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Morning Update: Trump-Trudeau trade meltdown; why Kim may have to make nuclear concessions

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These are the top stories:

Trump’s attacks on Trudeau: Who said what and the impact on trade

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The threat of an all-out trade war continues to grow, this time sparked by Donald Trump's comments immediately following the G7 summit in Quebec. At a summit wrap-up news conference, Justin Trudeau said Canada wouldn’t be “pushed around” by the U.S. amid the tariff dispute on steel and aluminum. That prompted Trump, mid-air on his way to the North Korea summit, to slam Trudeau as “very dishonest and weak.” Trump then proceeded to order U.S. officials to withdraw from a joint G7 communiqué discussing fair and balanced trade. White House trade adviser Peter Navarro went so far as to say there “was a special place in hell for any foreign leader that engages in bad-faith diplomacy with Donald J. Trump and then tries to stab him in the back on the way out the door and that is what Justin Trudeau did.”

Trump also threatened to impose 25-per-cent tariffs on car and truck imports, a move that would cripple Canada’s auto industry (for subscribers). That threat comes as the renegotiation of the North American free-trade agreement is stalled. And Trump upping the rhetoric could make it harder for Trudeau to compromise on a deal without the appearance of giving in to Trump’s demands, experts say. Foreign Affairs Minister Chrystia Freeland is brushing aside concerns that NAFTA is dead; she is expected to meet with U.S. Trade Representative Robert Lighthizer on Wednesday.

Here’s Barrie McKenna’s take: “Canada is already suffering as companies delay investments or divert them to the United States to escape the uncertainty of being on the wrong side of any protectionist barriers. The steel and aluminum tariffs, and threats of more to come, are still relatively fresh. But the effect of the uncertainty they sow could last much longer − perhaps long after Trump leaves the White House – particularly if businesses lose faith in the [World Trade Organization] and the rules-based trading system.” (for subscribers)

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Trump and Kim Jong-un have arrived in Singapore for their historic summit

Tomorrow’s summit is the first-ever meeting between a North Korean leader and a sitting U.S. president – but don’t expect a quick deal on denuclearization. Trump has said he is looking to reach an agreement for the North to give up its nuclear arsenal, but in recent comments cautioned that this might be the first step in a series of discussions.

Past nuclear deals have fallen apart over North Korea’s unwillingness to give outsiders full access to inspect its nuclear program. However, this time might be different. As The Globe’s Asia correspondent Nathan VanderKlippe reports, North Korea has, in many ways, shifted from its ambitions of a socialist paradise toward a market-driven economy. That change has altered the country’s dynamics of power, leading some experts to believe that Kim may need to reach a deal or risk threats to his own domestic authority. Sanctions shrunk the North’s economy by an estimated 2 per cent last year, and a continued downturn could provoke discontent among local elites and entrepreneurs.

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Unpacking Doug Ford’s vow to dismantle Ontario’s cap-and-trade system

More than $2-billion of existing emission allowances held by businesses could be rendered worthless if Ford sticks to his promise to scrap the cap-and-trade program put in place by the Ontario Liberals (for subscribers). It would also set up a potential showdown with Ottawa: Justin Trudeau has said he will impose a carbon tax on any province that doesn’t adopt its own system. If the federal Liberals remain in power past 2019 (and successfully defend against Saskatchewan’s court challenge to the carbon plan) then Ontario businesses could end up paying more than under the current cap-and-trade system.

Another key – and early – test of Ford’s governing style will be what he does with Hydro One, Tim Kiladze writes (for subscribers). During the election campaign, Ford said he would fire the utility company’s CEO and replace its board of directors. He doesn’t have the authority to fire the CEO, but replacing the directors could hurt the firm’s bottom line and send a signal to investors that doing business in Ontario is a risky move – the opposite of Ford’s promise to open the province for business.

Here’s John Ibbitson’s take on Ford’s premiership: “After June 29, when the Ontario Progressive Conservatives take office, we will get two Doug Fords. There will be days when a disciplined leader draws from the collective wisdom of a talented team to deliver effective conservative government. There will be days when a rogue premier riles up his base by raging against the elites. The success of Ford’s premiership will hinge on how much the former prevails over the latter.”

All Canadian Starbucks stores will close this afternoon for anti-bias training

The move was prompted by an April incident at a Philadelphia Starbucks where a store manager called the police on two black men who were sitting at a table waiting for their friend to arrive before ordering. The session is built around a series of videos developed to train American employees in May. But researchers are divided on whether this type of brief training can actually lead to a change in behaviour among employees. Forced training can lead some participants to become defensive and “activate bias rather than stamp it out,” according to a paper published in the Harvard Business Review.

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IN CASE YOU MISSED IT

Rafael Nadal won his 11th French Open title

The 32-year-old Spaniard cruised to victory in straight sets, beating Austrian Dominic Thiem 6-4, 6-3, 6-2 (for subscribers). And Thiem, who was appearing in his first major tennis final, couldn’t help but acknowledge Nadal’s brilliance on the clay court: “It’s definitely one of the best things somebody ever achieved in sport.” Nadal won his first Grand Slam title at the French Open in 2005, at the age of 19. He won four straight from 2005 to 2008, five from 2010-2014, and now two in 2017-2018.

Here’s Cathal Kelly’s take on Nadal’s French Open success: “Observers have spent years trying to dissect what exactly makes Nadal so good on clay. He has many advantages – having been raised on it; left-handedness; remarkable movement; his second serve; a mathematician’s ability to construct points and so on and so forth. But by now, Nadal’s key edge is that he does not believe he can lose. More important, no one else believes they can win.”

MORNING MARKETS

Markets shrug off trade fears

Global markets are largely up so far, with New York poised for a stronger open. “Equity markets are higher today as traders shrugged off the less-than-productive G7 that took place over the weekend,” said CMC Markets analyst David Madden. “Relations between the U.S. and some of its allies have deteriorated as President Trump has threatened to halt trading with countries that do not reduce tariffs on U.S. goods.” Tokyo’s Nikkei gained 0.5 per cent, and Hong Kong’s Hang Seng 0.3 per cent, though the Shanghai composite lost 0.5 per cent.In Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 0.2 and 0.7 per cent by about 5:30 a.m. ET. New York futures were also up, and the Canadian dollar was at about 77 US cents.

WHAT EVERYONE’S TALKING ABOUT

A different PM Trudeau, same buckskin jacket. But where is the ‘real change’ for Indigenous peoples?

“During the Harper decade, Indigenous peoples knew where they stood. His government, and really the past 150 years of Canadian governments, were clearly hostile. The past two years of a Liberal government, however, have been more confusing. On one hand, Justin Trudeau is praised internationally for making the relationship with Indigenous peoples, as he says, his ‘most important.’ On the other hand, he is heavily criticized for symbolism over substance. … This government seeks a gradual elimination of the Indian Act through a piece-by-piece dismantling of the legislation and voluntary opt-out processes. However, First Nations will be opting in to a new self-government model that is focused largely on re-entrenching reserve-based, administrative governance. How is this different from the current circumstances? It’s not, really.” – Hayden King and Shiri Pasternak, executive director and research director, respectively, at the Yellowhead Institute

The danger of water is another hurdle for the poor to overcome

“The wealthy regard access to waterfront as a privilege they pay for – and pay through the nose, they grumble-brag to one another – be it Muskoka lake frontage, Marine Drive homes in Vancouver or suburban pools anywhere. It is easy to understand why they do. Summer afternoons next to shimmering waterscapes form memories that go to the heart of what it means to be blessed, surrounded by beauty. Alongside that is an understanding that water, like wealth itself, can be a menace. Attentive parents watch nervously over their children as they fish and swim and water-ski and sail. Tragedies will occur regularly anyway, and they know it. … For poor people, water is a threat of an entirely different character: Worldwide, drowning is one of the leading causes of death for children between the ages of 1 and 18 years. The world’s highest rates of drowning are in Angola, Haiti and Equatorial Guinea. In Bangladesh, in 2008, an average of 46 children drowned each day.” – Kevin Patterson (physician and novelist) and Steve Beerman, co-chair of the Canadian Drowning Prevention Coalition

Ford’s victory: Welcome to the new era of post-policy politics

“The victory of Ford and his party means that Ontario voters have now formally joined the ranks of others around the world who live in the era of post-platform politics and post-policy government. Chronic volatility resulting from global markets and geopolitical jolts has led to widespread acceptance that traditional platforms - and the partisan policies upon which they rest - are largely irrelevant. At the same time, traditional party lines have blurred, allowing greater latitude to hunt and gather the bits that seem to fit the prevailing circumstances. After all, there is little to be gained from publicly committing to a resolute course of action that could be overturned by sudden unforeseeable events. As boxer Mike Tyson famously noted: ‘Everyone has a plan until they get punched in the mouth.’” – Deirdre McMurdy, principal at Navigator

LIVING BETTER

How to make the perfect pastry

The first rule, writes Lucy Waverman, is not to be nervous. That’s because nerves can lead to hot hands, which will affect the quality of the dough. It’s also important to handle the dough lightly to ensure it doesn’t become tough. Visit here for more pastry tips.

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