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Canada's finance minister quits over Trump tariff dispute with Trudeau
Seems like Trudeau is floundering for some ways to keep his job and his head economist didn't approve. I'm not sure why Trump wants to mega tax Canada but it certainly can't have helped. This may end up bringing down the Trudeau government.
What is good for the Canadian goose is good for the Canadian gander. I don't want to implement tariffs against Canada. How about they drop their senselessly high tariffs on some American goods before complaining about hypothetical future American tariffs?
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I would be hesitant to overexplain this as some grand global struggle; I think this is 90% personality politics and the rest is just the cherry on the top. Trudeau seems to be a very bad man-manager: he's had Freeland, as his #2, eat shit for him on a number of different files. For the past two weeks his office has been leaking stories to various newspapers undermining her. He told her on Friday via zoom that she was going to be replaced as Finance Minister, but oh, before you go, on Monday can you deliver our fall economic statement (that we've delayed for two months)? Oh yes, it shows we have a $60+ billion deficit and we've totally blown past the "fiscal guardrails" we had promised. But once that's done and you've humiliated yourself for me one more time we'll shuffle you to a less-visible cabinet position and maybe you won't lose your seat in the next election in what is supposed to be a safe Liberal seat.
Freeland predictably told him to go fuck yourself. Her public letter announcing her resignation (while also admitting she was getting fired) was pretty scathing as far as these things go. To do it on the day you were supposed to give the long-delayed economic update for the country was as pretty direct a knife to the guts as you can do as Finance Minister. I don't think Trudeau will make it to February.
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I'm somewhat surprised they wouldn't wait for Trump to actually show he can do something, instead of reacting on his babble.
In any case, I very much hope this heavy handed approach backfires in the case of Europe. As things stand, helping to maintain US hegemony looks like certain pain, dubious gain. It's perverse how little the US is willing to offer, given their advantages and prosperity. Ideally the Chinese would come up with a straightforwardly superior counteroffer that gives Europe time to restructure while on the side-lines of the broader conflict.
I'm surprised that you are surprised.
The parts of Canada from which Trudeau (and his voter base) come all define themselves in relation to the US (generally in Blue Tribe-inspired ways). The more on the "Left" you are, the more concerned with the US you are.
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Even if such a counteroffer were made, would European politicians be willing or able to accept it? My sense is that at least in Germany, print media is uniformly transatlanticist in outlook, and so to accept a Chinese offer over US objections would put you at the receiving end of a protracted storm of bad press. Few politicians inside the mainstream Overton window could weather this, since the sort of blanket press skepticism that would be required for an individual voter to dismiss a consensus of reporting from all the papers has itself been completely contained by association with out-of-window parties and movements.
Thats certainly the impression, but it has to come from somewhere, right? You dont keep ruling an area indefinitely without doing any work.
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It is, unfortunately, much easier to argue the opposite, as you do. And past the atlanticist status quo and soft power, there are tools like natgas supply blackmail, devastating sanctions lifetable when negotiations with the Authoritarians are broken off, outright assassinations.
On the other side, I can't really think of anything other than business community revolt, establishment self preservation attempt after economic hardship translates to electoral sweep for the "far" right, uncharacteristically well executed Chinese influence campaign, some significant US blunder or distraction.
Great men of history urgently needed.
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"I'm not sure why Trump wants to mega tax Canada but it certainly can't have helped."
Probably a bluff? If not, I would think it will be very politically unpopular in the US and there would be blowback.
Yeah. Trump's MO is usually to say exaggerated things and demand the moon to start from a strong negotiating position and then either get concessions and compromises for the things he actually wants, or at least have someone to point the finger at when he and his supporters don't get what they want.
My guess is this is mostly just because Trudeau is left-aligned so Trump wants to make him beg and plead to please not do this and then Trump will not do this (because he was never really intending to) but either get some sort of concessions out of it or just make himself look strong and Trudeau look weak.
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I wonder to what extent Trump's win will inspire regime change in western Allies.
The panic in Canada, Mexico, and Europe over Trump's tariff proposals has revealed how weak these countries are in relation to the U.S. It's basically a meme at this point. "While you were relaxing in cafes and expanding pension benefits, we were mastering the
bladeLLM. And now you have the audacity to come to US for help!?"Why should the Trump administration open U.S. markets to regimes who fought his election, in some cases quite directly?
They backed the wrong horse, and now its time to pay the piper. Trump's tariff threats are pretty savvy, and I think he will be able to extract valuable concessions on migration and defense. But better yet would be if these countries join the movement themselves, align their policies with the (IMO more forward thinking) American policies, and get better treatment as a result.
My impression is that this 'panic' is considerably overstated, triumphalism and wishful thinking that translates into deranged twitter takes about Trump charming entire rooms of pliant European elites. Reminds me a little of the "we're the good guys again!" atmosphere among American plebs and elites both after the war in Ukraine began.
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What movement? Trump heads no movement (no global one anyway), he has no ideology other than narcissism and vague sentimentalism about the past. He has no coherent ideal or theory about how the world system ought to work in the way that Wilson, FDR, H.W. Bush or Churchill did, certainly none that can be reconciled with his actions - or inaction - as President first time round.
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I assume you mean heavy tariffs against china in a futile bid to turn back the time and reindustrialize. I don't understand how diminishing trade between US and allies is supposed to convince them to end their trade with china. When one supermarket's closed, you go to the next one.
If you don't understand, it would probably help to work on the metaphor.
A tariff barrier is not a closing of a supermarket, not least because tariff barriers already exist between American allies. That is what the EU common market is- a trade barrier between the European group of allies and their other allies, including the Americans, the Brits, and so on.
Even more relevantly, a threat of tariff barriers is not a closing of a supermarket either, particularly when everyone (should) understand that the threat is conditional on [insert trade / political concession here]. The conditionality is critical because it can be used to create and either-or dilemma of which supermarket the consumer goes to, as opposed to the consumer has no choice.
The rise of deglobalization and the multipolar world order is not a close off of markets entirely, but a process of choosing / forcing choices of which markets to associate with. Globalization may have been a 'choose any supermarket you want' dynamic, but deglobalization is a mutually exclusive membership program, where association with one supermarket will lead to increasing limits with the other.
The issue for some countries, of course, is that the two supermarkets are not anywhere near to competitive in attractiveness. The European Family, for example, is not going to fine any meaningful offers from ChinaMart on in the 'expeditionary armies to fight in your defense' market, particularly when ChinaMart is close business partners with 'WeSwearWeWon'tBlackmailYou' Russian Discount Gas, which is currently in a special hostile takeover operation against the cousin down the street.
It’s a supermarket simultaneously raising its prices while rolling out an anti-competitive new policy where you can’t buy there if you also buy from the competitor. It assumes that the supermarket has infinite leverage, that it is so unilaterally indispensable that the customer has no choice. This kind of blackmail works until it doesn’t, like russia banking on europe’s gas dependency.
Psychologically, people prefer a less competitive supermarket to being coerced in that way. I think you overestimate your leverage, and how “rational” your customers are. I’m way more pro-american than average, and even I think US allies should tell trump to take a walk.
It's not an anti-competitive new policy. It's an old already practiced by the parties which are facing reciprococity, which they themselves justified in the past on the basis of competition. Note, again, the common market trade barrier.
This is one of the issues with the supermarket analogy. Both parties are 'supermarkets', and the trade barriers have already been in play.
There is no assumption that there is infinite leverage, only that there is drastically uneven leverage. This uneveness exists- the US and China are not substitute providers for Europe's priorities, and thus Europe cannot credibly claim to go to a different provider for what Europe seek from the US.
This another of the reasons the supermarket analogy is a bad analogy. Supermarkets provide analogous goods and services- however, the US and China do not.
You seem to be conflating characterization with advocacy, as well as psychology for policy position.
Unfortunately, you cannot tell a security provider to 'take a walk' from not fighting on your side, because your consent is not required for them to not fight for you. Similarly, you cannot tell someone to 'take a walk' from no longer providing a service to you- the breakdown of the relationship is the BATNA, not the continuation of the status quo.
This is a third reason why the supermarket is a bad metaphor- it reverses the agency in the relationship. The US is not a supermarket trying to persuade a European customer to come in but which the European has plentiful alternatives- the US is the only viable service provider that the European customer is trying to convince to stay when the new boss believes it's a bad business relationship. If the European consumer believes the new price is not worth paying, that's not a victory over the no-longer-provider, that is the provider leaving an unprofitable relationship.
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Who knows how "rational" Europe is in this scenario but the US has a lot of leverage. In a world where
Europe is now
The only way for Europe to collectively mitigate these problems is to build a large military, quickly, or to develop European autarchy, relieving the need to trade with China (or possibly both!) But Europe hasn't demonstrated the ability to do that. Building a conventional navy is extremely expensive and the requisite nuclear capability is fraught (I can absolutely see Russia attacking Poland if they try to develop nuclear weapons). And this is assuming Europe can pull this off in perfect harmony instead of getting locked in another European arms race or getting dominated by the only European power with nuclear weapons (France – I doubt England splits from the US and I'm counting Russia as its own thing.)
I dunno the exact numbers involved so who knows how the math plays out. But to me it seems like the supermarket has a lot of leverage.
The relative cost of this goes down the more nakedly transactional the US gets in US-European relations. If your choices are to get bent over a barrel now by the US or maybe get bent over by a barrel later by China, cutting a deal with China is going to start looking a great deal more appealing.
A large part of US power is that it doesn't demand very much of its allies (occasional Article 5 moment aside); the more the US tries to treat its allies like vassals or tributaries, the weaker that soft power grows. And if you're stuck dealing with a transactional superpower, you might as well go with the one offering money instead of demanding it.
Give me your scenario for a US-EU war.
Yes, I agree with this. I just think that trading with China is more expensive than it seems up front because it raises a lot of vulnerabilities that need to be mitigated against (or Europe can ignore them and then risk the outcome). But who knows, maybe it's best to run the risk and not mitigate in the long run since you can ramp up profits in the short term!
Well, my point here is more that if the US and EU (broadly) aren't allies, the EU would need to plan for a potential conflict with the US, otherwise they are at the mercy of US coercive diplomacy. (I'll just add that the EU pivot to China is me accepting Tree's scenario - I'm not sure how likely this is.) I don't foresee a near-term US-EU war (in part because I am not sure "the EU" will end up being unified enough to be a military alliance) but I don't think adopting a policy of non-defense is the wisest long-run strategy - even if the United States doesn't take advantage of it, others might. I will add that at least one German defense commenter I've read has spoken about the need for Europe to secure itself against the US militarily - I am not certain if that's remotely within the Overton window, possibly it's just literally one guy. But it's an interesting perspective to read.
But, hedging aside, scenarios are fun, so, a hypothetical:
The year is 2039. It's been a bad decade for American relations with Europe, between the President's 2026 revelation that FVEYS had been aware of Ukraine's plans to sabotage Nord Stream, the 2027 "annexation" of Greenland - accomplished without Danish consent via a referendum in Greenland - and the 2029 Sino-American war, which ended as abruptly as it began when the United States retaliated against a devastating Chinese conventional first strike on its naval and air assets by using nuclear weapons against the Chinese amphibious fleet in harbor.
It's also been a bad decade for Europe generally. Since their pivot to China, they've been subject to escalating tariffs from the United States. Their new chief trade partner is still finding unexploded mines in its coastal areas, and has been spending money on domestic disaster clean up - as devastating as the US nuclear weapons strikes were, the fallout from Taiwan's missile attack on the Three Gorges Dam was more devastating, even if it was not radioactive. And Russia, still licking its wounds, has not been inclined to forgive or forget the EU's support for Ukraine - which still weighs down Europe considerably, as Russia's destruction of its energy infrastructure has resulted in Ukraine drawing power from the European grid, starving it of resources.
Perhaps it is to distract from the economic malaise and renewed impetus for Catalan secession that Spain has been pushing the issue of Gibraltar harder than usual, and in 2039 a long-awaited referendum takes place. To everyone's surprise, Gibraltar votes - narrowly - to assert its sovereign right to leave English governance, opening the door to its long-awaited return to Spanish territory. However, England refuses to recognize the referendum, citing alleged voter irregularities, possible Russian interference, and the facial implausibility of the results given past elections, and moves to reinforce Gibraltar with additional troops. The EU makes various official statements, resolutions, and pronouncements that England is to respect the will of its voters.
When England refuses to respond to Brussels, the Spanish military overruns Gibraltar's tripline defense force. England responds with airstrikes from its naval task force, only to lose her only operational aircraft carrier to a Spanish submarine. Deprived of air cover for a surface fleet, England plans to conduct a far blockade of the Strait with nuclear submarines and, to facilitate this, launches cruise missile strikes on Spanish maritime patrol aircraft. Spanish intelligence assesses that US recon assets were involved in facilitating the strike, and retaliates by announcing the Strait of Gibraltar is closed to US traffic, contrary to international law.
The United States, which has already provided material aid to England during the conflict, declares a state of war exists between the United States and Spain (again!). With US naval assets depleted due to the war with China, Congress issues letters of marque and reprisal, authorizing the search and seizure of any ship that is or may be carrying military or dual-purpose goods to Spain.
In practice, this is nearly any ship with a European destination, and US venture capitalists have a very broad definition of what constitutes "dual-purpose goods" and "Spanish destination." It's not long before all of continental Europe of smarting under the humiliation of having their ships boarded and cargoes seized by American privateers, who within six months are operating effectively in both the Arabian Sea and the Atlantic. With Spanish naval assets tied up in a game of cat-and-mouse with British nuclear submarines, Europe must decide whether to continue enduring the consequences, or commit its naval assets to breaking the Anglo-American stranglehold and restoring its freedom of navigation.
(Do I think any of the above is likely? Not particularly. But it was fun to write up! I'd be interested to hear your scenario.)
That was a fun read!
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You reversed the incentive structure of cutting a deal.
The issue with this framing is that in the non-hypothetical the EU is already getting bent over a barrel by China. This is most notable in the field of green technology (solar panels, EVs, etc.), where for a lot of notable (and sometimes ethically questionable) reasons the Chinese state owned / backed enterprises have cornered the European markets in fields that the Europeans a decade or so thought they would dominate. Moreover, the expectation of China as a forever growth market has given way to the general recognition of PRC mercantilist strategy of IP theft and domestic protectionism, which limits than reverses chinese market share of industrial production, i.e. the great big German hope.
There are other fields and contexts as well, but the construct of a guaranteed versus uncertain screwing has since been passed by the paradigm that Europe is already getting screwed by the one that is presented as the hypothetical lesser risk.
As such, this framing should be reversed for understanding the actor perspectives. There is no choice about Europe being bent over a barrel now- it's already happening- but it's already happening with the Chinese, whereas the potential US risk may be mitigated by cutting a deal.
This confuses money flows between various actors, which undermine the monetary argument.
The 2022 China-EU trade balance was roughly 390 billion Euros in China's favor. The 2022 US-EU trade balance was about 130 billion in the EU's favor. Europe is already dealing with a transactional power, and paying quite a bit for the privilege.
The issue with your framing is that you neglect a third and more relevant patron-client relationship: the protectorate. In a protectorate relationship, the patron party subsidizes the client rather than extracts the resources. In the US-European context, this subsidy has been through granting the Europeans favorable access to US markets without reciprocity for US firms to access European markets since the early Cold War.
While in economic terms there is no meaningful difference between raising taxes or decreasing subsidies, in diplomatic terms there is a difference between demanding money and offering less of it.
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The US military umbrella, while nice, is unnecessary against russia’s second rate military (insert joke about joining the ukrainian military umbrella instead).
If the US and China go at it, it would be far better for us to sit on the sidelines than to be stuck in the US supermarket. The manager’s already raising prices in peacetime, we’d better get out before he turns desperate and asks us to pay in blood.
What is the threat of ‘the US becoming hostile’? Is the US going to double the tariffs to punish us from walking away because of the tariffs? Or is the threat war, blockade, invasion? If so , then the normal human pride reaction would be to militarize, get more nukes, and cooperate with US enemies, not accept US blackmail.
But neither I nor the rest of europe appears to believe that is a real threat – what you interpret as an inability to build a large army, I view as unwillingness because of a perceived lack of need: see minimal percent of GDP invested in the military, lack of nukes despite know-how.
Tacitus famously said that the Secret of the Empire was that an emperor did not have to be made at Rome . In other words, that the senate’s power was a sham and the ‘first senator among equals’ was in reality a military dictator.
Is the US secretly a military dictator, even though we peripherals pretend it’s a business partner, or worse, a friend? To me the strongest argument against is that allied US countries who could retaliate militarily after a US invasion (France, UK) have no meaningfully different politics and geopolitics compared to countries who couldn’t (Germany, Spain, Italy, Japan, etc). If anything, western nuclear powers seem even more eager to support the US, which is the opposite of what you would expect from 'hard' power relations.
Why is the manager being desperate if he no longer subsidizes your purchases?
Again, bad market metaphors are bad metaphors, but the US economic relationship with Europe- the 'supermarket'- is not a net moneymaker for the US. The trade balance between the US and EU is, and has for decades been, in Europe's favor, in part because of trade barriers such as the European common market wall.
If you want to make a marketplace metaphor, this is the market selling to the consumers at a loss. There can be benefits for the US side of the of the trade (advantage to the specific industries benefiting more), there can be non-monetary gains from providing subdisized services, but if you want to model the relationship as a commercial transaction (shopper and supermarket), the supermarket stops losing money the sooner it gets out of the business of subsidizing goods.
This is a mercantilist perspectives that get involved in arguments of why mercantilism isn't a good strategy for countries even if it makes sense for businesses, and service-vs-good economy differences, but the business case for the US-European relationship is not 'the Europeans bring in more commercial profits than costs.'
You are not in conflict with Donald Trump when you say you do not believe that there is no real threat, you are in agreement. What you consider blackmail is just the natural extension of that consensus.
The American-European economic relationship for the better part of the last century has been an extension of the Cold War American-European strategic alliance. But instead of the classic hegemon relationship of military protection in exchange for preferential market access for the hegemon (hegemon provides client protection in exchange for money), the Cold War alliance was the inverse- the Americans gave the Europeans preferential market access in exchange for strategic deference. This started with the Marshal Plan, continued with things like the trilateral agreements for getting the Japanese and Koreans during their recognistruction phases, and continued in various forms elsewhere.
If the Europeans are uninterested, unable, and/or otherwise unwilling to provide strategic deference- particularly due to a lack of mutual need- there is no strategic basis for continuing to pay for the strategic relationship.
The result of this what you call 'blackmail'- threatening to no longer pay (via ending preferential trade access that were the forms of payment) for services no longer rendered (strategic deference and military partnership).
OK, so the main disagreement is that I think trade balance is irrelevant . Trade isn’t a zero sum game where the US sells ‘at loss’ because they have a trade deficit. It’s kind of the opposite really, given that trade surplus countries are accused of ‘dumping’ manufactured goods like electric cars or planes they supposedly produce at a loss.
The excellent american economic health has gone hand in hand with trade deficits, to the point that many have suspected that americans get free stuff while the rest of the world gets worthless dollars. I’m not saying it’s causal, just that trump’s domestic story of exploited americans might not play as well elsewhere, when he’s negotiating supermarket prices. Non-americans have their own exploitation story, and at least they're, you know, poorer.
Because I see trade as mutually beneficial, you can understand why trump’s threats look more like ‘blackmail’ to me , and I understand why to you or trump it’s just ‘putting pressure’.
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First off, Russia is currently eating Europe's largest military land power for lunch. When they finish digesting, they will be bigger and stronger than they are now, both by virtue of having acquired a larger military and by virtue of gaining invaluable combat experience, including against Europe's most modern weapons systems. (This isn't a fringe view! This is the US/NATO military assessment of the situation!) Meanwhile, Europe (which nearly ran out of munitions in 2011 fighting a minor war of choice against Libya and had to be bailed out by the United States) is militarily weaker now than it was before the conflict, in no small part due to having donated large numbers of its weapons systems to Ukraine.
Secondly - if the US pulls out of NATO/Europe, it should not be taken for granted that "Europe" will act as a collective. That's the risk, I think - not Russia deciding it wants to fight a unified Europe, but rather Russia engaging in coercive diplomacy against e.g. Estonia and Germany, France and Spain deciding they don't care.
If Europe is China's trading partner, and the US and China go at it, the US may close shipping lanes to China, either by a blockade or just incidentally through e.g. mining Chinese waters. (India may try this as well in a conflict, but I think they have less capability to do so). The reverse is unlikely - China probably wouldn't try to threaten Atlantic shipping. The likely threat, I think, isn't Europe getting drawn into a war so much as their chief trading partner no longer being able to trade.
Over the long run of state relations, there is always the threat of nation-states becoming hostile to each other if they do not share interests. Personally, I think that American planners recognize a unified Europe (and China) as the only likely competitors to their dominance over the long course of history. If Europe begins to act in a unified fashion, we should expect the United States to react accordingly. (This will be by UK-style "offshore balancing" rather than "declaring war on the continent.") In fact, I would argue that the United States has already acted in this fashion.
Does Europe [broadly] have a normal human pride reaction? For instance, in 2014, Russia threatened to cut off gas supplies to Europe. Instead of remilitarizing, Germany...doubled down on energy deals with Russia. (This was not in alignment with US interests or desires at all, in case you're under the idea that Germany is in lockstep with the States.)
I agree there is - or was - a perceived lack of need, prior to 2014, when Russia annexed Crimea. And, a mere 9 years later, Germany has finally hit their NATO 2% defense spending target. Look, I'm not saying it's impossible for Europe to reindustrialize and remilitarize in the long run. But I am saying that they haven't demonstrated the ability to do so. I think it's reasonable to assume that it will be a difficult and expensive task.
I don't think it's necessarily wise or helpful to reduce complex geopolitics to simplistic roles like "friend" "military dictator" "business partner" etc. This is particularly true when US policies are not towards Europe as a whole (although I've spoken reductively at this level) but are towards each of the separate European states, and its relations with states such as England are different to its relations with states such as France or Germany. In fact, I think a lot of the US relationship with Europe after World War Two is best explained by understanding England's strategy and foreign policy. England has, with some degree of success, managed to get the United States to embrace England's goals as its own - this is most obvious when it comes to things like "entering World Wars on England's side" and somewhat more subtle when it comes to the goals of e.g. NATO. Which were - as per the words of its first Secretary General, an Englishman - “keep the Soviet Union out, the Americans in, and the Germans down.” Does that make the US a military dictator? Friend? Business partner? Maybe a bit of all three. Maybe it depends a bit on where and when you sit.
Over the very long course of history, the Russian empire has the ability to be a competitor for the United States. It happens to be an incompetent corrupt oligarchy which doesn’t care about economic growth. But there are possible-if-not-plausible futures where a Russian empire is a superpower again.
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Building submersible suicide drones is extremely cheap though.
How do cheap submersible suicide drones solve any of the problems I outlined?
You don't need conventional navy if you sink everything that moves.
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Sabotaging the ability of large nations to sabotage the shipping of small ones, I guess. Worst case I suppose shopping by sea becomes generally suicidal for everyone.
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AFAICT Trudeau has so mismanaged Canada that populist gimmicks(and Canada may be poorer than the US, but C$250 is not going to win that many hearts and minds) can't really do more damage in the time he has left. More than likely Freeland is jumping off a sinking ship.
Yes, but the damage is the point. More damage means more for the opposition to clean up, and the less they can actually get done by the time the Eastern Big City party's time comes round again.
It's rational for him, therefore, to fuck up everything in the only way he knows how, in the same way an angry cable guy cuts the cables off so far down in the box that they need to be replaced or spliced- a bad-faith attempt to cost the next company time and money. Which is important in a "well, the other guys couldn't fix the intentional sabotage, so why not vote for the saboteurs?" context, which politics is.
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These ideas sound right out of the UK in the 50s and 60s: micromanagment flailing from one crisis to the next while the economy goes to pieces. But what possible reason does Canada have for doing so poorly? They didn't lose an empire or cripple themselves in a world war!
I'm starting to think Trump wants a go at Canada because his real estate shark senses are telling him there's cheap blood in the water.
Of the many things people have said about Trudeau, no one has ever called him competent.
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For the unfamiliar, it's a temporary suspension of the Federal sales tax on this subset of items.
It came into effect three weeks after the initial announcement, and will end two months later. Retailers are responsible for categorizing children's LEGO (intended for those under 14) separately from adult LEGO (intended for those 14+) because only the first is tax-exempt. Or they could choose not to participate, in which case they would collect and remit the tax, and the customer could file to have the GST they paid on exempt items refunded (like anyone is going to do that).
It's a horrible amount of effort and confusion for a tiny amount of tax cuts.
Downtown Edmonton's Liberal MP has put up posters advertising the GST holiday. Not billboards, posters - right next to ones advertising tattoo parlours, car enthusiast clubs, and metal shows. I've never seen a major party do that before, it strikes me as desperate.
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