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10/ Rules-based trade — economic relationships governed by stable, predictable frameworks rather than the preferences of the powerful — has become more attractive, not less, in a world of tariff volatility. Countries are not abandoning that idea, but are fighting to preserve it.

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9/ But the attempt itself is important. Countries that lack the size to set terms unilaterally are looking for frameworks that bind everyone equally, including the powerful. Whether they succeed is uncertain, but they are trying, and finding each other.

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8/ The obstacles are significant. Canada sends 70% of exports to the US and trades $850 billion with America versus $150 billion with Europe. Regulatory alignment with the EU means diverging from US standards embedded in USMCA.

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7/ Canada is one node in something larger. The EU concluded agreements with Mercosur, India, Australia, and Indonesia in the past year. Each was struck for reasons specific to that relationship.

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6/ The "associate membership" category von der Leyen proposed doesn't exist in EU law. As Brussels is beginning to recognize its own gravitational pull, it's acting on it faster than its own institutions can absorb.

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5/ What the EU offers that makes this possible are terms that hold, agreements that survive elections, a framework whose rules don't change with the political weather. That's what Canada is trying to buy into.

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4/ Von der Leyen was explicit about the logic: "not against anyone else, but for our common strength." The network being attempted is organized around shared principles rather than against any particular power.

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3/ Canada isn't joining the EU. It isn't pivoting to China. It's building optionality — deeper EU ties on energy, critical minerals, defense, and potentially visa-free movement, while pursuing new deals in Asia. That's less of a bloc and more an attempt at a network.

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2/ The conventional assumption has been that the fracturing of the US-led order would produce a choice between two blocs — one around Washington, one around Beijing. What's happening between Canada and the EU suggests a deliberate effort to build a third option.

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Jonas Nahm @jonasnahm.com · 16/09/2026

1/ Von der Leyen just offered Canada "associate membership" in the EU in her State of the Union address. Carney was in the chamber. Standing ovation. Perhaps the clearest sign yet that some countries are actively trying to build a new architecture for global trade.

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28th state rebuke to the 51st state talk coming from the Trump admin. Lots of practical hurdles and questions about scope of EU partnership, but a clear signal in favor of stability and predictability. www.nytimes.com/2026/09/16/w...

nytimes.com

E.U. Offers to Make Canada ‘Associate Member’ as U.S. Ties Weaken for Both

Canada and the European Union have been confronting an increasingly challenging relationship with the United States under President Trump.

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Exclusive | Mark Carney’s Audacious Bid to Make Canada an ‘Associate Member’ of the EU

The week my @foreignaffairs.com piece on Europe's hidden trade advantage published, the WSJ reports Canada is exploring a "unique alliance" with the EU — after walking away from US trade talks in August. The argument, unfolding in real time. www.wsj.com/world/europe...

wsj.com

As trade talks with the U.S. collapse, prime minister pursues a major—and risky—pivot to Europe; an Ottawa book club plays its part.

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15/ Countries watching the current moment might conclude that executive agility and the willingness to weaponize economic relationships are the currencies of power. The EU's experience suggests otherwise.

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14/ Washington is not excluded from this. But a future US administration that chose to engage would be doing so on terms it did not write. That is not a position Washington is accustomed to.

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13/ What the EU is now assembling, one agreement at a time, is not a preservation of the old order but something new, a coalition of economies that have chosen rules over leverage as the organizing principle of their economic relationships.

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12/ The UK, meanwhile, tried a different approach. The OBR estimates Brexit reduced trade with Europe by 15% and made the economy 4% less productive — roughly $135 billion a year. The promised US free trade deal never arrived.

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11/ In the EU, trade agreements require Commission negotiation, qualified majority approval, and Parliament's consent. New tariffs require a formal investigation with statutory deadlines. There is no EU equivalent of Section 301 or Section 232.

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10/ The constraints that frustrate European governments when they want to act quickly are the same constraints that make European commitments durable.

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9/ Those EU rules, though, were designed to make economic integration possible across a continent of vastly unequal economies. France and Germany couldn't simply override the Netherlands. That was the price the larger economies paid to bring the smaller ones in.

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8/ The EU has long been mocked as too slow and too rule-bound. We all remember the jokes about the banana regulation.

7/ And where are countries looking instead? Europe. The EU concluded negotiations with India in January, Australia in March, Indonesia last September. Mercosur — 700 million people, the largest deal Brussels has ever signed — entered into force in May.

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6/ Regardless of who wins in 2028, formal trade agreements with the United States no longer offer any certainty the terms will hold. Governments and investors must now permanently price in that risk.

5/ Canada — the US's largest trading partner — walked away from negotiations in August. Mark Carney said the US approach had "called into question the reliability of any deal." That used to be our closest ally.

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4/ Turns out it hasn't worked. The goods trade deficit hit a record $1.24 trillion in 2025. Manufacturing shed tens of thousands of jobs. Trade with China fell — but was diverted to Vietnam, Taiwan, and Mexico. The overall imbalance barely moved.

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3/ Trump came to office with a theory. The US is the world's largest import market. Applied with enough force, this leverage would produce concessions on trade, investment, and the rules governing global competition.

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2/ In Europe, a joke is making the rounds. Trump spent the year searching for a 51st state — Greenland said no, Canada said no, Panama said no. Meanwhile Europe, accused of civilizational decline, can't keep up with the membership applications.

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Europe’s Hidden Trade Advantage

1/ New piece in Foreign Affairs on why EU bureaucracy — long a favorite punchline — turns out to be a hidden source of power. www.foreignaffairs.com/europe/europ...

foreignaffairs.com

Slow and steady wins the negotiation.

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13/ DC also has a choice to make. Protect the status quo behind a wall, or use competition and negotiated technology transfer to push US automakers to upgrade. The first path is politically convenient. The second is the one that worked with Japan.

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12/ Detroit has to decide whether to start learning from Chinese automakers, the way it eventually learned from Toyota, or spend another two decades insisting the productivity gap comes from somewhere else.

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11/ Unlike Japan, Chinese automakers were never here to begin with, and the window to change that may be closing. US-China relations keep deteriorating, and Beijing could restrict outbound investment and technology sharing just as easily as Washington restricts imports.

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10/ The window of opportunity is closing. For now, Chinese firms would benefit from US market access. Structured joint ventures with real tech-transfer terms, phased US sourcing, could pull some of that manufacturing capability here while there's still leverage to ask for it.

9/ A ban doesn't touch any of that. It protects market share without asking why US automakers need protecting, and it removes the one force, competition, that could push Detroit to change.

8/ Ford and GM invest 4–7% of revenue in capex, versus Honda's 20% and Volkswagen's 12%. Meanwhile Detroit is retreating from EVs altogether: GM took a $6B writedown in January to unwind EV investments, Ford took $19.5B months earlier canceling planned electric models.

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7/ Calling that cheating is the same misdiagnosis the Big Three made with Japan, just with China standing in this time. It lets Washington skip the domestic question entirely: why is the US still underinvesting in the things that actually build competitiveness?

6/ I saw why in Beijing this summer. Xiaomi's (and other's) EV plant runs almost entirely on robots and AI, hardly anyone on the floor. China deployed almost 57,200 automotive robots in 2024, over four times the US total. To me, this is a story about automation, not subsidies

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5/ That's the pattern repeating now. Rhodium Group found EV subsidies of about $64/vehicle for Geely, $292 for BYD, which does not explain their cost competitiveness.

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4/ Through the 1970s, Japanese automakers grew labor productivity six times faster than the Big Three. The gap wasn't imposed from Tokyo. The problem was in Detroit.

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3/ The unfair-trade piece is the bigger miscalculation. For the first 20 years of Japanese competition, decades ago, the Big Three argued Japan's edge was cheap labor. In reality, their edge was lean production, and it took GM over two decades to copy it.

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2/ Data governance for connected vehicles is a solvable problem: localization requirements, audits, structural separation. Tesla in China and the TikTok-Oracle deal both show it can be done without a blanket ban.

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1/ The Connected Vehicle Security Act frames Chinese EV competition as a security and unfair-trade problem. That framing assumes US auto decline is being done to the industry, rather than coming from problems the industry hasn't fixed on its own. www.nytimes.com/2026/08/31/b...

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I blame bsky for that :)

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8/ Most of that gap comes from automation and years of building an integrated supply chain, not a government check.

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7/ Subsidies don't explain the price gap either. Rhodium Group puts direct EV subsidies at around $64 per vehicle for Geely, $292 for BYD. That's nowhere near BYD's $4,700 price edge over Tesla's own China-made cars.

6/ Connected cars collect a lot of data continuously, and what happens to that data is important. The US could write specific rules, specifying where where data is stored, who can access it, how it's audited. The Chinese government did this for Tesla.

5/ That's not just happening in China. Auto manufacturing is heading this way everywhere, including in the US, where some automakers are experimenting with humanoid robots. Keeping Chinese cars out doesn't stop that.

4/ I visited Xiaomi's EV plant in Beijing this summer. Hardly anyone works there. Robots handle scheduling, defect checks, assembly. Geely's own executives say one plant went from 4,000 workers to 1,500.

3/ Slotkin cites 450,000 auto jobs in her state. That a big number. But I worry that banning Chinese EVs doesn't protect those jobs from what's actually changing the industry: automation and declining US competitiveness.