The Prof G Pod with Scott Galloway
Canada’s Role in a Shifting Global Order — with Mark Carney
Thu, 17 Apr 2025
Mark Carney, Canada’s 24th Prime Minister and leader of the Liberal Party, joins Scott to discuss the country’s economic outlook, how Canada fits into a shifting global order, and whether the U.S.-Canada relationship can be repaired amid rising trade tensions. Follow Mark Carney, @MarkJCarney. Algebra of Happiness: thoughts on porn. Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: Who is Mark Carney and what is his background?
Then this person also in their next quarterly earnings call is going to have to puke all over the earnings call because this person all of a sudden has to say, well, there was this $14.5 million expense we weren't even planning on. That comes right off the bottom line, folks. So what do you have? Oh, also some other conversations I had this weekend.
A German automobile manufacturer called What Would You Do? I'm like, I have no fucking idea. I can't predict what this guy is going to do. A friend of mine from the fraternity at UCLA has built this really lovely little specialty retail or specialty products company.
You know when you go to a conference and there's branded shit everywhere and you get those 45 fucking water bottles that say Oracle or NetSuite or ZipRecruiter and then all the banners and all the logos and the cups and everything that's branded? That's a specialty products company. He's built a really nice business, put three kids through school, employed I think about 120 people.
I bet it's a $10 or $20 million business. I don't know. And over the last 30 years, slowly but surely, he's told me, everything has moved to China. They just have a better supply chain and they can do shit at a lower cost, right? he stopped. He stopped all shipments.
There's no way he can turn to his customers and say, oh, all this logo wear and these logoed fleeces and these banners and this signage for the stage, it was going to cost you $8,000. Now it's going to cost you $21,000. He just can't do that. So he's going to have to eat all the contracts he's always committed to, right, while paying these tariffs. He has to come up with additional cash flow.
He said, Scott, this is reminiscent, but worse, worse, Then COVID. It's like my business has come to an end. Literally, my business is coming to an end. My guess is he retires. I don't think he's got it in him to try and figure out all the new supply chain relationships and to come up with the additional capital that's going to be required to support this business moving forward at universities.
What's going on? Corporations have paused hiring. What's a pause? It's called non-hiring because if they pause for three or six months, it's not as if when they fire up again, they double their pace of hiring. If you pause your hiring for six months, you've basically reduced hiring and employment or new employment at that company by 50% that year because they don't catch up. They just start again.
And what would you do if you're a large corporation trying to figure out if and what the tariffs will be and how to plan your business? Do you hire new people? No, you think we're just going to press a pause. The worst thing about this, and that's not true. There's a lot of things that are shitty about this, but we've decided to declare war on everyone all at once.
The piece of the calculus that is missing here is the following. You need to assess when you go to war or you have a negotiation with someone, you need to assess your strengths, right, your own weaknesses, and then their strengths and their weaknesses. And what they have miscalculated is the following. They think their weakness is their dependence upon us. What they miss is the following.
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Chapter 2: What are the biggest challenges and priorities for Canada as described by Mark Carney?
I worked for Goldman Sachs in London and Tokyo and New York and ultimately Canada. And then I went in about 20 years ago to become the deputy governor of the Bank of Canada, which is the equivalent of the Federal Reserve in the U.S. And ended up being the governor during the financial crisis of 2008. So worked with, you know,
Through that process of the financial crisis, we had a, quote, good financial crisis. If you can have a good financial crisis in Canada, we got through it better than anyone else, emerged stronger, our banks stayed together. And then ultimately, kind of slightly bizarrely, I was asked to become governor of the Bank of England. So I became the first foreigner's governor of the Bank of England.
And I did that through the period of the Brexit referendum, as it turned out, and the aftermath of that, and then came back Canada 2020, right in the middle of COVID. I think you probably had a better experience during COVID, listening to your podcast, if I read it correctly, than I did. And then I did a lot of work on climate change for the United Nations, sort of pro bono.
and organizing the financial sector to help address climate change. But also at the same time, I worked for Brookfield, which is a big asset manager, and I was chair of Bloomberg. And then as of the start of January, I first ran for the leadership of the Liberal Party, which is one of the main parties here, and winning that became prime minister about a month ago.
And now I'm running for election. We have much, last point, much shorter elections than the United States. Our campaign is 37 days, and we've got two weeks roughly left to go.
So a big friend of the pod is Ian Brenner, the geopolitical strategist, and he was on the pod last week, and he described you as a, open quote, generational mind for Canada on the global stage, close quote. In your view, what role does Canada play on the global stage?
So we play, I mean, we play several roles. We're a member of the G7. In fact, we are chair of the G7 this year. So I'm chair of the G7. We're a member of the Commonwealth, which is the old UK grouping. We're a member of the Francophone, which is obviously the Francophone grouping of about 60 countries.
So we have our role in several different, let's call it organizations, self-appointed organizations or groupings. I think one of the roles we play potentially in the new or the emerging global order is partly based on our assets. We are an emerging energy superpower in all forms of energy. We're one of the largest critical mineral suppliers in the world. We're pretty good in AI.
A lot of people claim that, but we're, I think, legitimately claiming that. And so we can play a role as a country that believes in open markets, open systems, believes in trade, open ideas, diversity. We can play a role with like-minded countries to kind of reconstruct that bit of the international order, which has been I'm in Montreal. They would say bouleversé.
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Chapter 3: What is the current state of US-Canada trade relations and tariffs?
You're the man representing our largest trading partner economically in as to the best of your knowledge, describe the state of play between what is happening between the U.S. and Canada. Where does it sit at this moment?
So I'll start with the bad news or the, as we would call the unjustified news, which is what tariffs are in place. We have still in place today tariffs that were originally justified because of fentanyl. Fentanyl comes across the border from Canada. Just for the listeners who haven't tracked this, less than 1% of the fentanyl imported into the United States comes from Canada.
In fact, you've got a sophisticated audience, so I can say things like 19 basis points of the fentanyl comes across the border from Canada. We've taken major steps to reinforce the border, drones, helicopters, other things, and it's fallen by a further 90% over the course of the last three months. Um, but those tariffs, um, hit a wide range of goods in Canada, 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 good. And those are 25% tariffs from the United States. Then we are also caught. Secondly, we're also caught in the steel and aluminum tariffs, which are this, quote, national security tariffs, so-called 232 tariffs. We are the largest supplier of aluminum in the United States.
We're one of the most important suppliers of steel to the United States, and you can roll those up into hundreds of thousands of jobs in the U.S. depending on Canadian steel and aluminum. And then the third thing is we are caught in the auto tariffs, as people probably know, but I'll just personalize it. Well, they wouldn't know this fact.
There was something called the AutoPAC, which was signed the year I was born, you know, 60 years ago. And we have had an increasingly integrated auto system with the United States for 60 years. It got tighter with the Canada-U.S. Free Trade Agreement 40 years ago and then with NAFTA and the successor.
So literally, you know, these companies and the supply chains, the main parts suppliers, they're virtually fully integrated. And now into the middle of this is coming 25% U.S. tariffs, which are, you know, in an industry, as you know, that has, you know, 5%, 7% margins. I mean, this is absolutely damaging. So we have three sets of tariffs. We are not
subject yet to the so-called reciprocal tariffs to the U.S. So the state of the relationship is strained, to say the least, because all of these tariffs are in violation of what you call USMCA, we call CUSMA, the same trade agreement.
The good news or the better news is that three weeks ago or so, President Trump and I spoke and we agreed that following the Canadian election, there would be the beginning of a negotiation of a new comprehensive relationship, economic security. So we are in the queue, so to speak, for those discussions.
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Chapter 4: How is Canada responding to US tariffs and shifting global trade dynamics?
Chapter 5: What role does Canada play on the global stage and in the emerging global order?
We fucking freak out when we think that the final episode of The Sopranos was a mistake and start calling our cable company. This is how stupid these people are. What do we have? Let's review. Less hiring. More expenses. The economy is slowing, which I'm sure the president got all sorts of data points on last week. But meanwhile, interest rates are going up.
If interest rates and those costs keep going up, it can chase down that consumer sentiment and that certainty. And what do we have? The uncertainty index is at a 40-year high. Consumers in America feel more uncertain right now than they did when there was a virus that killed a million people. Think about that. Think about that. consumer confidence is crashing. So what do we have? What do we have?
Less hiring, stagflation or threats of stagflation, which is Latin for we're headed towards a depression if we're not careful. We have retailers who don't know how to plan their business. And we have an administration that has no ability to actually assess the current situation and what our strengths are and our weaknesses are.
There is no better opponent than someone who overestimates their strengths and is aggressive and gets into the ring with you. And quite frankly, just isn't as strong or as quick as they think they are, but they have the hubris to believe that they're awesome so they don't train that hard, they don't think that hard, they just get in the ring and start flailing wildly. Guess what?
In about three months, if not sooner, we're gonna wake up and all we're gonna see are bright lights. We're gonna be flat on our ass staring up and all we would have heard is the ding. And what was that ding? Stupid tariffs. This is the definition of stupid. Okay. With respect to tariffs, in today's episode, arguably one of our most important interviews or... I don't know.
I think this means we're big time. We're big time. We speak with Mark Carney, Canada's 24th prime minister and leader of the Liberal Party sworn in this March. We discuss with the prime minister of the country's economic outlook how Canada fits into a shifting global order and whether the U.S.-Canada relationship can be repaired amid rising trade tensions.
I really enjoyed this conversation with the prime minister. He's clearly a very intelligent guy, thoughtful, especially enjoying the end. I asked him some questions more personal in nature. We'll ask Prime Minister Carney his thoughts on our relationship and where we go from here. Prime Minister, where does this podcast find you?
I'm in Montreal right now, Professor.
The majority of the world spends their news is 10 minutes domestic and 20 minutes international. In the U.S., we're kind of self-absorbed, narcissistic. We don't talk a lot about other countries. I think most people have heard of you, have seen you on TV, but don't know much about you. Can you give us sort of your backstory, your origin story?
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Chapter 6: How do global leaders view US leadership and its impact on international relations?
The logic isn't entirely consistent, let's put it that way, but I think at the core, recognizing this desire for more balanced trade, and so from the U.S. administration. The question, I think, in our mind is there are some industries, autos particularly, aerospace would have another element of this, and then a number of commodity. There are a couple of industries that are so integrated.
that it's hard to see why for U.S. competitiveness, let alone North American competitiveness, it makes sense to pull them apart. That would be our argument. And then there's other industries, forest products, steel, aluminum, as three big examples, where agriculture, potash, I gave that example, nickel, I could go on, where we're such huge suppliers and such a safe, secure supplier.
Again, it doesn't really, to us, make sense that that would be displaced or tariffed. So, you know, we've seen that the trade policy is evolving as some of these choke points become more evident. And, you know, I suspect we will see more. Maybe I'll say one other thing, if I could, which is it strikes me a bit in the consistencies of U.S. policy is a desire to have some
minimum tariff if possible, which has a revenue-raising element to it, and I think, you know, tied into U.S. tax policy. That is also a possibility here.
My understanding is about 99% of our trade is tariff-free, and that 1% is around things like dairy. Haven't we largely been kind of a trade-free zone between Canada and the U.S. today?
Yeah, yeah, we have. And then we have, like any trading partners, you get the odd trade irritant and trade dispute, but we have processes to deal with those. And so we have ongoing things around forest products, sometimes steel and aluminum, and that's handled. But yeah, trade is basically tariff-free. And when it's your biggest trading partner, pulling that apart is quite costly.
It's costly for both. From a Canadian perspective, and I'm out on the road, I'm running for office, I'm talking to lots of Canadians up and down, there is a very strong sense of, yeah, this is going to cost us, but we're willing to take the price to restructure our economy in a different direction. It's been such a sense of, I mean, the word that's used is betrayal. So we signed a deal.
We've had this partnership. We observe it in good faith. We set up businesses. We know lots of Americans. We like Americans. We listen to American podcasts. There's such a thing. And all of a sudden, we get these attacks, which is the way this is viewed, is, okay, so it's going to cost us for a period of time, and we'll build out and build with others. We'll be right back after a quick break.
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