As a background to this statement by Carney, the Canadian Industrial Minister Mélanie Joly, recently announced that the Canadian government would subsidize Honda to keep them in Canada by paying $313 million for retooling the Alliston plant that makes the Honda CRV model.

The net result is Honda will spend $165 million; Canada will spend $313 million. There are roughly 4,000 auto-sector jobs associated.  So, Canada is paying two-thirds of the cost for Honda to stay operating in Alliston.  Honda will be producing a new hybrid CRV there.

Against the backdrop of this decision by the Carney government, a transparently visible bribe just to keep Honda from leaving the area, and against the backdrop of the U.S trade position that cars for the American market should be made in America, Prime Minister Mark Carney is questioned about the trade discussions.

Within his response Carney notes the auto-sector is a RED LINE for Canada, and the Canadian government demands access to the American market for cars made in Canada.  WATCH:

The core of the issue is really simple.  Canada has chosen to chase climate change energy policy.  As a consequence, Canada no longer has heavy industrial manufacturing at scale.  In the auto sector the heavy industrial part of making forged iron, steel and aluminum is not done in Canada.  Instead, they import the component parts from heavy industrial manufacturing, then assemble those products into vehicles “made in Canada.”

This is a core part of the Canadian auto industry.  Without the import, their ‘climate friendly’ economy doesn’t have the manufacturing capacity to create automobiles.  The second aspect is they don’t have enough customers; Canada is dependent on the U.S. consumer base to purchase cars, trucks and SUV’s made in Canada.

Prime Minister Carney’s position is zero-sum.  The United States must purchase Canadian assembled vehicles or else….  The “or else” is undefined because in reality they don’t have any leverage.

If your supermarket was demanding you purchase their bananas, and you didn’t want bananas, if the supermarket blocked your entry until you acquiesced to buy their bananas, you would just go shopping somewhere else.  It would be silly for the supermarket to demand that you must purchase bananas exclusively from them, but that is the “red line” proposal from Carney.

To ensure you purchase their bananas, Carney is telling the banana wholesalers that they are not permitted to sell bananas to anyone else, except Carney’s market.  This, according to the arrogance of the outlook, is how Carney can force you to purchase his bananas.

The easiest resolution for the problem is simply to say that vehicles assembled in Canada can only be sold in Canada.

The problem for Canada is that the auto companies will leave because the Canadian market is not big enough to support their production.

Canada needs American consumers for everything.  This is the nature of the Canadian economy, a reality the Canadian government needs to keep out of the minds of the Canadian people.