We don't think they should become a US vassal. That premise is wrong.

Indeed. And trading with China doesn't mean you become a Chinese vassal, either. Although you might forgive the Canadians for believing that the U.S. wants to have far greater dominion over Canada than historically, and certainly more than China has indicated, given the President's constant efforts to use the asymmetric trade relationship to force them to make non-trade changes...or even become the "51st state," even metaphorically. The U.S. is signaling that it is very unwilling to tolerate Canada diverging from U.S. foreign policy preferences.

And does that mean they can't trade with China? Hardly. It means we reduce dependencies on China and keep certain goods out of the North American market. Unless you want BYD cars spying on Americans...

It means they couldn't negotiate trade agreements with China that differ from our China trade policy. If they want to have greater bilateral trade with China, to have certain goods within their sovereign part of the "North American market,", that's normally part of their sovereign prerogative. The U.S. wants to prohibit them from doing that. And so Canada has decided that they're not going to agree to that - and to ensure that they're not in a position where their reliance on the U.S. as an economic partner gives the U.S. leverage to try to force that type of disability on them going forward, they're going to diversify their international economic relations away from the U.S. The exact opposite of what we wanted them to do.

Or...they take a look at their trade practices (like banning US alcohol, years-long issues with dairy, etc.) and make some concessions. You know, negotiate for the win-win.

Yeah, they tried that. They couldn't reach the "win-win," because the U.S. wanted to leverage our dominance in the trade relationship to force them to make concessions that they felt were an overall loss. So they're exploring alternatives. It's almost certainly the smarter move for them, especially since "win-win" agreements with the U.S. are 'written in pencil,' as it were - at any moment the President can tweet about fentanyl or wildfires or what have you and just tariff you into losing all the "win" side of the deal. That's the downside to the President asserting all-but-unlimited power to revisit existing trade relationships - whatever deal you think you're negotiating for today, in 2026, only lasts as long as it takes for the President to decide he wants you to give him a better deal.

It's far smarter for them to start looking elsewhere for a more diverse set of more stable trading partners. That will certainly include the EU and very well may include China, at some point. Which is why, again, our insistence on getting this additional control over Canadian trade policy might have been a positive for US firms in the short run, but will likely end up being worse for US firms in the long run.