The U.S.-Canada rupture is a lesson in declining leadership

Trade talks between the U.S. and Canada broke down at the last minute late last month. The result was a temper tantrum. Apart from the tariffs President Donald Trump announced and which were matched by Canadian Prime Minister Mark Carney , Trump signed an executive order renaming Lake Ontario to Lake America .

A few days earlier, U.S. Transportation Secretary Sean Duffy had issued a (not very) veiled threat, saying Canada is “a country that doesn’t have a military,” so America’s oldest and closest ally could never go to war with Trump and win. Vice President JD Vance piled on by jokingly referring to Canada as a U.S. state.

The bluster was a result of the breakdown, not the cause. Negotiations collapsed because nobody on the American side could say who had the authority to make a deal stick as officials pursued incompatible policies. That and the embarrassing actions and rhetoric that followed aren’t just a problem for the U.S. -Canadian relationship. They’re a symptom of the Trump administration’s institutional breakdown. Whether it’s countries or companies, organizations built around single unconstrained leaders struggle when their abilities fade.

The trade war seemed averted on the night of Aug. 18th , when U.S. Trade Representative Jamieson Greer reached a tentative deal with the Canadians. But then U.S. Commerce Secretary Howard Lutnick intervened and inserted harsher terms that surprised Canadian negotiators, according to the Globe and Mail. Carney said the changes called into question the reliability of any deal, and that American demands included restricting Canada’s ability to make trade deals with other countries. He said he “was not prepared to compromise Canada’s sovereignty.” A White House official denied Lutnick derailed anything.

American demands managed the difficult feat of simultaneously being unacceptable, unclear, and unenforceable. The incoherence isn’t an accident. It’s what happens when ambitious people compete to please the leader of a personalized institution who isn’t mandating a unified vision. U.S. presidents have tangled with Canadian prime ministers before, but none has ever threatened Canadian sovereignty because his administration couldn’t get out of its own way.

The corporate world knows this pattern well. Six days after Edsel Ford died on May 26, 1943 , Ford Motor Co.’s board elected his father, Henry, president. No matter that the 79-year-old founder had suffered two strokes — he was Henry Ford . Harry Bennett , who ran the company’s internal security operations, said board meetings “were meaningless when Henry Ford did not attend, and farcical when he did.” When policy questions arose, Edsel’s son Henry Ford II recalled, Bennett would leave for a few hours then say he had seen the elder Ford and relay his orders.

Navy Secretary Frank Knox released Henry Ford II from military service partly because officials in Washington hoped he could stop the chaos in the company’s management. Ford II discovered that Bennett hadn’t seen his grandfather. Edsel’s widow, Eleanor, forced the eldest Ford to step down by saying she would sell her stock if he did not hand the presidency to her son.

More recently there was the Succession-esque war at Viacom Inc. In the spring of 2016, Chief Executive Officer Philippe Dauman was in advanced talks to sell a large stake in Paramount Pictures . But a lawyer for 92-year-old Sumner Redstone , who controlled about 80% of Viacom’s voting shares, moved against Dauman. Dauman sued, calling it an unlawful corporate takeover. Redstone’s holding company then rewrote the corporate bylaws to require a unanimous board vote on any Paramount sale, and his daughter Shari had a seat. The sale died while Viacom’s lead independent director was publicly asking for a meeting with Redstone.

Working from data on roughly 200 autocratic regimes since 1945, researchers Barbara Geddes , Joseph Wright and Erica Frantz found that those where one person monopolizes decision-making behave erratically and often aggressively. Kathryn Dunn Tenpas of the Brookings Institution has tracked senior White House staff turnover back to Ronald Reagan . In January, at the one-year mark of this administration, she found that turnover stood at 29%. As of Aug. 20 , it was 54%.

Days before the war with Iran began, the Wall Street Journal reported that then-Director of National Intelligence Tulsi Gabbard told Trump that killing Iran’s supreme leader would bring a harder regime, close the Strait of Hormuz , and bring attacks on American forces. All three happened. Gabbard’s reward? She was cut out of deliberations concerning Iran and Venezuela . She resigned in May. Reuters reported she was pushed out.

Federal immigration officers operating in Minneapolis shot and killed two American citizens, Renee Nicole Good and Alex Pretti , in January. Homeland Security Secretary Kristi Noem kept her job then, but in March she told the Senate that Trump personally approved a $220 million advertising campaign that featured her on horseback at Mount Rushmore . Trump told Reuters he knew nothing about it. Noem was fired two days later. If failing to cater to the president’s whims gets you fired but disastrous mistakes don’t, ambitious members of the Executive Branch will read the obvious lesson and pursue their self-interest.

The first Trump administration was hardly a well-oiled machine, but it at least aspired to competence. I’ve written two books on presidential leadership. In the next editions this administration will be the case study for the fallout when a president abdicates his managerial responsibilities and the institutions surrounding him are too weak to compensate.

Negotiating with Canada , which has every reason to accommodate the United States , is diplomacy with training wheels. An administration that fumbles that relationship will fail disastrously at more challenging tasks. And that problem will keep getting worse, because there’s no equivalent to Henry Ford II in the Trump administration.

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Gautam Mukunda writes about corporate management and innovation. He teaches leadership at the Yale School of Management and is the author of "Indispensable: When Leaders Really Matter."