Welcome to Trade Secrets. One important event this week, apart from peace breaking through or not between the US and Iran for the 100th time, is a meeting of EU leaders to decide what to do about Chinese trade dominance. I’ll give my take on that in my opinion column in a day or two.

Today I look at what it’s like for a middle-power country such as Canada to try to build alternative poles of power to the US. I’ll also make a brief observation about AI and regulation. Charted Waters, where we look at the data behind world trade, is on fuel stocks in Europe.

A beat of drums, the steady tramp of approaching feet and a marching column of geopolitical troops strides into view, bugles sounding and maple-leaf banners streaming from flagstaffs carried high. The signs are unmistakable: Mark Carney is on manoeuvres. But whether the Canadian prime minister makes any progress or gets caught in no man’s land between incompatible allies remains to be seen.

Carney wowed the world — or, at least, the small corner of it that cares about global governance — at Davos in January by talking about an alliance of middle powers no longer dependent on US leadership. But operationalising that alliance is much easier said than done. Almost five months later, he is trying to face south, west and east at the same time.

Last week, during a trip to Ireland — one of the three countries for which he has held a passport, although he is now apparently down to one — Carney grabbed attention by calling Canada “one of the most European of non-European countries” and pledging to deepen its relationship with the EU. He also said middle powers shouldn’t compete for favour with the US, and that the Group of Seven countries, which meets this week in France, doesn’t run the world.

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Can it really be coincidence that Canada carefully engineered a respectful 1-1 draw against a European country (Bosnia and Herzegovina) in its first game in the World Cup? Could Canada be angling to join the queue behind the Balkan nation for accession to the EU? (This is a joke: the answers are respectively yes and no.)

But at the same time, Carney has recognised the huge shock that would come from ripping up the US-Mexico-Canada (USMCA) trade deal, for which there is a remake-or-break negotiation in the coming weeks. Despite wanting to pivot away from US trade, for example by creating an import quota for Chinese electric vehicles, he has recently emphasised the importance of USMCA. The US ambassador to Canada, Pete Hoekstra, even said last week he was impressed by the Canadian prime minister’s more emollient tone.

The White House’s strategy is to bind Mexico and Canada to a “Fortress North America”, dissuading trade with economies outside the bloc, particularly China, with rules-of-origin requirements, while also pulling more foreign supply chains into the US. (Remarkably, the pugnacious Doug Ford, the Ontario premier who infuriated Trump by running an anti-tariff ad quoting former US president Ronald Reagan, has started using the “fortress” language.) Carney somehow has to find a way of squaring that US demand with his desire to diversify economically and geopolitically. 

The economics is much harder than the politics. For trade, geography is still largely destiny. More than three-quarters of Canada’s total trade has been with the US for decades, barely affected by the 2017 Comprehensive Economic and Trade Agreement (Ceta) with the EU or the 2018 Asia-Pacific CPTPP trade deal. Canada sends almost all of its oil and gas to the US. It has made some diversification efforts but can’t magically elongate and reorient pipelines to Europe or Asia.

Canada has also hewn much more closely to US rather than EU food regulations, limiting its opportunity to diversify agricultural trade across the Atlantic. And while the country has talked a good game about developing critical mineral alliances, that too has yet to amount to much. I’m watching intently and in good faith to see what Carney can do to advance his middle-power strategy, but I’ve not seen a lot yet.

Here is a fairly extraordinary development in AI: Anthropic suspended access to the latest versions of its models in response to a directive from the Trump administration to limit use to US nationals. AI is not exactly my main field, but I will make one broad observation based on earlier episodes of regulation of data and digital services.

My esteemed colleague Martin Wolf makes the case here for a global agreement to regulate the technology. It is a nice idea of course, but I’m not cancelling a holiday in case it happens while I’m away. It’s not just that the US generally wants to protect its champions, nor indeed (as in this case) that it wants ultimate control over their actions. It’s that its attitude to regulation has been arbitrary and inconsistent.

The US doesn’t have a national data protection regime, because no administration or Congress has really tried to create one. The US used to argue aggressively for rules in trade agreements protecting the cross-border free flow of data, until it did a sudden about-turn under former president Joe Biden, apparently following the personal whim of the then US trade representative Katherine Tai.

Biden published principles of AI regulation and some executive actions but never achieved binding legislation. Trump forced Chinese technology company ByteDance to divest TikTok, but it was hardly a well-thought-through regulatory plan: the unit was sold to politically connected investors with doubt remaining about how much influence ByteDance retained. And so on and on.

If the EU regulates too much (it probably does), the US, whence comes most tech innovation, usually regulates too little and frequently acts arbitrarily. I have no idea how you’re supposed to implement an AI ban on non-US citizens when they are literally sitting at the next desk looking over the shoulders of American nationals, and I’m not holding out hope that the Trump administration knows how to either.

Fuel reserves in the Amsterdam-Rotterdam-Antwerp trade hub have come down over the past few months, with regional supplies of jet fuel particularly under strain.

• Switzerland yesterday rejected a plan to cap the national population at 10mn, which would have deeply affected immigration and which I wrote about recently here.

• An expected crunch in global oil supply and prices hasn’t (yet) arrived, partly because China has been running down its reserves.

• Former Bank of England chief economist Andy Haldane warns of incipient inflation from the Gulf shock.

• Politico says that the shipping industry is preparing for a world of permanent disruption. Relatable.

• The EU will extend the coverage of its carbon border adjustment mechanism (CBAM) to more metal products.

• In one of its valiant attempts to hold back the tide of linguistic uniformity, France is resisting the idea that EU trade deals should henceforth be written only in English. Désolé, mes amis, mais les jeux sont faits.

Trade Secrets is edited by Harvey Nriapia