🇺🇸 trump's game of thrones
Trophies, Tributes, and the Tyranny of Trade
Canada didn’t just blink — it surrendered a policy tool worth $2 billion to shield $762 billion in trade. We can blame Trump’s 72-hour ultimatum, but that only masks our bigger problem: we’ve wired our economy so tightly to Washington that a single threat yanks Ottawa off course.
In this guest post, my friend Barry Appleton unpacks how we got here, why resurrecting the old SAGIT model matters, and what it would take for Canada to secure a fair share of Big Tech’s revenue, instead of settling for the crumbs that slip through today’s tax rules. Because sovereignty isn’t a slogan; it’s a set of capabilities we choose to build (or dismantle).
*I got to meet Barry at a dinner earlier this year, and I’ve been learning a ton about trade from him. He’s a trade, investment, and digital economy expert and has his own blog, “Clause and Effect.” We love a pun. ❤️
In a stunning reversal that reveals the depth of Canada's economic dependence, Prime Minister Carney's government rescinded the Digital Services Tax just hours before implementation on June 30. Trump's 72-hour ultimatum worked exactly as intended—Canada blinked first, again.
This was no diplomatic victory; it was economic vandalism masquerading as statecraft. The DST collapsed under a simple threat. Canada chose submission over sovereignty.
Trump’s administration understands trade not as mutual prosperity but as domination—extracting submission before the negotiation even begins. These issues were never about economic principle; they were about extracting tributes to enhance political theatre. The DST, a symbolic effort to reclaim sovereignty in the digital age, collapsed under the weight of Canada's profound structural dependence on the United States.
The math is devastating: Trump threatened to disrupt $762 billion in annual bilateral trade over a $2 billion tax. Canada's structural dependence made resistance impossible. Trump's strategy is simple: threaten massive retaliation for minor irritants, forcing Canada to choose between economic damage and policy independence.
This is Trump’s trade world: where power, unpredictability, and provocation reign supreme, displacing established rules and respect. Canada’s hurried retreat underscores a deep truth that Canadians have long ignored: the "special relationship" was never special—it was transactional, and Canada has been dangerously naive.
Game Theory: Understanding Trump’s Strategy
Trump's strategy is elegantly simple: threaten massive retaliation for minor irritants, forcing Canada to choose between economic damage and policy independence. Canada consistently chooses submission, encouraging future threats. Each ultimatum transforms what should be negotiations into a series of costly concessions.
This reveals Canada's strategic predicament: we are playing a game where Trump controls the board. When your opponent can eliminate your options through structural dependence, tactics become irrelevant. Canada faces what strategists call a 'no-win scenario'—every move available to us benefits our opponent.
The DST debacle reveals a strategic vacuum at the heart of Canada's trade policy. It is not surprising Canada yielded—what is surprising is that Canada ever believed it held leverage in the first place.
Beyond Capitulation: Strategic Sovereignty
This capitulation reveals a troubling pattern. The 'special relationship' was never special—it was transactional. Trump's world operates on power and provocation, not rules. Canada's retreat signals that Canadian sovereignty has a price tag—and it's surprisingly low.
Canada's capitulation becomes even more humiliating when viewed comparatively. The UK maintains its Digital Services Tax without facing ultimatums from Washington. France, Italy, and other allies implement similar measures without surrendering sovereignty. What makes Canada different? Not economic logic, but psychological dependence. We've trained ourselves to capitulate before pressure is even applied.
Canada faces an existential choice: accept perpetual subjugation or build strategic alternatives.
Canada's misguided reliance on an outdated neo-liberal trade orthodoxy—that prosperity naturally follows a rules-based global order—must be abandoned. Neo-liberalism is dead, killed not by Canada's ideological foes, but by its closest ally. Trying to resuscitate it from the dead is as much a policy folly as it is dangerous for Canada's economic and competitive future.
This shift from a rules-based order to power-based bargaining risks not only Canadian sovereignty but global economic stability. But this is now the game. Rules based agreements no longer are guaranteed. This requires Canada to pay more attention to robustness and alternatives now more than ever.
Resilience and Retaliation: Rethinking Canada’s Options
Canada must pivot from passive acceptance to proactive strategy. Policies that think about the changing economy and the digital AI world. In this game of thrones world, Canada has to keep earning its seat at the table by showing its necessity and strategic importance. To confront economic coercion effectively, Canada needs a recalibration.
Strategic ambiguity: Keep Trump uncertain about Canadian responses, weaponizing unpredictability to increase Canada's strategic leverage. Strategic ambiguity from Canada means keeping Trump guessing about Canadian responses. This could include:
Conditional cooperation: 'We'll discuss market modifications only after tariff threats end'.
Asymmetric retaliation: Target politically sensitive US exports (think Kentucky bourbon, Florida oranges).
Timeline uncertainty: Refuse to commit to Trump's arbitrary deadlines.
Conditional cooperation: Negotiations must not proceed under duress; Canada should set clear boundaries: discussions on Canadian sovereign policy – be it digital taxes or supply management - only occur when tariff threats cease.
Rebuilding domestic capacity: Canada must also enhance its domestic capacities. Strategic sectors, such as critical minerals, clean energy, digital governance, and advanced intellectual property, should be strengthened domestically. A resilient economy is less vulnerable to foreign demands and more capable of withstanding the stress tests of trade disputes.
To respond effectively, Canada must reinforce both economic and strategic resilience. This requires re-establishing the robust Sectoral Advisory Groups on International Trade (SAGIT) or similar stakeholder consultation mechanisms that were crucial during NAFTA renegotiations.
The dismantling of Canada's Sectoral Advisory Groups on International Trade (SAGIT) twenty years ago left Canada flying blind in complex negotiations. These were not just talk shops, they were standing committees of industry, labour, and civil society experts who provided real-time intelligence and swift response capabilities during NAFTA talks, allowing negotiators to understand immediately how proposals would affect different sectors.
While the U.S. built sophisticated trade infrastructure and strategic capacity, Canada systematically dismantled ours. Canada approaches critical negotiations with ad hoc consultation. This institutional asymmetry must end. The elimination of SAGIT was not just institutional downsizing—it was strategic disarmament. We entered a knife fight with a butter knife. 🧈
Trump’s trade aggression underscores not just an economic imperative but a digital sovereignty imperative—transforming digital policy from reactionary taxation measures to proactive market restructuring and robust regulatory frameworks. Canada's sovereignty in the digital age depends critically on systemic thinking and proactive capacity building rather than incremental reactions to external pressure.
Canada's approach to digital policy exemplifies reactive thinking—taxing platforms after they have captured our markets rather than structuring those markets to serve Canadian interests. Real digital sovereignty requires upstream intervention: reshaping how digital markets operate, not just skimming revenue from monopolistic behavior.
Upcoming blog posts will start to outline the seismic shifts and how Canada needs to reconfigure its thinking to keep pace.
From Capitulation to Renaissance
The DST debacle reveals Canada's deeper strategic failure: we think reactively, not systemically. Instead of building capacity to shape digital markets, we built mechanisms to tax monopolistic behaviour. Instead of creating alternatives to dependence, we created more sophisticated forms of submission. True sovereignty requires rewriting the rules, not just negotiating better terms within someone else's game.
Canada Day 2025 must mark awakening, not just celebration. Canadians must demand their government stop negotiating from its knees. Sovereignty is strategic, not symbolic. The government must restore our SAGITs, rebuild strategic capacity, and reject the psychology of preemptive surrender.
The alternative to building resilience now is accepting permanent vulnerability to whoever occupies the White House. That is not sovereignty, it is dependency with a maple leaf. Capitulation has led nowhere. It is time to change the game. 🇨🇦
What do you think? How should Canada respond to this pattern of preemptive surrender? Share your thoughts in the comments below.
If you found this analysis valuable, please share it with others who care about Canadian sovereignty and strategic independence.
Subscribe to Barry’s blog Clause & Effect for more analysis on trade policy, digital sovereignty, and Canada's strategic challenges.
 | A guest post by
|
That's the blog form these days, Saying the same thing three times then finally something somewhat new then not talking about that global coordinated digital tax because you're saving it for a future blog post. This could have been 255 characters. Living in the navel business.
Easier said than done.