year-plus were botched irretrievably.”
Next time, Trump would know how to work the levers — aided by a group of policy and communications professionals who have been cooking up plans in a new constellation of MAGA think tanks. And Trump wants to exact revenge on the Democrats who he blames for his grave legal difficulties.
Trudeau, of course, has not played any role in prosecuting Trump, and the former president hasn’t gone after him, but the Congressional Republicans closest to him have taken to lobbing rhetorical potshots north of the border. Marjorie Taylor Greene, for instance, has suggested (falsely) that Trudeau is the child of Fidel Castro while complaining about Canadian gun laws. Lauren Boebert has said that Canada needs “to be liberated,” and Tucker Carlson proposed that the United States invade Canada, although the hour-long special he had planned was kiboshed when Fox showed him the door.
Trudeau’s image as global progressive poster boy grates on American conservatives, who see him as a woke, virtue-signaling irritant, overseeing a frozen blue state where Muslim immigrants are welcome, guns are banned and vaccines mandated. Over the weekend, prominent Republican online influencers denounced and mocked him in crude terms when he posted a picture of himself and his son at a showing of Barbie. He is an irresistible target for the MAGA GOP.
‘Deeply fearful’
As the culture war increasingly dominates American politics, and the two voting blocks come to resemble warring factions, it is possible that the domestic American impulses may find expression in the Canada-US relationship, which has for decades been dominated by arcane disputes about softwood stumpage fees and dairy quotas.
Lieber thinks that’s likely just noise: “Fundamentally, none of these people have reason to care about US-Canada trade relations or do anything to upset it. It’s not like Mexico.”
Heyman, though, is uneasy. “I am deeply, deeply fearful for the Canada-US relationship if Donald Trump is back in the White House.”
Next time, if it happens, Trudeau would be unwise to rely on charm.
A collage depicting food price increases.
Are high food prices here to stay?
A perfect storm of pandemic shortages, Russia’s invasion of Ukraine, and extreme weather events have driven up food prices and threatened food security globally. Now, a strong El Niño event stretching into 2024 could exacerbate this food crisis, but not for everyone.
A 2023 report by the UN Food and Agriculture Organization found that as many as 783 million people worldwide faced food insecurity in 2022 – 122 million more than in 2019. The pandemic brought supply chain challenges that have been slow to abate. Extreme weather and global conflict further drove up hunger by limiting access to food. The problem is acute in the developing world, but it’s hitting people hard in North America, too.
Faint hope but gathering despair
Recent weeks have brought better news about food inflation in the US and Canada, with signs that it’s beginning to cool. In June, the Biden administration’s Council of Economic Advisers pointed out that it was slowing after a long period of elevated growth, driven largely by declining egg and fruit prices. They cautioned, however, that prices would remain above pre-pandemic levels throughout 2023.
North of the border, the Royal Bank of Canada found the same: Prices rose 18% in two years, and the rate of growth is slowing though prices are unlikely to come down. A fifth of Canadians, nearly 7 million people, lived in a food-insecure household in 2022. In the US, a study by the Urban Institute found that in 2022, a quarter of Americans reported being food insecure – a whopping 83 million people.
Peter Ceretti, director of Global Macro Geo Strategy at Eurasia Group, echoes the numbers from the Biden administration and RBC. “Consumers are seeing food price inflation begin to cool in the US and Canada, which is a good thing, but I don’t think that food price levels are likely to fall economy-wide in the near future,” he says.
Experts in the United States and Canada are already warning that changing weather will continue to drive up food prices as it delays or kills crops. And that’s not all. “In addition to putting upward pressure on prices,” Ceretti notes, “climate change introduces more uncertainty into weather patterns and growing conditions, which can increase volatility in food costs, too.”
The El Niño factor
What exactly do climate change and El Niño, the warming in the Pacific that impacts weather worldwide, bring to the table? Writing in The Conversation, David Ubilava, associate professor of economics at the University of Sydney, argues that El Niño will not have a significant aggregate effect on food prices at the global level. Instead, while the aberrant weather induces some crop failures (palm oil in Indonesia and Malaysia), it could lead to better harvests for others (in the Horn of Africa). The effects, however, will not be borne equally and could produce famine and conflict.
US Special Envoy for Global Food Security Cary Fowler has highlighted Southeast Asia, Central America, and southern Africa as particularly at-risk areas from El Niño. Meanwhile, Peru’s higher-than-normal water temperatures threaten its fishing industry.
With El Niño arriving and climate change threatening food security, the US and Canada are being asked to do more to support food aid. The Biden administration has launched the Vision for Adapted Crops and Soils. With an initial pledge of $100 million, the program is currently focused on Africa and developing resilient crops in the face of climate change. Last year, Canada announced CA$250 million in food aid, blaming Russia for soaring prices, but cut foreign aid by 15% – a projected CA$1.3 billion – in its 2023 budget.
Climate change is the game changer – and it comes with conflict
Even if El Niño spares some, climate change combined with its attendant crises, such as geopolitical instability and conflict, threatens us all. The Russian invasion of Ukraine, Europe’s breadbasket, has shown what can happen when conflict converges with extreme weather events.
Long term, the effect won’t be pretty. “Global food demand will increase by more than 50% in 2050, but due to climate change, agriculture yields of major crops could decrease over that same period,” according to Secretary of State Anthony Blinken.
Global food producers are already producing relatively smaller yields than in recent decades, says Canada’s largest farmland owner Robert Andjelic. This won’t be helped by the weather this summer, with the hottest month in recorded history – July – and wildfires that ravaged Canada and the US. In recent days, sea temperatures in Florida broke records – hitting 101 degrees Fahrenheit. El Niño or no El Niño, extreme temperatures, and weather events are going to hurt crops and affect food prices and security.
Andjelic issued a stark warning that he expects high food prices to become the new normal when he spoke recently with The Toronto Star. “What I’m going to say is not going to be very well received by the consumer, because I see prices going much higher. This is not just in Canada. It is a worldwide supply and demand issue.”
Trade under pressure
Crop failures could also shape trade and international relations. Canada, for instance, relies on the US and Mexico for much of its produce imports. Last year, the USDA said the US was on track to become a net food importer. Canada became a net exporter in 2019 – but remains a top importer of US agricultural exports, while the US scoops up nearly 60% of Canadian agricultural exports.
Both countries, however, can feed themselves and have plenty of arable land to do so. Ceretti says deep integration and interdependence and (mostly) tariff-free exchange between the US and Canada means that while “there may be disruptions or trade imbalances that emerge in certain food products, generally, I think that trade relations will remain strong.”
But both Canada and the US rely on Caribbean, Central American, and South American states for certain commodities. Consumers may soon face higher prices for coffee and chocolate as futures in sugar, cocoa, and robusta coffee are through the roof, with the latter hitting an all-time high.
Ceretti warns that food security concerns can lead to potential export restrictions, “which can shock global food prices and make it difficult for net food importing countries to buy sufficient supplies at prices they can afford.”
Political risks abound, too
High food prices and insecurity also pose a political risk to incumbents. The 2024 US presidential race is taking shape, and in Canada, PM Justin Trudeau is due to face the electorate by October 2025.
The cost of food and other goods will factor into the US and Canadian elections, putting pressure on Biden and Trudeau to act. But with climate change running unchecked, persistent global geopolitical instability, and potentially greater and more unpredictable El Niño and other weather events in the future, just about every politician is going to face these pressures for the foreseeable future.
Chair of the Federal Reserve Jerome Powell testifies during a House Financial Services Committee hearing.
There’s no party like a rate hike party
Rate hikes will continue … until morale declines or a recession hits. That’s the message market watchers expect, despite slowing inflation, from the Bank of Canada’s next meeting on July 12. The Canadian economy has stayed hot despite the Bank’s effort to cool it with increased interest rates, including a 25-point increase in June.
Federal Reserve Chairman Jerome Powell has indicated the US should expect more hikes, too. And with economists now believing the odds of a US recession are dropping, thanks to a strong labor market and strong consumer demand, the Fed may have no choice but to continue driving up borrowing costs.
Both central banks have signaled that rate hikes have had an effect, but wage growth rates aren’t cooling fast enough, and employment rates remain high. Predictions of a recession on both sides of the border have gone back and forth for months.
The US is Canada’s largest trading partner, so Fed decisions are being watched closely by Canadian economists.
Consider that 70% of Canadian exports go to the US, while only 17.5% of US exports go to Canada. US interest rate hikes, and how they impact exchange rates, can have an outsized impact on the Canadian economy. And if interest hikes lead to a US recession, this could push Canada closer to the brink by driving down demand, contracts, and prices.
Tesla charging station.
Canadians cooler on EVs than Americans
Both President Joe Biden and PM Justin Trudeau want their countries to be leaders in the electric vehicle industry … but are drivers in each country ready to make the leap?
According to a new study by J.D. Power, Americans are more likely than Canadians to consider buying an electric vehicle. It showed a 13-point drop in the number of Canadians keen to buy an EV, dropping from 47% last year to 34%.
Just over one in five Canadians are “very likely” to consider an EV the next time they buy a vehicle. In the United States, meanwhile, 61% of those shopping for a vehicle are likely to consider buying an EV – a 27-point jump on their northern counterparts.
In 2022, there were nearly 763,000 EVs registered in the US compared to just over 462,000 in 2021, and the first quarter of 2023 saw 246,624 registrations, nearly 100,000 more than in the same period last year. In 2021, Canada hit record-high EV registrations at just over 86,000, and by the fourth quarter of last year, EVs represented nearly 10% of all registered vehicles. But the first quarter of 2023 saw the EV sales share dip back to 9.1% compared to gas vehicles.
Why the EV reluctance? First, there’s concern about how far a car can travel on a single charge – aka range anxiety. This relates to both a real and perceived lack of charging infrastructure, especially in more remote areas.
The US has a more robust network with around 51,000 public charging stations, and President Joe Biden allocated $7.5 billion in 2021 to help build an additional 500,000 public EV charging units before 2030 (stations often have multiple charging units). Canada, meanwhile, surpassed 20,000 charging stations nationwide this spring and plans to hit 84,500 charging units by 2027 supported by CA$1.2 billion in federal funds. In May, the US and Canada announced plans for an electric charging corridor running from Quebec City, Quebec, to Kalamazoo, Michigan.
So the relative EV reluctance from Canadian buyers is linked to the infrastructural lag, but cost is also an issue.
EVs are pricey. In the US last year, the average EV cost just over $60,000, compared to around $50,000 for a gas vehicle. In Canada, the average is CA$83,510 compared to CA$58,895.
EVs are cheaper to operate in the long run, but with high and rising interest rates, paying upfront for an EV can be prohibitively expensive. Government subsidies in both Canada and the US aim to take some of the edge off the sticker shock (a tax credit of $7,500 in the US if the final assembly is done stateside and up to CA$5,000 as an instant rebate at the point of sale in Canada), but it may still take some time for consumers to get plugged into EVs. We’ll be watching to see whether improved infrastructure has the desired effect.
View Macy’s Fourth of July fireworks, from the Queens borough of New York, NY.
Two birthdays, two futures, two metrics
The United States and Canada just wrapped up their respective national birthdays, with Canada turning 156 and the US hitting the ripe old age of 247. The countries share the world’s longest undefended land border and rack up nearly $800 billion a year in trade of goods and services. But how do they both stack up on crucial indicators that shine a light on quality-of-life issues and the health of their democracies?
Population growth and immigration: The Congressional Budget Office projects the US population – currently at 336 million – will grow by 37 million over the next 30 years. Immigration will account for most of this increase, but this would still be a decline in the growth rate from a recent high of 0.8% in 2014 to 0.2% in 2053. That means the US labor force – which is predicted to grow by just over 8 million jobs by 2031 – will also slow.
Canada has a fraction of the US population – roughly 12% – and while the gap is closing, the two countries are unlikely to ever be anywhere near parity. It recently hit the 40-million mark and plans to welcome 500,000 newcomers a year by 2025. According to Statistics Canada’s high-growth projections, the world’s second-largest country by landmass would see its population hit 74 million by 2068. StatCan also expects the labor force in Canada to grow “from 19.7 million in 2017 to 22.9 million in 2036,” but the country also faces an aging population, meaning “the overall participation rate is expected to decrease … from 66% in 2017 to 63% or less in 2036.” This, in turn, can drive up healthcare and social security costs as well as labor shortages.
Trust in government: How many of these citizens trust their government? A 2022 Pew Research Center study on public trust in government from 1958-2022 finds a long-term decline in Americans’ faith in the state. Those who say they “trust government to do what is right just about always/most of the time” hit a high of 77% in 1964, during the Johnson administration. Since then it’s been on a fairly steady drift downward to today’s 20%, and the rate notably dropped as low as 10% during the Obama years. Recently, Democrats seemed to be more trusting than Republicans – 29% versus 9% last year.
Canadians, meanwhile, are more trusting. The 2023 Edelman Trust Barometer finds 51% of Canadians trust the government (for comparison, Edelman found that 42% of Americans trust theirs, higher than the Pew numbers). But the Canadian numbers are down two points from last year.
Greater distrust means both governments face a tougher job engaging their electorates and affecting change.
Toronto's new mayor Olivia Chow.
Hard Numbers: Chow wins Toronto, Mexico gets corny, Ford cuts staff, Canada Bread gets baked for price-fixing, inflation slows
37: Progressive candidate Olivia Chow won the Toronto mayoral election, taking 37% of the vote in a field of more than 100 candidates. The Hong Kong-born Chow is the first Chinese-Canadian mayor of Canada’s largest city and the first from the left wing in a decade. Expect fireworks with conservative Ontario Premier Doug Ford, who has called her “an unmitigated disaster.”
50: Mexico has imposed a 50% tariff on imported white corn in a bid to boost domestic production. The move, which violates US-Mexico-Canada trade agreements, comes as Mexico is locked in a wider dispute with its North American partners about imports of genetically modified corn and other crops.
1,000: Ford Motor Company on Tuesday began laying off at least 1,000 employees in the US and Canada as it streamlines operations to focus more on electric vehicles and digital services.
50 million: Canada Bread, one of the country’s largest producers, must pay a fine of CA$50 million for conspiring with a competitor to raise wholesale bread prices in Canada between 2007 and 2011. If that sounds like a lot of bread, it is: It’s the largest price-fixing penalty in Canada’s history.
3.4: Speaking of prices, some good news from the bean counters! Canada’s annual inflation rate fell by a full point to 3.4% in May, the slowest pace in two years. This may make it possible for the Bank of Canada to pause on any more rate increases, after setting them at their highest level in more than two decades earlier this month.