>> PRESIDENT TRUMP WANTS IT TO BECOME THE 51st STATE, BUT NOW IT'S ACTUALLY GETTING CLOSER TO BECOMING PART OF THE EUROPEAN UNION.

CANADA SHARED A DECADES-LONG PARTNERSHIP WITH THE UNITED STATES ECONOMICALLY AND CULTURALLY.

TODAY THE TWO NATIONS ARE IN THE MIDST OF A RELENTLESS TRADE WAR.

IT'S ONE OF THE MOST STRIKING EXAMPLES OF TRUMP'S UNIQUE BRAND OF DIPLOMACY, ONE THAT OUR NEXT GUEST LIKENS TO AN UNRELIABLE BOYFRIEND.

IN FACT, THAT'S THE TITLE OF HER NEW BOOK, PART MEMOIR, PART BLUEPRINT FOR DEALING WITH CHAOTIC SUPERPOWERS.

FORMER CANADIAN DEPUTY PRIME MINISTER CHRYSTIA FREELAND DRAWS ON HER OWN EXPERIENCE TO INSTRUCT READERS ON HOW TO FIGHT BACK AS SHE EXPLAINS TO WALTER ISAACSON.

>> THANK YOU, PAULA.

AND CHRYSTIA FREELAND, WELCOME TO THE SHOW.

>> GREAT TO BE WITH YOU.

>> IN YOUR NEW BOOK, "UNRELIABLE BOYFRIEND," YOU HAVE A PRETTY TOUGH BEGINNING IN WHICH YOU SAY ULTIMATELY THIS IS THE STORY OF THE WORLD AMERICA MADE AND THE WORLD AMERICA IS TRYING TO DESTROY.

THIS IS THE STORY OF AMERICA'S DESCENT FROM LEADER OF THE FREE WORLD TO THE WORLD'S PROBLEM CHILD.

YOU HAVE GONE FROM BUILDING THE CITY ON A HILL TO WIELDING A WRECKING BALL QUITE LITERALLY AGAINST YOUR OWN HOME.

EXPLAIN TO ME WHAT CANADA DOES TO ADOPT TO THIS WHOLE NEW SITUATION.

>> WELL, I THINK CANADA IS DOING EXACTLY THE RIGHT THING AND WE HAVE SOME PRACTICE.

THIS IS NOT OUR FIRST RODEO WITH THE TRUMP ADMINISTRATION.

WE EXPERIENCED SOMETHING ACTUALLY PRETTY SIMILAR WITH THE FIRST TRUMP ADMINISTRATION WHEN PRESIDENT TRUMP THREATENED TO RIP UP NAFTA, OUR TRADE AGREEMENT WITH THE UNITED STATES.

AND WE DEVELOPED A THREE- PART PLAYBOOK THEN.

PART ONE WAS DO COLLABORATE WHEN YOU CAN.

BE REASONABLE WHERE THERE ARE AREAS OF SHARED INTEREST.

AND WE FOUND WITH THE FIRST TRUMP ADMINISTRATION THAT WAS HAVING ELEMENTS IN OUR TRADE AGREEMENT THAT PRESERVED HIGH-PAYING BLUE-COLLAR JOBS IN NORTH AMERICA.

OUR SECOND POINT, THOUGH, AND THIS IS REALLY IMPORTANT, IS DO NOT CAPITULATE.

AND YOU KNOW, WALTER, THAT THERE WAS IN THIS SECOND TRUMP ADMINISTRATION INITIALLY A VIEW BY A LOT OF PEOPLE INSIDE THE U. S. AND ALSO A LOT OF PEOPLE OUTSIDE THE U. S. THAT WHAT YOU HAD TO DO WAS SOMEHOW KIND OF SWEET- TALK THE PRESIDENT AND MAYBE HE WOULD GET DISTRACTED AND THAT WAS HOW TO GET THROUGH THIS.

OUR VIEW THEN AND CANADA'S VIEW TODAY IS THAT IS ABSOLUTELY WRONG.

PRESIDENT TRUMP IS A CLASSIC BULLY.

AND IF YOU GIVE IN TO HIM ONCE HE DOESN'T SAY OH, YOU'RE SUCH NICE GUYS, THAT'S GREAT.

HE JUST DECIDES TO COME BACK FOR MORE.

SO OUR VIEW WAS WE DO NOT ESCALATE, WE DO NOT BACK DOWN.

THE THIRD PART OF THE PLAYBOOK, THOUGH, IS VERY IMPORTANT.

WE CALLED IT THE DONUT STRATEGY.

AND THE IDEA WAS THAT THE PRESIDENT IS THE HOLE IN THE MIDDLE OF THE DONUT.

IMPORTANT BUT FAR FROM THE ONLY PLAYER IN THE UNITED STATES.

AND WE BELIEVED THAT WHAT WE NEEDED TO DO IS GET OUT AND TALK TO AMERICANS.

MAYORS, GOVERNORS, SMALL BUSINESSES, TRADE UNIONS.

AND IF WE MADE THE CASE TO AMERICANS THEY WOULD GET IT AND THEY WOULD PUT PRESSURE ON THEIR PRESIDENT TO STOP TRYING TO BEAT CANADA UP, TO STOP TRYING TO TAKE CANADA OVER, AND TO GO BACK TO WHAT WE'VE HAD FOR PRETTY MUCH ALL OF OUR HISTORY, WHICH IS A WIN-WIN MUTUALLY BENEFICIAL, MUTUALLY RESPECTFUL RELATIONSHIP.

>> YOU KNOW, WE'RE ABOUT TO GO INTO OUR MIDTERM ELECTIONS IN A WEEK OR SO.

AND THE TARIFFS ARE PLAYING A BIG ROLE IN TWO KEY STATES, MAINE AND MICHIGAN.

CERTAINLY THEY'VE CUT AGAINST, IT SEEMS, PRESIDENT TRUMP AND THE REPUBLICANS.

HOW DO YOU READ THE SITUATION, ESPECIALLY IN TERMS OF THE MIDTERMS AND THOSE TWO STATES?

>> EXACT LIV LY AS YOU SAY, WALTER.

I THINK THAT MAINE AND MICHIGAN ARE TWO STATES THAT HAVE EXTREMELY CLOSE RELATIONSHIPS WITH CANADA OVER MANY, MANY DECADES AND THEY UNDERSTAND THAT THOSE RELATIONSHIPS ARE GOOD FOR THE PEOPLE OF MAINE.

THEY'RE GOOD FOR THE PEOPLE OF MICHIGAN.

IN MICHIGAN WE BUILD CARS TOGETHER.

THE CAR SECTOR REALLY DEPENDS ON US COLLABORATING.

SOMETHING THAT I KNOW THE PEOPLE OF MICHIGAN REMEMBER IS DURING COVID 1500 CANADIAN DOCTORS AND NURSES CROSSED THE BRIDGE FROM WINDSOR INTO DETROIT EVERY SINGLE DAY TO KEEP DETROIT HOSPITALS GOING.

THAT'S HOW CLOSE THE RELATIONSHIP IS.

AND THE SAME IS TRUE OF MAINE, WHERE THE ECONOMIES, THE FAMILIES ARE CLOSELY INTEGRATED.

AND PEOPLE SEE THAT THESE TARIFFS ARE NOT ONLY POINTLESS, THEY'RE ACTUALLY ECONOMICALLY HARMFUL.

THEY ARE COSTING PEOPLE IN MICHIGAN AND MAINE JOBS.

THEY ARE MAKING LIFE LESS AFFORDABLE.

SO I THINK THAT THE VOTERS OF MICHIGAN AND MAINE UNDERSTAND IT AND IT'S IN AMERICA'S POWER TO STOP IT.

>> YOU TALK ABOUT RONALD REAGAN.

YOU INVOKE THE SHINING CITY ON A HILL AS WHAT AMERICA HAD BUILT BUT IS NOW WRECKING.

THAT OF COURSE COMES FROM JOHN WINTHROP'S FAMOUS SERMON WHEN THE PURITANS ARRIVE IN AMERICA.

BUT IT WAS MADE FAMOUS BY RONALD REAGAN, WHO MADE IT A SYMBOL OF AMERICAN EXCEPTIONALISM.

EXPLAIN TO ME YOUR VIEW ON WHAT USED TO BE CALLED AMERICAN EXCEPTIONALISM AND WHAT'S HAPPENED TO IT BECAUSE IT'S SMUG TALK ABOUT IN YOUR BOOK "UNRELIABLE BOYFRIEND. "

>> YEAH.

SO YOU KNOW, WALTER, I WOULD SAY PROBABLY MORE THAN AMERICANS REALIZE AMERICA --THE WORLD AND IN PARTICULAR AMERICA'S CLOSEST FRIENDS, COUNTRIES LIKE CANADA, COUNTRIES LIKE AMERICA'S NATO ALLIES, ONE OF WHOM IS CANADA, BUT AMERICA'S NATIVE ALLIES IN EUROPE, COUNTRIES LIKE AMERICA'S ALLIES IN THE PACIFIC ARE GIVING UP ON AMERICA AND ARE STARTING TO SEE AMERICA NOT AS A FRIEND BUT AS A THREAT.

THERE WERE SOME VERY SHOCKING TO ME SURVEYS OVER THE SUMMER THAT SHOWED THAT IN CANADA, IN GERMANY, ALL OF THOSE COUNTRIES SAW CHINA AS LESS OF A THREAT THAN THE UNITED STATES.

THINK ABOUT THAT FOR A MINUTE.

NOW, TO ME THE BIG QUESTION IS CAN THEY RELATIONSHIP BE REBUILT?

CAN, YOU KNOW, THE ALLIANCE OF THE NON- GEOGRAPHIC WEST BE RENEWED IN SOME WAY?

I WOULD SAY A LOT OF CANADIANS, IF YOU ASKED THEM THAT QUESTION, WOULD SAY IT CAN'T, WE CAN NEVER TRUST AMERICA AGAIN.

MY OWN VIEW IS WE NEED TO LEAVE THE DOOR OPEN.

AND I THINK THAT BECAUSE I REALLY BELIEVE THERE'S A BIG FIGHT GOING ON IN THE WORLD RIGHT NOW, THERE'S A FIGHT BETWEEN DEMOCRACY AND DICTATORSHIP.

NOW, I DO A LOT OF WORK IN UKRAINE, AND UKRAINE IS ON THE FRONT LINES OF THAT FIGHT.

THE WORLD'S DEMOCRACIES, WE'RE GOING TO KEEP ON GOING NO MATTER WHAT CHOICE AMERICANS MAKE.

BUT IT SURE WILL BE BETTER FOR THE WORLD'S DEMOCRACIES IF AMERICA IS ON TEAM DEMOCRACY.

>> YOU'VE BEEN ADVISING TO SOME EXTENT PRESIDENT ZELENSKYY IN UKRAINE.

THINGS HAVE GOTTEN WORSE IN THE PAST MONTH OR TWO BETWEEN ESPECIALLY PERSONALLY BETWEEN PRESIDENT TRUMP AND ZELENSKYY.

WHAT ARE YOU ADVISING HIM TO DO, AND WHAT'S YOUR PROGNOSIS FOR THE SITUATION NOW?

>> I THINK THAT'S A REALLY ARE IMPORTANT ISSUE, WALTER, ARGUABLY THE MOST IMPORTANT ISSUE IN THE WORLD RIGHT NOW.

SO THANKS FOR RAISING IT.

AN IMPORTANT STARTING POINT IS UKRAINE, TO THE SHOCK OF I WOULD SAY EVERYONE APART FROM THE UKRAINIANS HAS BEEN DOING VERY WELL ON THE BATTLEFIELD THIS YEAR.

YOU KNOW, THE BEGINNING OF THE YEAR THE CONSENSUS VIEW, THE RECEIVED WISDOM WAS UKRAINE IS GOING TO BE GIVING UP TERRITORY INCH BY INCH, MILE BY MILE AND IT'S JUST A QUESTION OF HOW QUICKLY THAT HAPPENS.

THE REALITY IS UKRAINE HAS NOT ONLY HELD THE LINE BUT IN SOME PLACES PUSHED RUSSIA BACK.

SO UKRAINE HAS BEEN WINNING ON THE BATTLEFIELD, AND PUTIN HAS RESPONDED TO THAT BY ATTACKING UKRAINIAN CIVILIANS, BY ATTACKING UKRAINIAN CITIES.

AND TO ME THAT IS WHY THE BETRAYAL OF UKRAINE BY PRESIDENT TRUMP IS PARTICULARLY APPALLING, BECAUSE WE'RE AT A MOMENT WHEN UKRAINE COULD WIN, WHEN UKRAINE COULD PUSH PUTIN HARD ENOUGH TO THIS TERRIBLE WAR WOULD END, AND THAT, YOU KNOW, THIS THREAT TO THE WHOLE IDEA THAT SOVEREIGN STATES CANNOT BE INVADED BY THEIR NEIGHBORS, YOU KNOW, THE GREAT POST-WORLD WAR II SETTLEMENT, WE COULD COME OUT ON THE POSITIVE SIDE OF THAT.

THE TRUMP ADMINISTRATION AND THEIR PERPLEXING SUPPORT FOR PUTIN IS PUTTING ALL OF THAT IN JEOPARDY.

I REALLY APPLAUD PRESIDENT ZELENSKYY FOR HIS DETERMINATION, FOR BEING SO RESOLUTE, AND FOR DOING SOMETHING REALLY HARD, WHICH IS BEING OPENING AND CANDID ABOUT THIS U. S. BETRAYAL.

AND THAT IS A HARD THING TO SAY.

I THINK IT'S REALLY IMPORTANT BECAUSE IT'S IMPORTANT FOR AMERICANS TO UNDERSTAND WHAT THEIR GOVERNMENT IS IS DOING.

AND IT SORT OF GOES BACK TO MY MESSAGE ABOUT THE UNRELIABLE BOYFRIEND IN CANADA AND THE UNITED STATES.

LIKE AT THE END OF THE DAY I REALLY DO HAVE FAITH IN THE AMERICAN PEOPLE.

I DO NOT THINK THEY WANT A TRADE WAR WITH CANADA.

AND I THINK THEY RECOGNIZE THAT PUTIN IS A CRIMINAL DICTATOR INVADING A NEIGHBORING COUNTRY THAT JUST WANTS TO EXIST AND THAT THE UKRAINIANS ARE BRAVE PEOPLE WHO ARE FIGHTING FOR THEIR SOVEREIGNTY.

AND OPINION POLLS SHOW THAT, THAT THE VAST MAJORITY OF THE AMERICAN PEOPLE RECOGNIZE THAT THE UKRAINIAN CAUSE IS JUST AND RECOGNIZE THAT PUTIN IS A THREAT.

SO I THINK ALTHOUGH IT WAS HARD WHAT PRESIDENT ZELENSKYY SAID, DIFFICULT TO SAY HARD THINGS CLEARLY AND CANDIDLY, I THINK IT WAS IMPORTANT.

AND THE AMERICAN PEOPLE DESERVE TO KNOW THE TRUTH.

>> WHAT SHOULD CANADA DO AND WHAT IS CANADA DOING TO HAVE BETTER RELATIONSHIPS WITH CHINA BOTH ON TRADE AND WE HEAR EVEN ON SOME MILITARY AND DEFENSE MATTERS THERE'S DISCUSSIONS?

>> SO WALTER, I'M NO LONGER IN THE GOVERNMENT AND I AM A CHINA HAWK.

I THINK THAT THE WORLD'S DEMOCRACIES NEED TO BE VERY CAREFUL ABOUT GETTING TOO CLOSE TO CHINA.

I WAS APPALLED, AS I KNOW SO MANY PEOPLE WERE, WHEN WE SAW PRESIDENT TRUMP DIRECTLY SIDING WITH RUSSIA, WHEN WE SAW HIS REPRESENTATIVE, STEVE WITKOFF, DESCRIBING PUTIN AS A HUMANITARIAN.

THOSE WERE SHOCKING, APPALLING MOMENTS, AND WE SHOULD BE SHOCKED AND APPALLED.

IF WE'RE SHOCKED AND APPALLED BY THAT, WE NEED TO RECOGNIZE THAT CHINA IS RUSSIA'S NUMBER ONE SUPPORTER RIGHT NOW.

THE RUSSIAN ECONOMY IS CONTINUING TO OPERATE BECAUSE OF CHINA.

XI HAS TALKED ABOUT THE ETERNAL FRIENDSHIP HE HAS WITH PUTIN AND BETWEEN CHINA AND RUSSIA.

AND CHINA IS SUPPORTING EQUIPMENT FOR RUSSIA'S MILITARY.

SO IF YOU ARE A PERSON WHO BELIEVES IN DEMOCRACY, IF YOU ARE A PERSON WHO BELIEVES THAT PUTIN'S DICTATORSHIP IS TRYING TO TEAR DEMOCRACY DOWN, STARTING WITH UKRAINE BUT IS A THREAT TO EUROPE, AND I BELIEVE ALL THOSE THINGS, THEN YOU HAVE TO RECOGNIZE THAT CHINA IS PART OF THAT EFFORT TOO AND IS ON THE WRONG SIDE.

>> ONE OF THE GREAT GLOBAL FORCES HAPPENING NOW IS THE RISE OF PLUTOCRATS, WHETHER IT BE IN RUSSIA OR THE UNITED STATES.

AND YOU WROTE A BOOK IN 2012 CALLED "PLUTOCRATS," AND YOU TALKED ABOUT THE PROBLEMS THAT CAN ARRIVE WHEN THERE'S A GREAT DISPARITY LIKE THAT.

YOU ALSO THEN ADDRESS IT IN YOUR NEW BOOK, "UNRELIABLE BOYFRIEND. "

YOU WRITE "THEY MAY BE SCORPIONS BUT IT'S OUR JOB, WE THE PEOPLE YOU THROUGH OUR ELECTED GOVERNMENT TO IMPOSE ON THEM THE CONSTRAINTS THAT WILL CHANNEL THEIR INEVITABLY SELFISH SELF-INTEREST FOR THE PUBLIC GOOD. "

TELL ME HOW YOU THINK GOVERNMENTS NOW HAVE TO DEAL WITH THIS NEW ECONOMIC ORDER WE'VE BEEN IN FOR THE PAST 30 YEARS.

>> YEAH.

SO WHEN I WROTE "PLUTOCRATS," I COULD SORT OF ANALYTICALLY SEE THAT WE AND IN PARTICULAR THE UNITED STATES WAS MOVING TO A REAL PLUTOCRACY.

BUT IT'S ONE THING TO UNDERSTAND SOMETHING ANALYTICALLY.

IT'S ANOTHER THING EMOTIONALLY TO ACTUALLY SEE IT.

AND I HAVE TO SAY WHEN YOU SEE THE JUST EXTREME WEALTH THAT A HANDFUL OF PEOPLE HAVE ACCUMULATED IN THE UNITED STATES AND THE EXTENT TO WHICH THAT WEALTH HAS BECOME AN OUTSIZED POLITICAL VOICE IN THE UNITED STATES AND AROUND THE WORLD, JUST CONSIDER THE ELON MUSK STARLINK DRAMA, I THINK, YOU KNOW, MY OWN FEARS OF PLUTOCRACY IF ANYTHING WERE UNDERSTATED 15 YEARS AGO.

WHAT DO WE HAVE TO DO ABOUT IT?

I'M GLAD YOU READ THAT QUOTE BECAUSE I AM PRO A MARKET ECONOMY.

I AM PRO CAPITALISM.

VERY EARLY ON IN MY CAREER WHEN I WAS STILL A STUDENT I ACTUALLY LIVED IN THE ACTUAL SOVIET UNION.

SO I KNOW WHAT IT'S LIKE TO LIVE IN A CENTRALLY PLANNED ECONOMY WHERE THE STATE OWNS AND CONTROLS EVERYTHING.

IT'S NOT GOOD, WALTER.

I REMEMBER STANDING IN LINE FOR SAUSAGE AND FOR BUTTER.

AT THE END OF THE DAY A MARKET ECONOMY WORKS.

BUT A MARKET ECONOMY ONLY WORKS IF, YOU KNOW, WE THE PEOPLE THROUGH OUR DEMOCRATICALLY ELECTED GOVERNMENTS CONTROL THE MARKET, CONTROL THE MARKETS, SHAPE THE MARKETS, REGULATE THE MARKETS AND CONTROL THE CAPITALISTS.

IT WAS WARREN BUFFETT WHO SAID THAT HE LIKES TO INVEST IN COMPANIES THAT HAVE A MOAT AROUND THEM, THAT DON'T HAVE COMPETITION.

THAT'S WHAT EVERY GREAT INVESTOR, THAT'S WHAT EVERY CAPITALIST WANTS.

AND IT'S THE JOB OF GOVERNMENT TO REGULATE, TO BE SURE THAT BUSINESSES ARE ACTING IN THE INTERESTS OF THE PEOPLE, TO BE SURE THAT MONOPOLIES ARE NOT FORMED AND TO BE SURE THAT THE PEOPLE WHO ARE ACCUMULATING GREAT WEALTH THANKS TO ALL OF US PAY THE TAXES THAT ARE NECESSARY TO CREATE A JUST SOCIETY TO ARE PROVIDE A SOCIAL SAFETY NET.

IT IS CONNECTED TO THE UNRELIABLE BOYFRIEND AND TO MY OWN HOPE THAT WE CAN RENEW THE WESTERN ALLIANCE BECAUSE ONE OF THE CHALLENGES WITH PLUTOCRATS AND DEMOCRACY IS CAPITAL HAS GONE GLOBAL AND DEMOCRACY IS NATIONAL.

AND SO UNLESS YOU HAVE THE WORLD'S DEMOCRACIES WORKING TOGETHER TO REIN IN THE PLUTOCRATS, TO ENSURE THAT THE WORK THAT THEY ARE DOING SERVES EVERYBODY, THEN THE PLUTOCRATS CAN ALWAYS JURISDICTION SHOP.

THEY CAN ALWAYS THREATEN A COUNTRY, LOOK, I'M GOING TO LEAVE.

IF YOU TAX ME, IF YOU REGULATE ME I'M GONE.

AND ONE OF THE THINGS WE'VE SEEN OVER THE PAST 30 YEARS IS A RACE TO THE BOTTOM WHEN IT COMES TO TAXATION, WHEN IT COMES TO REGULATION.

UNDER THE BIDEN ADMINISTRATION THERE WAS ACTUALLY AN EFFORT TO END THAT RACE TO THE BOTTOM, TO DO A DEAL AMONG THE WORLD'S DEMOCRACIES, AMONG THE WORLD'S RICHEST COUNTRIES ON TAX.

WHAT WE REALLY NEED, WHAT AMERICANS NEED IS AN ADMINISTRATION THAT'S PREPARED TO RENEW THAT EFFORT.

>> CHRYSTIA FREELAND, THANK YOU SO MUCH FOR JOINING US.

APPRECIATE IT.

>> GREAT TO BE WITH YOU.