Carney has a huge card, two if he chooses to play them.
The US Is Not Energy Independent
The US is a net exporter of energy (barely), but US refiners are dependent on imports of sour grade crude, mostly from Canada.
In terms of overall trade, the US has a trade surplus with Canada excluding oil which Canada sell the US at great prices.
Trump on the Keystone Pipeline
Back from the Dead
Bridger Pipeline
Trump on the Keystone Pipeline
Truth Social: I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL! The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave! Thank you for your attention to this matter. President DONALD J. TRUMP
Aug 18, 2026, 8:15 PM
Canada Has Something Trump Wants and the US Needs
Canada has two things the US wants and needs, oil and auto parts.
Those are enormous cards. Yet, we see the same silly focus and analysis that we had regarding China and Iran.
Historical Incorrect Analysis
On China, recall the nonsense that Trump held all the tariff cards because the US imported billions more from China and vice versa.
China responded by shutting off rare earth elements and Trump backed down in a week, called in advance by me.
Regarding Iran, Trump has declared victory over 40 times. His blockade was supposed to drive them into submission in days, then weeks.
Now, the blockade is for as long as it takes with the price of diesel skyrocketing.
We see the same reasoning now. But the setup is more like the setup with China, than Iran.
AI models mistakenly look to failed answers that went wrong before, namely how much bigger the US is.
The correct model involves how much pain can TACO Trump take.
Hey Grok
That answer by Grok is flat out ridiculous. Of course there are scenarios. The question is how likely are they.
A Three-Day TACO
Spot Diesel Prices
Spot/futures diesel in the Midwest would spike within hours to 1 day on a full Canadian cutoff, driven by tight distillate stocks (~28 days cover regionally) and 70%+ heavy crude reliance. Retail lags 3-7 days as stations adjust. Refinery runs hold via commercial stocks for ~2-3 weeks before cuts, though diesel yields fall earlier. SPR grade/location limits help. Canada still takes the larger relative hit first.
Again note Grok’s repetitive thinking.
“Canada still takes the larger relative hit first.”
Is a relative hit what matters? Carney has the option to go on Canadian National TV and explain what happened, why he is doing what he is doing and the ridiculous last moment US demands.
Trump faces the ire of every farmer, every trucker, and every auto worker when Canada shuts off diesel and auto parts.
Yet, Grok insists there is no way for Canada to win.
Reflections on AI
“Sometimes you have to push Grok to remember key articles or elements of an argument to get it to see that its ‘factual’ response is off the mark. I have done that both with Claude and Grok and gotten better responses. You have to keep feeding the machine the data until the machine realizes that something being argued is not correct. Never accept anything at face value. It also helps you to gather the data you need to get a logical answer and then continue to press those points.”
Critical Dependencies Not Percentages
There is an obvious risk to my proposed strategy.
But I stick with my assessment, Trump would TACO quickly when faced with an immediate spike in diesel prices to a record.
Don’t Be Stupid
Carney on What Happened
“They made changes [to the deal] including threats on the French language, the Quebec culture and Canadian culture. That is not acceptable.”
The US also demanded a say in Canada’s deals with other countries.
No nation would ever accept that.
A Lose-Lose Proposition
Trade wars are a lose-lose proposition.
I have many times stated that the correct response to tariffs is to lower them to zero no matter what other nations do.
I now wonder if that applies when dealing with an economic madman who does not honor any deal he makes, and always wants more.
The question is moot however, because politically speaking it is impossible to not retaliate.
In this case, only 18 percent of Canadians don’t want Carney to respond.
How Should Carney Handle This?
Address the nation.
Announce a cut off in energy supplies to the US.
Threaten to cut off auto parts delivery if Trump retaliates.
I believe that combo would quickly restart negotiations.
Is it risk-free? No, of course not. But caving in to Trump’s escalating demands is not risk free either.
Piecemeal retaliation is what team Trump is depending on. On a piecemeal approach, Canada suffers much more pain than the US.
This is why Canada needs to respond with massive leverage quickly, figuratively smashing Trump’s face with a brick, and reserving one key card (auto parts) as a threat.
Key question
Q: Does Canada even need to do this, or is a threat on national TV sufficient?
A: I suspect a credible threat would do it.
A Rancher’s Perspective
True Words
Fact Check on Trump’s Claim “Canada Ripped Us Off”
Please see Fact Check on Trump’s Claim “Canada Ripped Us Off”. What’s the Real Story?
For 2025, the total balance with Canada was – 53 billion. But the oil balance was -84 billion. Excluding oil, the US has a goods trade surplus with Canada of 31 billion.
Q: Why exclude oil?
A: Because the US needs Canadian oil and gets it at bargain prices too!
Related Posts
Canada at War with US Says Carney, Why the Trade Negotiations Broke Down
Canadian Prime Minister Mark Carney explains what happened.
Lunatic Talk
Also see Trump Threatens to Use the Military on the US Bond Market. What!?
Trump responds to a reporter’s question with an answer that makes no sense.
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