Mark Carney’s Davos Rupture: Why Global Trade Rules Are Dead (And What Comes Next)

Justin Hayden Miller breaks down Canadian Prime Minister Mark Carney's explosive Davos speech at the World Economic Forum. From tariffs weaponized as leverage to supply chains exposed as vulnerabilities, explore how great powers are accelerating chaos in international commerce. Is this a rupture or a salvageable transition? Miller unpacks the geopolitics with sharp insights, drawing on analogies from science and history to make sense of the turmoil.

Key Topics Explored:

• The end of the rules-based international order: Carney's blunt take on economic integration turning into coercion.
• Middle powers' survival strategies: Building alliances, strategic autonomy in energy, food, and critical minerals.
• Tariffs and trade wars: Reactions from figures like François Hollande on balancing power with the US, plus insights from US trade attorney Peter Quinter on free trade's role in global peace.
• Geopolitical risks: From EU's anti-coercion tools to the prisoner's dilemma in modern trade negotiations.
• Forward-looking trade shifts: Multiplex alliances, resource cartels, and the race for critical materials like copper.

Featuring audio snippets from Carney's iconic address and a voiceover of François Hollande's advice concerning European trade policy regarding the US.

Link to Mark Carney’s speech on the excellent WEF World Economic Forum website: https://www.weforum.org/stories/2026/01/davos-2026-special-address-by-mark-carney-prime-minister-of-canada/

See also: https://www.weforum.org/stories/2026/01/davos-2026-how-middle-powers-are-reading-the-global-moment/

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Thumbnail image of Mark Carney, © Lëa-Kim Châteauneuf, reproduced by kind permission: licensed under the Creative Commons Attribution-Share Alike 4.0 International license, c.c. https://commons.wikimedia.org/wiki/File:2025-11-14_InaugurationREM_Deux-Montagnes_Mark_Carney.jpg ; photo cropped and lightly modified by Global Trade Deciphered.

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Transcript

Justin Hayden Miller 0:00

We've woken up this morning in a world where tariffs aren't just taxes. They're weapons. According to Mark Carney, the Canadian Prime Minister, staying neutral and passive, you're sure to lose. It's existential. That's not dystopian fiction. That's what's actually happening. And what, at Davos, Carney just called the rupture. In this episode, I'll be decoding Carney's iconic Davos speech. Because there really is a message in there as to what he plans to do next. That I'll reveal later in this episode. I'm Justin Hayden Miller. Welcome to Global Trade Deciphered. Deciphering the policies, trends, and geopolitics reshaping global trade. Hello everyone. I started this podcast in 2024 to discuss world trade issues. I knew that if Trump won his second term, world trade would take on a new significance, but there there are times when we feel, for good or worse, that we're living in a special moment in history. One of those moments when something tips. I think we're in one of those moments. Especially recently, world trade has become almost synonymous, if not synonymous, with politics. Which is why last month's WEF World Economic Forum event, held in Davos, Switzerland, might well have been called the WEF World Electoral Forum. Economic events talk just as much about politics these days as they do about economics. Because there was one speech that stood out above all others at Davos this year, the speech given by Mark Carney, Canadian Prime Minister and former Governor of the Bank of Canada and the Bank of England, in which he gave a blunt assessment of the definitive end to the rules-based international order. The speech titled Principled and Pragmatic Canada's Path, it was written entirely by him, actually, which is quite unusual for heads of state to entirely write the speech himself, but that's what everyone's reporting. The speech titled Principled and Pragmatic Canada's Path, well, it could have been called Wake Up and Smell the Coffee, and agree or disagree with him. His speech that he gave at Davos is going to go down in history. It will be regarded as one of the great iconic speeches of the twenty first century, and that's why I wanted to discuss it with you. There are many political angles to what he said, but I want to analyze the economic trade points that he raised. It is a global trade podcast, after all. And I want to use a few short snippets from his speech to illustrate these points. Here's the first one.

Mark Carney 3:03

Let me be direct. We are in the midst of a rupture, not a transition. Over the past two decades, a series of crises in finance, health, energy, and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons. Tariffs as leverage. Financial infrastructure as coercion. Supply chains as vulnerabilities to be exploited.

Justin Hayden Miller 3:32

What did he say there? Economic integration as weapons. Tariffs as leverage. Supply chains being the weak link in the chain as vulnerabilities to be exploited. Financial infrastructure as coercion. So we're in the midst of a rupture, he says, not a transition. Weapons leverage vulnerabilities. Now many of you may think that I'm talking implicitly about the US here, but the EU has an instrument to use in case of coercion. And it's no coincidence that it bears the name of a weapon, because the EU anti coercion instrument, the ACI, is nicknamed the trade bazooka. For centuries the British used its powerful navy to blockade countries. Now it's tariffs and sanctions. But Carney's theory is one of chaos accelerating, where interdependence isn't a stabilizer, but a multiplier of disorder. Trade disorder. I do like finding scientific analogies because science is based on rules and laws. Right. And I find that scientific rules really do mirror in so many ways real life problems. Perhaps part of the problem is that modern day trade issues are so damned emotive. But science helps us to analyze things on the basis of hard facts and cool headedness. Events are certainly heating up around the world. Politically, I mean. Great powers injecting heat, I see like, you know, tariffs and coercion into the system, creating a lot of uncertainty and disorder. Yeah, I I really did think long and hard about this over the weekend. Science tells us all about things heating up. And when things heat up, science tells us that creates disorder of the molecules. It's called the second law of thermodynamics. And trade practitioners should read up about it. When heat, like tariffs, are applied, the heat that it radiates out that tension, that heat. It creates disorder in world trade and uncertainty, randomness, or at least a lower capacity to predict what's going to happen. And this disorder in science is called entropy. This is what I see happening. The world is becoming less frictionless, and it requires more effort, more money, in order to optimize as well as could be done in the past. Science tells us that systems naturally evolve towards disorder unless energy, effort, etc., is input to fight it. And this is precisely what Carney is asking nations to do, to input efforts and energy in an ordered way to minimize all this disorder that we're currently experiencing. How middle powers become disorder reducers, compressing that chaos into localized order, engineering strategic alliances that haven't before existed, to use alliances that previously might not have made much sense. Carney's solution? Build diversified alliances that dissipate the energy before it boils over. He's telling everyone not to follow the World War II British adage. What was it? Stay calm and carry on. He's saying no, stay calm, but you know, don't carry on what you're doing. He's saying don't panic. The future isn't chaos, it's selective alliances. In his speech, Carney evokes Vaklav Haval's The Power of the Powerless, a 1978 essay on communist rituals. Listen to the speech in fully. It definitely is worth it. And I'll put the link in the show notes. It's also on the World Economic Forum's website, which is a minefield of information, and urge you to look at it. But coming back to Carney's reference to Havill, Havill was a Czech dissident who explained how ordinary people in oppressive regimes keep the regime going, sustain it by going through the motions, even if they don't believe in it. And Carney says this is what nations are doing with global trade. He takes an idea concerning oppressive regimes, communism, Havill, and he applies it to oppressive systems. The World Trade System, for example. We have believed that the rule based order applies to trade after all. Carney says it clearly does not, if it ever did. You see, and as I've also been saying, perfect trade is an illusion. Countries will at times use force to their own advantage. This isn't necessarily defendable, but especially when it happens, we need to acknowledge it, realize it, and Carney underlines this, and put in place a practical solution that doesn't involve us simply pretending that it's not happening. But not everyone considers that the old order has been definitively lost. For some, the jury's still out, especially if we act in a particular way and quickly. One of these people is Francois Hollande, French president from 2012 to 2017. Holland has been criticized quite a bit in France, notably during his French presidency, at least domestically. But you know, he's somewhat respected on his foreign policy. And in recent years, Holland has provided statesmanlike rhetoric. Shocked by Donald Trump's threats during Davos to apply a 200% tariff on French champagne because Macron had apparently refused to join Trump's Board of Peace, Francois Holland had this to say about it. I think it was the the day after Trump's comments. We we couldn't find a translated version, so Global Trade Deciphered organized its own voiceover.

François Hollande 10:16

I want to express a simple idea here. We must have a relationship with the United States of America under this administration that is based on a balance of power. If they impose custom duties on us, they will face custom duties. If they impose coercion on us, they will face anti-coercion measures. If they no longer want to remain in the Atlantic Alliance, we'll see. We will have to act together with the Europeans. It's not about entering into an escalation. It's simply about making ourselves respected. And by making ourselves respected, we may eventually be able to make international law respected as well.

Justin Hayden Miller 10:55

So whilst Kearney says rupture's here, you know, the old order's finished game over, everyone should wake up and smell the coffee. Holland is the optimist really in the room, arguing that we can salvage the rules if Europe flexes back. Although, you know, admittedly, some US skeptics, certain trade hawks, argued this would just escalate geopolitical trade risks without resolution. For too long, people have considered that world trade is dependent on international relations. But what all this is showing is that it's a two-way stream. The prisoner's dilemma is a game theory concept where two parties might betray each other for personal gain, even if cooperation is better overall. I I I don't watch much telly, but yeah. Somebody can tell me if it's a bit like traitors or not. I seem to think it might be the concept. My, you know, Mike, I see this all the time in in business. A party might not play the rules in order to get a one-up advantage. And it certainly seems to be the case in the this current tariff trade environment. You know, just just thinking off the cuff, President Trump is a is a businessman, isn't he? So yeah, perhaps nations should have expected this. And let me just underline, I'm I'm not saying whether something is right or wrong or pro-politician or not pro-politician. I'm just putting the cards on the table and saying what naturally flows from that. Holland is arguing that by imposing the respect of trade relations between nations could be a means of bringing international order back. Peter Quinter, the US international trade attorney in a previous episode, said we are one beautiful world.

Peter Quinter 12:43

I'm a free trade person. I believe in international trade. I believe it creates peace and understanding between peoples and countries, and it benefits us.

Justin Hayden Miller 12:53

Peter there is saying that free trade brings about world peace, and the other side of the coin is surely that a lack of free trade brings potentially a less peaceful world. But coming back to Kearney, he implied in his Davos speech that the post-rules-based order world is one where countries operate on a dog eats dog basis. But he indicates middle countries can protect themselves by forming a pack. He wants to turn it round. If everyone wakes up to what is happening and does the necessary, middle countries such as Canada aren't victims. They can make effective smarter deals. The strong do what they can, and the weak suffer what they must. No way, says Carney, and he flips it. In today's ruptured society and trade relations, middle countries don't have to take crap, he says. Just after Davos and talking about a discussion that he'd had with the President of the United States, he told a journalist leaving a meeting or something. He said, I said to the president, Carney said, I meant what I said in Davos. And he went on to say, we discussed as well what Canada is doing positively to build new partnerships around the world. I explained to him our arrangement with China. I explained to him what we're doing. Twelve new deals on four continents in six months. He's impressed. Q big, huge beaming smile from Mark Carney when he said that. But he also opened a door on cooperation, and he mentioned the possibility of moving forward on CUSMA, which is the Canadian, Mexican, US agreement. He considers that if certain nations want to get rid of the rule-based order, then a second league of nations can get together that will at least apply it amongst themselves. And this signals to me that there will be a shift and a movement to existing free trade zones to compensate like Mercosur or the European Union. There may not be a single rule-based order. There will be several orders, potentially with different rules applying to different groups. In in early 2025, the Economist ran an article why Canada should join the EU. Well, that's hardly likely. Just looking at the papers here. Article 49 of the Treaty on the European Union limits somewhat membership to European states. Even if the French start eating croissants with m maple syrup on them, Canada joining the European Union isn't going to be any time soon. Eurovision Sun Contest. And you know, that's you can't you can't get much further from Europe than Australia. It's certainly not in Europe, not now anyway. So I suppose I should be honest. Especially in this world, nothing can be excluded. The second main trade point that I see coming out of Kearney's speech concerns the direction that trade strategy will probably take. And perhaps even more importantly, concerning what industries. This is what I mentioned in my intro as to what I believe Kearney plans to do next and how it could affect us all. So stay with me. This is perhaps the most important point coming out of all this. This is what Carney had to say.

Mark Carney 16:35

The multilateral institutions on which the middle powers have relied, the WTO, the UN, the COP. The architecture, the very architecture of collective problem solving are under threat. And as a result, many countries are drawing the same conclusions that they must develop greater strategic autonomy in energy, food, critical minerals, in finance and supply chains. And this impulse is understandable.

Justin Hayden Miller 17:06

I would certainly add on to all that military and industries related to armament. But Kearney's strategy isn't to build fortresses. Too simple for Kearney. I say that his strategy is based on resources and ensuring ownership and supply of critical minerals and processes. The US has the know-how, you know, the knowledge, the IP. Middle countries, especially if the right ones coordinate and close ranks, can secure sufficient access and control of critical raw materials, minerals and critical minerals, metals, to create mutual dependence with larger powers, to demand a seat at the table. You're not going to get a seat at the table just by asking. You have to generally have something that the other side wants or needs. These middle countries, they don't need to control all critical materials, simply a sufficient amount to materially affect the market. Think resource cartels like, you know, think OPEC, an OPEC for metals and critical materials constituted by middle powers and middle countries. I see Canada seeing the US as like the Microsoft of this world, while middle countries can be the ones that provide the hardware for the Microsoft's to function. Both need each other. The US don't think they need copper to build the necessary cabling. I mean, it's not really an analogy because it's the reality. No joke, it's a real issue. The need for such materials, such as copper, even, is increasing exponentially, and the need is greater than the supply coming on demand. So countries that can mine even a reasonable proportion can hope to have increased even exponential influence. Quietly rewiring trade with those copper cables and other materials that larger powers require. I think Kearney understands that. I mean, is that the real reason why the US has had its eye on Greenland? China's shown restricting supply and critical materials to the US as a countermeasure to US tariffs. It can be as much about ensuring that your competitors don't have the critical materials as it is about you getting hold of them yourself. Carney's idea of middle nations forming a block of trade nations is hardly new and it hasn't always gone as planned. I mean, the BRIC nations, for example, come to mind, and their intent was to challenge Western-dominated global financial business and the payment systems, whatever. Even de-dollarization didn't work quite as well as they hoped. And Kearney's saying, the question is whether we adapt by simply building higher walls or whether we can do something more ambitious. It seems to me that Canada is doing both. A recent Canadian government advert was pushed to me. In it, Kearney says he's put in place a new buy-Canadian policy. He says he will build big, including for the military sector, building with Canadian materials, steel, aluminium, with Canadian workers. Build Canadian. It seems awfully similar to Donald Trump's MAGA plan to reindustrialize America, if you ask me. If you can't beat them, then join them. But it is two-pronged. It's not only that. And this is why Kearney spoke about a third way in his Davos speech. If you think the world has become bipolar, you know, two superpowers, the US and China, leaving Europe in the in the doldrums, it's becoming ever more bipolar in terms of trade policy as well, and international mood swings. Carney thinks he has the antidote here. Not bipolar, but you know, a multipolar mesh with overlapping alliances according to specific objectives on specific issues. A federalization of alliances. Choice for countries to decide which one they wish to adopt by integrating their trade and their alliances with countries that adopt common principles, but giving countries freedom to strike individual alliances. And the second takeaway is that I believe that the critical Elements, minerals, and raw materials point. Industry, knowledge, and technology within those industries is probably the way forward for those middle countries to take a common trade position together to be able to negotiate as a bloc next to the superpowers. Interesting times. Anyway, whatever happens, Carney's words will be remembered into the future as an iconic, historic speech, a sign of the times. Not just because his prediction seems to be credible, with a CTA, a clear call to action to the world's nations and leaders. He got a stunning ovation after all, and that's a pretty rare sight at an economic forum. Iconic historic speeches are always born in pivotal historic moments. And I believe we're living one of these times right now. And one day, my future grandchildren will probably say, Grandpa, where were you when Carney gave his WEF speech on the end of the Old World Order? And I'll probably tell them to subscribe to my podcast to find out. If this episode on Carney's Davos speech and geopolitical trade risks sparked thoughts for you, please do share it with your network. Let's play out with some final advice from Mark Carney.

Mark Carney 23:30

The middle powers must act together because if we're not at the table, we're on the menu.

Justin Hayden Miller 23:40

It's one of those Ronald Reagan moments, such as his time for choosing speech. But this time the choosing is for nations. The content of this podcast is intended only to provide an information resource of interest and does not constitute legal, tax, business, or financial advice of any kind. Should you require advice, then you should engage an appropriately qualified person to provide you specific advisory services in the field. The views, thoughts, and opinions expressed in this podcast are my own, and do not necessarily represent the views, thoughts, or opinions of any law firm, nor that of any third party, other person, company, or organization. Stay tuned for the next episode.