Edward Fishman on American Power in the Age of Economic Warfare
This week on the podcast, we’re sharing highlights from a conversation at the 8th Annual Haskayne School of Business PETRONAS International Energy Speaker Series held on February 11, 2026.
Jackie Forrest moderated a sold-out session featuring award-winning author Edward Fishman, whose recent book Chokepoints: American Power in the Age of Economic Warfare, explores the rise of U.S. geoeconomic strategy. Mr. Fishman is a Senior Research Scholar at the Center on Global Energy Policy and an Adjunct Professor of International and Public Affairs at Columbia University.
Joining the discussion was Robert (RJ) Johnston, Director of Energy and Natural Resources Policy at the University of Calgary’s School of Public Policy.
The conversation explores a wide range of issues, including the United States’ use of tariffs as a tool of economic warfare, the potential for expanded investment and trade between Canada and China, how such a shift might be viewed by the U.S., and key lessons from American intervention in Venezuela. The panel also discusses the prospects for a peace agreement between Russia and Ukraine, whether a weakening U.S. dollar could diminish America’s ability to deploy economic statecraft, and, finally, whether China’s growing self-sufficiency could ultimately reduce the effectiveness of U.S. sanctions and leverage.
The episode concludes with Peter and Jackie sharing their reflections on the discussion, offering their own perspectives, and examining the issues through a Canadian lens.
Content referenced in this podcast:
- Peter Tertzakian’s article on why Canada must act with urgency to diversify its export markets, “Oil, Mercantilism, and the Return of Gunboat Economics” (January 12, 2025)
- Edward Fishman’s article on how Europe should handle Donald Trump’s threats, “Want to stop Trump bullying your country? Retaliate” (February 8, 2026)
- Peter Tertzakian’s article, “The Cost of Being a Market Hostage,” (September 8, 2025)
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Episode 314 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Welcome back. So we’re going to talk today about something we’ve been actually talking about for well over a year, and that is geoeconomics, the basically economic warfare for geopolitical aims and the fact that we are at war, we in Canada are experiencing and caught in the middle of an economic war between the superpowers. In fact, the world is an economic war. We’ve argued in the past that that’s nothing new. We’ve seen it in various eras including the Mercantile era. And so Jackie, you were hosting a big luncheon.
Jackie Forrest:
Yeah, so we wanted to share this conversation from the eighth annual PETRONAS Speaker Series, and we have run previously excerpts of these discussions in the past here on the podcast, and it’s sponsored by PETRONAS and hosted by the Haskayne School of Business at the University of Calgary. And so this year, every year we have to think months in advance who would be a good speaker. I think we got it right here with Edward Fishman. He’s an award-winning author for his book Chokepoints: American Power in the Age of Economic Warfare. And Edward has spent a lot of time even working in the US government in devising sanctions on countries like Iran. So it was great to have him here in Calgary.
Peter Tertzakian:
Yeah, he was real expert and also joined by a alumni of our podcast, Robert Johnston or RJ as he’s known director of Energy and Natural Resource Policy at the Haskayne School of Public Policy at the University of Calgary. So he was on the panel and you moderated it and it was really a well attended event. 600 people.
Jackie Forrest:
Yeah. Well, we’ll switch here to a bit of the discussion, but before I do that, we will put a link to his book. It chronicles the history of sanctions. I mean, some of the lessons go back to 400 years before Christ. So one takeaway is this is not new. This has been done for a long time. Another lesson is that sanctions do need to find some structural chokepoint, and the US has a huge one in the fact that their financial system, so much of the world’s trade flows through the United States. And so he’ll talk a bit about that and he’ll also talk about the fact that over time sanctions kind of lose their power as countries find workarounds. So let’s switch to that conversation and we’ll be back with some closing comments.
Let’s start with the first question. Your book was actually, you said you finished in November of ’24 and then it was released in early ’25. And so it goes through the history of how economic warfare has been used in many, many countries, but it never talked about tariffs. Tariffs are a new form of economic warfare before they were trade policy. So maybe both of you can talk about tariffs now. One thing I got out of your book is there’s weaknesses with all of these things. So are tariffs going to be an effective tool long-term for economic warfare?
Edward Fishman:
Yeah, so the whole principle of my book is that what makes economic warfare effective today is these chokepoints. They’re asymmetric leverage that countries possess and there are really three criteria that makes something a chokepoint. You need dominant market share, you need a difficulty of substituting it, and you need the ability to weaponize it against another country without it blowing back on yourself. So the dollar is a great example. 90% of all foreign exchange transactions obviously has dominant market share. Difficulty of substituting. Good luck finding another reserve currency. You’ll be waiting for decades until you get there. And then I think the most important one in terms of asymmetric leverage, I mean this is something that’s frightening if you’re not in the United States, the US can cut off virtually any country, any company, specific company from the dollar. It’ll impose dramatic pain on that specific company.
We saw this on Lukoil and Rosneft a couple months ago, and it won’t affect the United States at all. So it’s totally asymmetric. When it comes to tariffs, let’s go through that list. So does the US have dominant market share? Well, the US is the biggest importer in the world and ultimately tariffs as their import taxes. So what you’re really doing is you’re weaponizing other countries access to your market. The US is the biggest importer, but we only account for 13% of global imports, 13. Substantially lower than the 90% market share we see for the dollar or for AI chips. And so for most countries it’s actually pretty survivable to not be able to sell into the US market. We actually saw that last year where Brazil and India for a long period of time were hit with 50% tariffs and both countries still managed to dramatically increase their exports.
For Canada, obviously it’s a little different, Canada sells 75% of their exports to the United States. You might say, “Well, for Canada it is a chokepoint and it’s difficult to substitute,” but I think it actually fails on this third criteria. Is it something that the US could weaponize asymmetrically against Canada? I don’t think so because Canada’s also a massively important trading partner to the United States. If the US were to cut off trade with Canada, it would obviously be devastating for Canada, but it would also send the US economy into a recession. And if there’s one Achilles heel for us economic warfare, it is that we have a very low political pain tolerance when it comes to our markets going down even by a percentage or two. So I do not believe that tariffs are an effective tool of economic warfare.
Jackie Forrest:
And RJ, we had the threat of 25% tariffs on energy earlier this year. Based on that, do we have to worry about that coming back? Are there are discussions that maybe that’ll come back?
Robert Johnston:
It’s funny being on the stage with Eddie because usually I’m the optimistic one and now I feel like I need to be pessimistic a little bit, if you’ll indulge me. I think Eddie’s point on Canada obviously are very well-made that we sometimes forget because we wonder constant assault here from south the border, rhetorically speaking at least, yesterday was the bridge in Detroit and it’s something new every day. But Eddie’s core point about our economic interdependence, including energy where there’s no real substitute for our heavy oil flows into the US Midwest and Gulf Coast. We talk about Venezuela later. That is a source of strength for us.
But I want to make a different point, which is I think what the whole world, including Canada is getting used to that comes from Eddie’s book, is the idea of tariffs being deployed not just as an economic tool to protect a particular sector or to resolve a dispute on economics with some country trading partner, but as bleeding into this sort of national security domain. So we’re living in a world where national security tools, most of the stuff in your book was talking about adversaries, as you mentioned. Now these tools are being deployed against allies and I think for Canada and other middle powers, it’s sort of hard to know where we fit into that world. So that was one of my key takeaways from the book as well.
Jackie Forrest:
Okay, well on that, let’s talk about the middle powers. You may have heard about this speech by Mark Carney at Davos.
Edward Fishman:
I haven’t heard about it. He gave a speech?
Jackie Forrest:
Right, and of course it made news around the world. And we talked about the middle powers need to collaborate to defend their interests, and you just recently put this article in The Guardian, which I do recommend people check out, and you talked about what do you do about Donald Trump if you’re some of these countries, yours was specific to Europe. So I guess the question for you is do you think that the middle powers should collaborate? Do you agree with Mark Carney and what should they do? What coordination should be happening?
Edward Fishman:
Look, I’m always hesitant to give advice to people living in other countries because you guys know your situation the best. But what I will say, looking at the countries that I think did the best job in 2020 of dealing with Donald Trump’s tariffs, there are really three countries that stand out to me. It’s India, Brazil, and China. If you look at sort of the what did they do that was well, I came out with these three factors that were common. The first is what I would call resolve, and I think India is a great example. In August of last year, Trump whacked India with 50% tariffs, ostensibly because India was buying Russian oil. I think most people believe it was because Modi refused to nominate Trump for the Nobel Peace Prize, which Cardinal sin as we all know. So what did Modi do? He didn’t sort of scurry to Trump hat in hand ready to make a deal the way the European Union did a couple months earlier.
What he did was he galvanized public support to endure some short-term pain. He basically carved out this public stance of defiance and look, I’m married to a woman whose parents are from India. I can tell you that Indians, I think elbows up would’ve also applied to India in August and September of last year. And so I think that resolve was really important. The second factor is what I would call resilience. And Brazil I think did a really good job with this and that’s can you adapt? Can you find other markets for your product? So Brazil had been selling coffee and beef and all these types of things to the United States. They quickly said, “We need to find other markets.” And they started selling more to China and other parts of Asia. And so Brazil literally had the single best year for its exports in 2025, despite the fact that it was under a 50% American tariff.
And I think if you look at it from the US perspective, I think the White House has to respect that and say, “Wow, these guys showed that under our coercive pressure they could adapt.” And I’ll note that Trump had actually imposed sanctions on a Brazilian Supreme court judge who had been prosecuting Bolsonaro, the previous Brazilian leader. He actually dropped those sanctions a couple months ago, very quietly. So Trump has backed off this policy from Brazil, I think largely because Brazil showed resilience. The final factor that I think is really important is retaliation. Countries are very uncomfortable with this, but to be clear, the single biggest economic story of 2025 par none was not the Liberation Day tariffs. It was China’s export controls on rare earth elements to the United States in April of 2025, because that’s single-handedly discredited the China Hawks in the Trump administration and has pivoted US policy in a much more dovish position on China.
Because what China showed was that it actually had the ability to idle American factories in the Midwest just by weaponizing this chokepoint. I think it really rattled the Trump administration and it showed frankly that when countries push back, they can actually establish some level of deterrence. There’s not necessarily an escalatory spiral, right? It’s not necessarily that you’re going to wind up having the US and try to impose even tougher sanctions and it’s race to the top. It actually wound up being de-escalatory with United States. So I think that is an important lesson that all the middle powers have to internalize.
Robert Johnston:
Yeah, and Eddie, I think the rare earth story is such an important one because just this last week it really did rattle the Trump administration in part was actually returned to a multilateral table for resolution. They actually reached out to 57 countries to try to form some kind of trading alliance around rare earths that would include price floors and joint finances. Wow. This was like the first Trump administration, or even dare I say at the Biden administration, but it’s probably one of the only examples where the Trump folks have opted for a multilateral approach instead of a unilateral or bilateral approach and think it’s because precisely the vulnerabilities around rare earths vis-a China are so high.
Edward Fishman:
Yeah, I agree.
Jackie Forrest:
Okay. Well, RJ, I put the Canadian overlay here. So those are great tools to be used, but when I look at the Canadian circumstance, I don’t know that we have them. We can’t just, like India or Brazil, just start exporting our products to other markets because we don’t have the infrastructure. What can we really do to retaliate against a country that we share the border with, but also like 80% or 75% of our trade? Do we have options like that?
Robert Johnston:
I’m glad you both mentioned the Brazilian infrastructure because if you’ve been down there, it’s pretty incredible. I mean, for 25 years they’ve been thinking about how to get agriculture and metals from the interior to the coast and on the world’s largest vessels to China. So they’re way ahead of us on that front. So there’s probably some lessons for Canada on that front. I think it goes back to what Eddie said, which is we know that we can build more market access to Asia Pacific. We’ve done it with TMX, we’ve done it with LNG Canada. It’s just taking too long.
So I think the message that Eddie said about our country’s willing to take some pain in the short term while you’re building those diversification strategies is the real question. Will we have the patience? Will we have the determination to do it? I hope we do because unlike most other countries, to your point, Jackie, we have such a large relationship with the US that it’s going to be much harder for us to diversify than Brazil. Brazil already had a huge relationship with China. They already had the infrastructure. So to Eddie’s point, the question is whether or not we’ll have the resolve, your first of your three Rs, to actually see this through.
Jackie Forrest:
We’re going to talk a bit more about pipelines, but let’s move to Venezuela, on a lot of people’s minds at the start of this year. Actually you need to add another chapter because there was no chapter on Venezuela, but there’s obviously been decades of sanctions on that country. Yet in the end, military intervention was needed to pluck Maduro out of the country. What can we learn from this? Does this say that if we have to put sanctions in place over decades, then they just don’t work and military is the only option?
Edward Fishman:
Look, I’m often asked, I think one of the most basic questions, anyone who works on sanctions is asked is do sanctions work? It’s actually a fairly common question. The thing I always found peculiar about that question is I also had the good fortune. In addition to working on economic statecraft in the US government, I also worked at the Pentagon for the Chairman of the Joint Chiefs of staff, so the top military advisor to the President of the United States. And one question I never heard asked at the Pentagon ever is, “Does a bomb work?” Well, obviously. A bomb works to blow things up, but it oftentimes doesn’t necessarily get you the political change that you want. I mean, look at the US War in Afghanistan, right? We wiped out the Taliban pretty quick. We stayed there for 20 years, we left and then the Taliban came back to power.
So what I’d say is that generally speaking, coercive economic statecraft is really hard. The best way to judge sanctions is based on the purpose that you set out for them. What is your actual goal? If your goal is regime change, if your goal is to use sanctions to push another leader out of power, if I was your advisor, I’d say you better think of a different goal. Or if you’re serious about regime change, you got to think about the use of military force. There are very, very few examples in history where economic pressure has led to pushing governments out of power. I think the lesson from Venezuela, and I think it’s a frightening lesson honestly, when you think about Trump, is that if you set your goal too high, if you set an unrealistic goal for economic pressure, you may be inadvertently putting yourself on a slippery slope to military pressure.
Because in the first Trump term, going back to 2018, 2019, that was when Trump said, “We’re going to do maximum economic pressure on Venezuela to try to push Maduro out of power.” And they said Maduro is an illegitimate leader. They recognized a different leader of Venezuela, a guy named Juan Guaido at the time, I believe in 2019, they imposed sanctions on PDVSA and stopped importing oil from Venezuela. And then of course Trump comes back in 2025, he looks at this file and he says, “Well, Maduro is still there, so let’s try maximum pressure again.” So they try it again and they realized that the only thing left on sanctions, the only other sanction you could possibly do to potentially pressure Maduro, would be to threaten secondary sanctions on Chinese refineries and banks who are buying Venezuelan oil.
Well, as I mentioned a few minutes ago, after the Chinese rare earth embargo, the US has been very cautious about doing anything that might inflame economic tensions with Beijing. So I think we sort of inadvertently got ourselves down this path where because we had set the goal so high at the beginning that we needed to get Maduro out of power, that we inadvertently put ourselves in the path to military force. And I do worry that when Trump does come out and say, “We need to push the Iranian regime out of power,” or, “We need to annex Greenland,” that sort of rhetorical commitment sometimes can lead to policies that might not have been intended or rational at the outset.
Jackie Forrest:
Not rational behavior. Interesting. Okay. Well, obviously as Canadians we’re very concerned because there’s a broader issue here with this US ambitions for dominance in the Western Hemisphere, which we are part of. And one of the reasons, there were many reasons for why the actions in Venezuela, but one was while the Chinese and Russians, they were getting too close because actually the sanctions just pushed them more towards those authoritarian type countries, and we didn’t want them having this position so close to the doorstep of the United States.
Now here we are in Canada, we want to build this pipeline. Because we’ve made it so hard to build things like oil pipelines, I don’t know that a western publicly owned company is going to build an oil pipeline here, and you know that our prime minister just made a trip to China where they signed an MOU to maybe collaborate on energy and even have China invest in our energy infrastructure. Would that be acceptable to the Americans or would they view that as a threat, maybe as they did with Venezuela? And I’m sure you’ve put a lot of thought into this as well.
Edward Fishman:
Look, again, I’m always cautious to give advice to people in other governments. I would be cautious though about getting too much in bed with China because I’m quite confident that US policy is not going to be adversarial toward Canada forever. We have two close of cultural ties, family ties, we are neighbors. Geography is not going to change. So while we may have dustups every once in a while, I don’t think we’re going to be adversaries. One of the few things I do believe there’s political consensus on in the United States is that we should not be more deeply integrating ourselves with China. So while would Chinese investment be acceptable to finance construction of a pipeline in sort of a minority ownership sense? Potentially. But would it be a good idea to allow China to control Canada’s infrastructure or a good idea for the Canadian auto sector to be completely reliant on China?
To me, I think that would be not just bad for US-Canada relations, I think that’s bad for Canada. I mean, China is an authoritarian rival superpower, right? They’re a country that has a totally different vision of the world. I heard Mark Carney’s speech. I was kidding when I said I hadn’t listened to it, and he talked about Canada standing up for liberal values. What does that mean if you are totally beholden to the Chinese Communist Party? So while I think it does make sense to selectively engage with China, I would be wary of becoming overly dependent on China.
Jackie Forrest:
Add another question. There’s been talk that the Americans want to revive the Keystone. They want to build, and I don’t know if the economics or the fundamentals support that. Would they want us to sell our oil to China? Could you see them launching tariffs on us or some other type of economic warfare to stop building a West Coast pipeline?
Robert Johnston:
There’s two things. One is as far as Keystone goes, I think if you tie that back to Venezuela and Trump’s public statements, what Trump wants, as crazy as it may sound, is a flood of oil in the US. He wants low gasoline prices. He’d love to have Venezuelan exports, Canadian exports, Keystone XL. The more, the better. That may not be what the shale industry in Houston wants to hear, but that’s the direction he’s going because his main concerns politically are inflation and affordability. As far as the Chinese investment goes and trade goes, it’s important to remember that the US itself is a massive exporter of commodities to China. So that part of it I think is okay.
The question that Eddie laid out around ownership structure and influence over the infrastructure is where the bright lines are. But even that, my own view is that investing in energy infrastructure, oil and gas is probably less politically sensitive in Washington. Then investments in the electrical grid would be a sensitive area. Investments in nuclear critical minerals, electric vehicles, that’s where the real tension points are on US-China relationship. So I think the oil and gas, I think there’s a little bit more room for cooperation.
Jackie Forrest:
Okay. Well, let’s move over to Russia, another hot spot here in geopolitical warfare. I have noticed that there’s been a trend of more sanctions coming on Russia, Rosneft and Lukoil you talked about. Sanctions on India recently while they threatened a tariff and took it away so they would stop buying the Russian oil, seizure of these Russian shadow fleet tankers. So do you think this is going to help push us towards a peace deal and what are the chances of a peace deal? I’d like to hear from each of you in 2026 at the beginning of the year, hopes were high, but I think they’re starting to fade.
Edward Fishman:
The Russian economy is hurting. I think one of the big myths I hear out there is that Russia’s sanctions have been ineffective. My response would be, well, compared to what? Right? Had you not done sanctions on Russia, what would Russia’s economy look like right now? I mean military Keynesianism, the idea that you’re just funneling all of your state resources into building capacity for your military, generally speaking, it’s very stimulative for an economy, right? Meanwhile, Russia’s economy right now is in stagflation, right? They’ve effectively zero economic growth, inflation well over 10%. They’ve had interest rates that have been hovered between 15 and 20% for a long time. There’s basically nothing, no productive investment in Russia outside of the government funneling money into the military. So the Russian economy is hurting. And I do think that specifically the sanctions on Rosneft and Lukoil, by increasing the risk premium of buying Russian barrels amongst refineries like Reliance in India has clearly blown out the discount for Russian crude.
If you look at Russian crude, the discounts now are getting to 15, $20 a barrel. We haven’t seen discounts like that since late 2022, early 2023. So I do think Russia is heading for a substantial economic collapse. The question is, can we in the west keep our political will behind this kind of a strategy? Right now, the weak link is clearly the United States because Trump has never had this view that Putin is a bad guy. I think Trump would love if he could to find an excuse to lift sanctions and to start doing business deals with Russia. I think the check on that is that there’s this very, very little political support for that policy in the United States, even within his own party. I mean, Republicans routinely say we need more sanctions on Russia, more sanctions on Russia.
So I think if Trump honestly could see the light on Putin and decide that it was time to put some more pressure on him, I do think we could potentially get a peace deal in 2026. But because I’m skeptical of that, because I do think that you’ll still see Trump being a bit lukewarm about pressuring Russia, you won’t see full-throated support for Ukraine militarily. I think we’re more likely in some sort of a stalemate where this sort of quasi-frozen conflict that has a lot of death on a daily basis keeps going on.
Robert Johnston:
Yeah, I would just add that the discount that Eddie mentioned, that’s especially painful coming off of a $50 oil price versus an $80 oil price.
Jackie Forrest:
Because of this cap policy.
Robert Johnston:
Right.
Jackie Forrest:
Yeah.
Robert Johnston:
So they’re kind of getting hit twice at this point. And I would also echo what you said about the Trump administration. Because they’re such an activist revisionist foreign policy, they’re juggling a lot of different files, including with allies. So the ability to focus and get some big deal done with the Europeans and Ukrainians and Russians seems to be pretty improbable.
Jackie Forrest:
Okay, well, let’s move to China. China is a big part of your book, and the difference with China is they have a lot of things that make the west vulnerable. And if you think about today, they have the critical minerals, they have clean energy, a lot of the inputs to clean energy, not just the critical minerals, but a lot of the technologies that go into it, and they’ve shown that they can yield those things against the west. The one thing I think the west has that I got out of your books is the advanced computer chips and the fact that China can’t do those yet and that we’re ahead on AI, although depending on what you read, maybe China’s ahead, it’s a race that seems like it’s very close. So if you think about five years from now, do you think that China has got any vulnerabilities? Do they make their own computer chips? Did their AI get to the point where the west really has no levers that they can pull against them?
Edward Fishman:
I’m glad you asked this because I think, and this sort of loops back to the conversation about Canada and China, to be clear, what the Chinese Communist Party is trying to do, what Xi Jinping is trying to do, they’re going for full self-sufficiency, right? They want what economists call autarky, where any sort of high-end technology, they want to do it all themselves from the rare earths to the batteries to the actual finished vehicles themselves. And if you look at what they’ve accomplished in the auto sector, I mean it’s awe-inspiring. Right? I think five years ago they made a fifth of the number of vehicles that Ford makes, and now BYD makes more vehicles than Ford every single year. They’re now by far the biggest auto exporter in the world. And so you’ve got to honestly be impressed by their industrial policy, and I think they’re going to continue doing this.
I think they look at countries like Canada and even like the United States and their vision of the world as commodities producers, we’re going to give them oil and maybe some agricultural foodstuffs and stuff like that, and then they’re going to be the ones making the technology. What I’ll say though is they’re still a long ways off from that because on frontier technology, it’s still Silicon Valley that really dominates. And when you look at the rare earth export controls from last year, I mentioned the biggest geoeconomic event of 2025, a lot of people came out of this saying, China has escalation dominance over the United States. Basically, China has bigger economic weapons than America has, and I actually think that’s not right. I think the US still has more economic leverage over China than the other way around. I mean, China is completely dependent on the dollar for its foreign trade.
One of the most interesting statistics that I came across when researching my book, so China is by far the world’s biggest exporter. I think 120 countries consider China their top trading partner, and yet only 30% of China’s own trade is settled in RMB. They settle 70% of their trade in the dollar. And you got to think they’re selling stuff to other countries. They should be able to say, “Pay me in RMB,” right? People have talked about the petroyuan. Why isn’t Saudi Arabia paying China RMB for their oil? It’s because the dollar is the dominant reserve currency and it’s got tons of advantages that the RMB doesn’t have. That’s a huge vulnerability that China has right now, and they’re not going to break it anytime soon. We mentioned advanced semiconductors. China cannot make advanced AI chips at scale, and while China has incredibly impressive human talent in terms of AI researchers, they’ve got amazing energy resources which are really important when it comes to data centers.
If they don’t have the chips, they’re not going to win the AI race. The US is going to win the AI race. That’s why I think China is trying to maneuver to get access to more advanced NVIDIA AI chips right now. I think the difference between China and the US, it’s not in terms of economic leverage. It’s again, it’s in terms of this political pain tolerance. Maybe the US has a 10 out of 10 leverage, whereas China has a seven out of 10 leverage, but the US isn’t willing to take even a one or 2% hit to GDP or the stock market, whereas China is. And so I think that’s where China has the advantage. It’s on pain tolerance. It’s not actually on economic leverage.
Jackie Forrest:
Okay. Well, let’s talk about the dollar because there’s been a lot of views in the last year since your book’s come out. Concerns about the long-term strength of the US dollar driven by their rising debt, the increased use of sanctions which are causing some oil payments that are made outside of the US dollar today, and questions about the Federal Reserve’s independence. So do you have confidence that the dollar’s going to remain a tool that the Americans can use for economic warfare, or does the dollar start to reduce in its relevance?
Edward Fishman:
So I think the dollar is pretty secure as the world’s leading currency over at least the next decade, but I do think we are at an inflection point in which we could potentially go one of two ways. I don’t think that if you zoom out sort of fast-forward 10 years that we’re going to be exactly where we are today with the dollar. One scenario, which I think is slightly more likely, maybe 60% likelihood, is that the dollar very slowly loses share across the key use cases of money as a unit of account, medium of exchange and store value. More and more of these Chinese payments will be settled in RMB instead of dollars. I don’t think they’re going to get to a hundred percent, but they’ll continue to chip away. Countries like in Europe, I think will successfully use the Euro for more of their trade.
It’s possible that central banks continue buying up more gold and relying on commodities instead of the dollar for reserves. And so in that world, the dollar is still sort of the king of the hill when it comes to currencies, but it’s slightly less powerful than it is today. There’s another possibility though, and it’s actually the possibility that I think the Trump administration’s going for, that Scott Bessent, the treasury secretary is going for, which is actually to usher in a new era of even more comprehensive dollar dominance. And that would be a world where everyone around the world is using dollar peg stable coins to do everything. From paying your employees in Turkey to getting out a loan in Argentina. And something that I don’t think has been given enough attention is that within just a few hours of Nicolas Maduro turning up a few miles from my apartment in New York in the Metropolitan Detention Center in Brooklyn, the State Department came out and said, “Now would be a good time for Venezuela to adopt the dollar and dollar peg stable coins as their own domestic currency.”
And the petroyuan, which actually had been used by China to pay Venezuela for oil, that 500 to a million barrels a day is now being paid for in dollars. So I do think there’s a world where, and again, I don’t think it’s necessarily the base case scenario, but it’s significant chance maybe 30, 35% chance that we actually could have a period of even greater dominance five or 10 years from now if the Trump administration’s strategy on stable coins actually works.
Jackie Forrest:
So you haven’t put all your savings in gold, I guess?
Edward Fishman:
No. I wish I had because I’d be doing very well. And look, I think that there is a role for diversification. I’m not saying that the dollar is totally secure, but I think that we’re not quite at the point yet where I think the floor is going to fall out from under the dollar.
Jackie Forrest:
Okay. We only have a little bit of time left. Let’s talk about the negotiation of our free trade agreement, the CUSMA, or as you call it, the USMCA on your side of the border. There’s a lot of concerns around that in Canada today. We are protected from a lot of these tariffs because we’re still… Many of our products are, almost all of them are under the Free Trade Agreement. What do you think the chances are that the US keeps that agreement in place? Or do you think that they cancel it, I think this year?
Edward Fishman:
I’ll go first. I’m curious what RJ has to say. I’m quite confident that this will be renewed. A point that, I think RJ you mentioned before. In Canada, I can imagine that sometimes it feels like sort of sitting ducks. So vulnerable to this giant economic power south of you guys. But it’s important to note that the economic relationship between the US and Canada is actually not one of one-way dependence. It’s not one where Canada’s totally dependent on the US, but the US can say, “We no longer need Canada.” As I said earlier, if we were to cut off all trade with Canada, if we were to have massive tariffs on Canada, that’s going to send the US economy into a recession. That’s going to be terrible for manufacturers in the Midwest who are relying on supply chains from Canada. It’s going to be terrible for our refineries who are dependent on three, 4 million barrels of crude oil coming from Canada every single day.
I think ultimately the reason why Trump backed away from his 25% tariff threat on Canada and Mexico earlier this year, why so much of the trade in 2025 was classified as compliant with USMCA is because there’s a realization in Washington that a rupture between US and Canada would be really, really bad for the United States, might be worse for Canada, but it would be so bad for us that it’s not worth it. So it may be easy for me to say for my position, but if I had to bet, I’m quite confident that USMCA or in Calgary, I’ll pay my respects, CUSMA will be renewed.
Robert Johnston:
It’s funny, after 25 years of living in the US as a Canadian, I started saying USMCA too. So I need to go back to CUSMA. But look, I think if Trump renews CUSMA, it will be because he’s been forced to by congress, governors, CEOs, unions, people who actually want the status quo. But don’t forget, our own prime minister’s been talking about a new framework, and I’ll be curious to see if whatever deal lands is not just about trade, but about issues in your book. What is the joint US-Canadian policy towards China, as we discussed earlier, what are we doing the Arctic vis-a Russia and China? What are we doing in critical minerals? So I think the next CUSMA that comes out is going to look a lot different and have a lot more elements of the US-Canada relationship on the table.
Jackie Forrest:
Okay. Well, we’re finishing on a positive note. Thank you so much, RJ and Eddie, for all of your thoughts. So thank you very much.
I hope everyone enjoyed that discussion. Glad we could bring part of the luncheon right here to you, wherever you are listening to the podcast, let’s talk, Peter, about some of the things that we agreed with and actually we’re pretty optimistic. He talked about the fact that Canada has some leverage here and that the US is vulnerable because of all the trade they do with Canada and that because of that, he felt that we do have some leverage in terms of these negotiations on the trade agreement, or if they try to use economic force on us that it will hurt them because he talked about the fact the Americans have very low tolerance for pain, and if the stock market falls or bond rates increase or companies complain or state governors complain, Trump will listen to that. And so I thought that was a pretty optimistic message.
Peter Tertzakian:
Yeah, I do think, I mean it’s this… I hate to use the nuclear analogy, but it’s the mutually assured destruction or mad construct where one side uses nuclear weapons against the other. The retaliation in nuclear weapons means both sides are losers. And I think this sort of applies economically that if the Americans go too far in threatening Canada economically, then they stand to lose as well. Or if they actually do throw major economic bombs at Canada in terms of tariffs and sanctions, it basically hurts both economies and that the Americans have a low pain point, as you said, for things like inflation and other negative effects on their economy. So he was optimistic as you heard about the negotiations that are going on with the Free Trade Agreement and that we may expect to hear something positive out of that. What do you think?
Jackie Forrest:
I think he’s got a lot of great points, and I mean he even saw it in last February about a year ago when I think at one point I get mixed up with all of the different threats, but it was something like 35% tariffs on everything and then 10 on energy and they kind of backed down on that.
Peter Tertzakian:
So I buy into the notion for sure that there’s mutually assured destruction in terms of the economic fallout of going too far. I do also buy into the fact that we are likely to see some sort of free trade agreement. I do know that there’s sorts of ongoing discussions behind the scenes, and I’m taking one step further that is it good for Canada to fall back into a free trade agreement given the experiences we’ve had over the course of the last 18 months in this economic warfare? And I hope it doesn’t diminish the urgency of diversifying our export markets and getting things going as fast as possible.
Jackie Forrest:
And we will put a link to some of your articles on that. You had a great article on why we need to act quickly. And also I don’t think it’s going to be just as easy maybe as Edward talks about. I could see a scenario where they cancel the agreement, create a lot of noise, and then eventually come back because it hurts them too. But I don’t know if it’s just going to be all smooth. I think we should expect some surprises.
Peter Tertzakian:
And there’s also the other factor here, which is Mexico, because if you use the acronym CUSMA, Canada-US-Mexico Agreement or USMCA, which is actually the real legal name, but putting US first is a US biased construct, whether it’s CUSMA or USMCA or I guess the Mexicans may, I don’t even know. Do they use MUSCA?
Jackie Forrest:
I don’t know.
Peter Tertzakian:
No idea
Jackie Forrest:
Something.
Peter Tertzakian:
But whatever comes up, I mean, this whole construct also depends very heavily upon Mexico.
Jackie Forrest:
Okay. Yes. So let’s talk about that because another message that Edward had for us is he warns Canada to not get too close to China. He says there’s a broad bipartisan agreement that is hawkish on China in the United States, and whether you’re Democrat or Republican, you don’t like doing more business with China. And he thinks that Canada getting too close to China for trade will be a challenge for the US to accept.
Peter Tertzakian:
Well, no, I think we do have to explore or actually go beyond exploring having investment from countries like China and others to diversify our economy. I think Edward Fishman’s comment about not being too hostage to any one interest is really important. In other words, he talked about market share or economy share, we’ll call it. So when we have a situation, for example, where 90% of our oil exports are dependent upon the US, well, we’re complete hostage in terms of the pricing and we’ve talked about that. But if you can diversify enough to various countries, whether it’s less export dependency on any one country or jurisdiction, and also limit the percentage of influence through foreign investment in any one industry, basically not get too close to any one country, I think it’s fine.
Jackie Forrest:
That other point that was discussed is this idea of our West Coast oil pipeline. What happens if the Chinese were to invest in a West Coast pipeline? Would that be acceptable? And Edward thought it would be acceptable if it was non-majority and if they didn’t have influence. So that’s good to know. Also, I brought up the idea and the Americans seem to still want to build a keystone, which fundamentally, there doesn’t seem to be a lot of reason to build a keystone anymore. If Venezuelan oil is going to flow to the Gulf Coast, do we really need a keystone? But if they really pushed for a keystone, it would make it harder for a West Coast pipeline.
Peter Tertzakian:
Well, we have to think strategically. I mean, as I said, we’re already heavily shackled to the US market to our detriment because of the differentials. And we’ve talked about that. We can even post a couple of articles we’ve written on that. The imperative is to diversify our markets. Our markets not only if there is a demand pull from China, it’s from Southeast Asia, it’s from India. So if they want to come and invest as minority capital providers and bring in also sovereign wealth funds from the Middle East and others to help finance, and then ultimately we benefit because the export revenues lead to royalties and taxes and prosperity and jobs using other people’s money, that’s fine.
I mean, that was the formula we have used to develop many of our resource industries in this country over the past a hundred years. I did a calculation about half a dozen years ago of how much of our oil and gas industry was actually funded by foreign investment dominantly the United States, and it was like 70 plus percent of the near $2 trillion that’s been invested over the course since post World War II. And so if you think about that, I mean, we are prospering today of some $20 plus billion in royalties alone, another five or six in cash taxes per year because we used other people’s money to fund our infrastructure. And that’s okay, as long as it’s not a majority of concentration from one source,
Jackie Forrest:
They build a pipeline and be like, “You must sell it to us only, and now we get price discounts because we don’t actually have optionality.” I totally agree with you. A lot of people don’t really understand that, but we were going to just fund this infrastructure with our own cash flow, it would take forever. We need these big amounts of capital to come in and even LNG Canada. There’s foreign ownership in that. And that’s a great thing because we needed that investment-
Peter Tertzakian:
Sure. Korea, Malaysia-
Jackie Forrest:
… in our country.
Peter Tertzakian:
… Japan. I mean, it’s the-
Jackie Forrest:
Yeah, even China.
Peter Tertzakian:
China. So it can create a win-win situation. The only issue, and Edward Fishman brought it up is excessive dependency and that makes you vulnerable.
Jackie Forrest:
Exactly. And I think that’s a lesson that’s throughout his book. Now I just want to quickly move away from Canada, a couple of hot spots here. One of the things that when… And I actually read the entire book, Peter. To be honest, I listened to the audiobook, which was like 17 hours or something like that.
Peter Tertzakian:
That’s great. I love audiobooks,
Jackie Forrest:
But I learned a lot. But one of the things I learned is that if you really look at it, these sanctions don’t seem to do anything, right? Has Russia stopped producing oil or even reduced their oil production? Barely. Has Iran stopped trying to get nuclear weapons? No.
Peter Tertzakian:
North Korea?
Jackie Forrest:
Yeah, like Venezuela, there’s a great example, 20 years of harsh sanctions, and they still had to have a military intervention at the end, but Edward brought this new framework that you can’t just look at it that way. You have to look at the counterfactual. What would Russia look like if there had been no sanctions on the country? And they’re really an economic basket case. They have zero economic growth, very high interest rates, high inflation, no one’s investing in the country. If you hadn’t done all those financial war with them, they’d be a much stronger country right now, and that would make it even harder in terms of the situation in the Ukraine.
Peter Tertzakian:
Yeah, well, sanctions definitely hurt in the near term. And as you pointed out, it can really make a country limp, but it also makes countries more clever about how they go around sanctions eventually. And authoritarian regimes figure out all sorts of things, whether it’s shadow tanker fleets or other means, or trading with people that don’t care about the sanctions, for example, the Chinese. I think what’s more important when we think Canada to defend ourselves going forward against any of these geoeconomic weapons is to shield ourselves through diversification of our markets and anticipate these things and think strategically rather than short-term as we have in the past.
Jackie Forrest:
Okay. Well, let’s wrap up too with a few thoughts. One thing that gives the Americans so much power, if you go back many years ago, 10, 20 years ago, a lot of times sanctions were done collectively through the UN or the G7, but lately Americans have just been doing it on their own because they hold that vital chokepoint, which is the fact that something like 80 to 90% of all export trade goes through the US. He had an example in the book, if you’re an Indian refinery and you’re trying to buy crude oil from Saudi Arabia, well that money flows through a banker in New York, and that’s what gives the Americans the power is the US dollar and the fact that all this trade is done in the US dollar, and of course there’s concerns that the US may lose its dominance and therefore will lose its power. Edward actually thinks that’s not the most likely scenario. So that was kind of interesting. And so maybe the Americans will continue to have this ability to inflict some pain on bad actors.
Peter Tertzakian:
Yeah, I think he was, in my opinion, a little bit dismissive about this. I mean, his notion of the way he talked about the US overwhelmingly controls the world’s financial systems, the dollar is a reserve currency, and therefore that economic stick is the biggest one in the toolbox. But we talked about sanctions just previously, and its impacts is that there’s sort of a long consequence of sanctions. And in this instance, and what we’re witnessing over the last few years is that countries like China and others are starting to set up their own financial systems. The Chinese have their equivalent now to the SWIFT system with the payment system globally, and more and more countries are starting to get on that one because they don’t want to be shackled to this overwhelming dominance by the Americans. And so I felt he was a little bit dismissive about the potential that the US could lose quite a bit of power or that the Chinese can erode over time, maybe quicker than we think the ability of countries to get around the American dominance of the financial system.
Jackie Forrest:
Yeah. Well, and China is for sure the candidate country here that has the potential to really decouple itself from the Americans. He doesn’t think that China really can become self-sufficient in a few areas. These advanced computer chips and AI, he still thinks that it will be difficult for them to figure out how to do that as well as the Americans, and therefore they’re always going to have some weakness, even though they have strengths in things like critical minerals and clean energy technology. And because they lack those chips, he also thinks that the US is going to dominate in the AI race. And so you’ll continue to be able to have some ability to get China to behave. And you’re saying, “Well, China’s done such a great job at dominating so many areas, and it’s not just the transfer of money, but it’s the technology that they use.”
Peter Tertzakian:
Yeah, I must say I’m skeptical of his conviction that the US is going to be dominant in things like semiconductor technology and AI chips, because he said in his comments that he was blown away by the ability of the Chinese to dominate the car market in only a decade and other areas like batteries and so on. So I’m thinking, well, all right, I think it’s pretty amazing what they’ve done, so why wouldn’t they be able to do it in semiconductor technology as well? And they have definitely a determination to do so, and therefore also a determination to dominate the AI thing. So I think that this is not a world in which any country, strong, mid-power or weak can underestimate the potential changes and the ability of clever people and their determination to get around these sorts of economic things. And it’s going to increase because this is, as I said at the outset, this is an economic war.
And let me look at the Ukrainians in kinetic war, like real warfare, smaller country to Russia. And it’s thinking of all sorts of clever ways with our drone technologies to be able to fight the big gorilla in the room. So this is going to be very interesting over the next few years, but the first thing we have to do, and I think the importance of that lunch was to get across to people that we are in an economic war and that we have to think about ways to build an arsenal to be able to defend ourselves in this new era.
Jackie Forrest:
Exactly. Well, and to wrap it up, this was actually in his book, not in the talk as much, but he talks about the fact that when all these tools to have economic warfare start to weaken, like the Chinese, if they become self-sufficient and you don’t have leverage over them, you may miss it when it’s gone because you will not like the alternative. Because after that, the only other alternative is kinetic warfare. And actually financial warfare has saved the world a lot of actual wars and a lot of deaths. And so it has a huge value. So with that…
Peter Tertzakian:
With that happy note. Anyway, a great session, Jackie. You’re always a master at moderating those things, so thanks for doing that as well.
Jackie Forrest:
Well, it was a lot of fun as always. And thanks to our listeners for following this podcast. If you liked it, please write us on the app that you listened to and tell someone else about us.
Announcer:
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