- The president was unclear as to why we were going into Iran in the first place, which is why it's been so damn hard for him to get out.

He never articulated a clear vision to the American people.

We are more isolated in the world because of the president's decision to strike unilaterally.

Hello and welcome to GZERO World, I'm Ian Bremmer.

It's summer in North America, temperatures are rising between the United States and Canada.

President Donald Trump questioning the future of the USMCA, that trade agreement that underpins two trillion dollars a year in North American trade, saying America doesn't need Canada for much of anything.

But whether President Trump likes it or not, Canada does remain America's second largest trading partner and the economic relationship between the two countries runs far deeper than many people realize.

For many states across the United States, trade with Canada supports jobs and investment, manufacturing, agriculture and energy production.

And few have more at stake than Pennsylvania, which does billions of dollars in business with Canada every year.

Just last year, the province of Ontario and Pennsylvania traded over $20 billion worth of goods.

And no one knows that better than my guest today, Pennsylvania Governor Josh Shapiro.

Governor Shapiro joined me in Canada while he was meeting with business leaders and government officials, discussing trade and the economic ties that connect his state to our neighbor to the north.

He even found time to take in a Phillies/Blue Jays game.

Diplomacy occasionally comes with good seats.

But our conversation went well beyond tariffs and exports and cross-border commerce.

As governor of one of America's most important swing states, and as someone widely viewed as a leading voice in the Democratic Party and a likely 2028 presidential candidate, Shapiro sits at the center of many of the biggest debates shaping the country's future.

We also discussed the escalating conflict in the Middle East and what it means for America's role in the world.

We talked about artificial intelligence and how quickly it's transforming the economy, whether political leaders are prepared for the changes ahead.

And yes, yes, we talked midterms.

With the nation barreling towards elections in November, Democrats are hoping voters will issue a rebuke on President Trump's second term.

But what lessons has the party learned from its recent defeats?

And what message, if any, can unite a coalition that is still searching for an identity?

I spoke to Governor Shapiro about all that and more.

Don't worry, I've also got your puppet regime.

The lights are out?

Thanks, Angela.

Well, what do we do now?

First, a word from the folks who help us keep the lights on.

Funding for GZERO World is provided by our lead sponsor, Prologis.

Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains.

With a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at Prologis.com.

And by Cox is proud to support GZERO.

The planet needs all of us.

At Cox we're working to seed the future of sustainable agriculture and reduce plastic waste.

Together we can work to create Cox, a family of businesses.

Additional funding provided by the Andrew Carnegie Foundation, Koo and Patricia Yuen, committed to bridging cultural differences in our communities, and... Governor Josh Shapiro, welcome to the show.

Great to be with you.

So here we are in Toronto and, you know, Prime Minister Mark Carney, back at the beginning of the year, troubled US-Canada relationship and said that there had been a rupture in the global order that the United States was responsible for.

How do you think about that?

How do you respond to that kind of a statement?

I think it's clear that the President of the United States has poked his finger in the eye of our allies, including Canada.

I think when he berates the Canadian people and when he berates the Canadian leaders and refers to Canada as the 51st state, he not only does damage to our economic partnership, he erodes the trust that is necessary between our two countries for both countries to be able to thrive, for both countries to be able to succeed.

Part of the reason I'm here is because Canada is an incredibly important trading partner with the Commonwealth of Pennsylvania.

We export about $14 billion a year to Canada and we import about $14 billion a year from Canada.

It is a balanced relationship.

It's important for our farmers.

It's important for our manufacturers.

And so for the president to go and unilaterally, you know, sort of verbally strike at Canada like that, not only creates a division economically, but it erodes the trust that has been so essential for our historical partnership.

It is true that the relationship needs to mold and adapt and change and update with the times.

But the way you do that with a friend is addressing your differences in a constructive manner, not attacking them the way the president has.

So Liberation Day at this point was over a year ago.

There were a lot of views expressed that these countries around the world are taking advantage of the United States economically.

We're letting them free ride on the largess of the United States.

USMCA is a big component of America's trade relationship globally, and right now is under some stress.

First of all, is there any truth in your view to the fact that the US-Canada trade relationship is imbalanced and needs to be redressed in America's favor?

- I think you're raising two issues.

Let me try and address both.

- Sure.

- First, USMCA needs to be updated.

It needs to deal with certain issues that have emerged since it was signed during the first Trump administration.

I'll give you a couple of examples.

We've got to address Chinese inputs in this system.

We've got to address different parts of the service economy, streaming and other issues like that.

So it is important that we update it.

But we've got to work constructively on updating the deal in a way that benefits the United States.

And I don't believe it is a zero-sum game, that if the United States benefits, Canada has to suffer.

I think both can benefit.

Obviously, my focus is on the economy in Pennsylvania and strengthening the ties in the United States, strengthening the economy in the United States.

On the first part of what you said as it relates to tariffs, understand what the President did was push a button and not only erode that trust with Canada and other countries, but he raised costs on the American people.

We saw inflation hit above 4%.

His war of choice in Iran is one reason for that.

The added cost because of tariffs is another reason for that.

We've seen markets shudder for our farmers in Pennsylvania.

We see everything basically cost more as a result of these tariffs.

I think what the president's done is really harmed our economy.

It's made things cost more and it's really set the American economy back.

He loves to brag about how the stock market reached a high or close to a high.

Well, that's nice for some, but the vast majority of Pennsylvanians are hurting with higher costs because of the president's economic policies.

So if you're going to bring up affordability and inflation, we have to talk about Iran.

And it has been the war in Iran and the disruption of the Strait of Hormuz that has been a direct feed input into those increased costs.

We're several months into this war right now.

How would you address this going forward?

What should the Americans be doing?

Well, look, we're seeing American people and the good people of Pennsylvania see the effects of this war of choice every single day when they go to the gas pump and they're paying over four bucks a gallon for gas.

And of course, the cost of a barrel of oil has an impact on so many different points in our economies.

You're seeing everything cost more because of the president's war of choice.

The president was unclear as to why we were going into Iran in the first place, which is why it's been so damn hard for him to get out, because he doesn't know why he went in.

He never articulated a clear vision to the American people or to our allies.

We are more isolated in the world because of the president's decision to strike unilaterally.

The effect of this war has been to replace a whatever 90-year-old Ayatollah with a roughly 60-year-old Ayatollah, who's even more hard-line.

The effect of this war has been not to dismantle all of their nuclear capabilities and destroy the materials, but rather it seems that the Iranians continue to possess that material based on public reporting.

Their arsenal of weapons were not degraded to the point that the president has said in his bloviation and in his rhetoric that has been really irresponsible in this.

And I think he's isolated us further in the world.

It is time to bring this war to an end and to reopen the Strait of Hormuz.

And then it seems that the president continues to be knocking on the door of a deal to do that and then negotiate the nuclear pieces next.

It would be unfortunate if after all that, that's where we find ourselves.

In effect, in the same place when it comes to nuclear material, and in a place where our economy has taken a hit, and in a place where now the Iranians control the Strait of Hormuz.

He's got to figure out a way to get himself out of this mess that he created.

And every day this goes on, it costs the people of Pennsylvania even more, it costs the American people even more.

President Trump made the decision unilaterally to go into the war in Iran, but they went into war with Israel.

Israel is not as popular in the United States today as it was five years ago, ten years ago, especially among young people, including in Pennsylvania.

Do you think US policy towards Israel needs to change, and if so, how?

Well, it's clear it needs to change, and I think it needs to change in a way that benefits America's national security interests first and foremost.

I think one of the first things it needs to change is the MOU that relates to arms sales.

I think Prime Minister Netanyahu said recently they want to begin to wean off of American arms, and I think that that is an important step.

I think second, we need to make sure that the US administration is pushing for a global peace in the region.

I'm someone who has supported a two-state solution, Palestinian state and the Israelis living side by side in peace, where that Palestinian state recognizes Israel's right to exist, where the terrorist group Hamas is not in charge of that Palestinian state, where they have self-determination on the other side of that border.

I think that's in America's national security interest.

But let me be clear, that should not just include the Palestinians and the Israelis.

I think you need to have a global, if you will, peace in the Middle East with the 20-plus Arab nations joining into, if you will, a broader Abraham Accords or whatever that would be called.

It is important to create stability in that region for US interests, and that would be my hope that we could have an administration in Washington that's focused on that.

There was a broad agreement with the United States and most everyone in the region in terms of a phase one of a peace deal.

You even got a Security Council resolution in favor of that.

But as you say, absent a Palestinian state, it's very hard to imagine how the vision that you just put together would actually emerge.

This is where American leadership needs to come in.

A lot of folks, I say this respectfully, have said, "Well, is that really reasonable?

Is that really a possibility, I should say, in this political climate?"

It must be.

We need to make sure that there is stability and peace in the region.

We need to make sure that Palestinians, not Hamas, but the Palestinian people have the ability to see their kids grow up and be anything they want to be.

To grow up and not viewing the Israelis on the other side of the border as the enemy.

And to be in a place where that stability leads to greater stability across the globe.

And that is in America's national security interest.

And we should have an administration focused on that work.

The Democratic Party has not covered itself in glory over the past few years.

And it's not enormously popular right now.

What are the lessons that the party should learn from the last election?

What are the lessons the party needs to learn to make sure they're more successful going forward?

Look, I come from Pennsylvania, the ultimate swing state, and I'm a proud GSD Democrat, a get-stuff-done Democrat.

I've won every election I've ever run, set a record each time I've run.

I think that's largely been because we've delivered results to not just Democrats, but Independents and Republicans as well.

I think one of the reasons why folks are so frustrated is they don't see their elected leaders delivering results that make their lives better, to bring down costs, to make their kids' schools better, to make their streets safer.

We're doing that in Pennsylvania.

I'm proud of that work, and I think we need to elevate elected officials, elevate candidates who are focused on doing that work, not just making a lot of noise, but doing that work that makes people's lives better.

Now, if you're a member of a House, you're a member of the Senate, it's a little bit more challenging in the sense that you're part of a group to get stuff done.

A governor, you know, a mayor actually runs something, right?

It's a little easier to run for things as a consequence.

If you're talking to the Democratic Party as a whole and recognizing just how polarized Congress is, just how little gets legislated right now, how does the Democratic Party get to deliver that message?

I think it's focusing on the things that matter most in people's lives, schools and safety, being able to live in a community that you can afford, where you're going to have a job and opportunity for your kids going forward.

I think Democrats are the party of real freedom, real freedom that allows women to make decisions over their own bodies, allows parents like me and my wife, Lori, to make decisions over what vaccines our kids are going to be able to get, that they can read the books that they want to read, not have certain one banned by certain politicians.

The point I'm making here is that we can be a pro-freedom party and a pro-growth party, a pro-safety party, a pro-education party.

That is what we're doing in Pennsylvania.

We're winning in Pennsylvania in the toughest state in the country to win in.

And that is what I think we need to see more of, not just in our party, but all across America.

Can you be a pro-tech party?

Can you be a pro-data center party?

Americans are increasingly scared of AI.

They're more negative about it than almost any other country in the world.

And it's changed quickly.

And the US has become what it is because of innovation, because of technology, because of entrepreneurship.

How does the Democratic Party and how do you address that going forward?

Well, I don't really view these things as a Democrat.

I view these things as a governor, a governor who's focused on delivering for people and making their lives better.

And I would say that on both utilizing AI and the infrastructure of AI, think data centers, we need to have responsible regulations.

Let me explain.

On data centers, I put forth GRID, which is my plan in Pennsylvania that says, you want to build a data center there, you've got to bring your own power, you got to pay for your own power, you got to be transparent with the local community, meaning tell them who the hyperscalers, tell them what's going to go on there.

You've got to have a local benefits agreement to help that community.

You've got to protect the water sources that are used to cool off those facilities.

As a result of GRID, I think a lot of these speculators that make a lot of noise that rightfully upset the communities, they're going to fall by the wayside.

As it relates to the use of AI, I was the first governor in the entire country to sign an executive order actually deploying AI tools into the hands of our workforce.

Our workers, none of whom have been replaced because we've said this is a job enhancer, not a job replacer.

Our workers report that they're saving about 90, 95 minutes a day utilizing these tools.

Now, when we dispatch those tools into people's hands, we worked with experts at Carnegie Mellon University, Penn State, Penn, and other leaders in the tech industry in Pennsylvania to ensure that we were deploying these tools in a way that brought integrity to the process, in a way that responsibly used this technology, that protected people's private, personal information.

I think you've got to use these tools in a way that is responsible.

The problem I have in the United States is the manner in which the President of the United States has just allowed the tech companies to do whatever they want.

He's taken a total and complete hands-off approach.

You could talk to some of these tech CEOs.

They want responsible regulation.

They want clear rules of the road.

And instead what you are-- and I'm not apologizing for them.

I'm just suggesting they want to see clear-- - You sense a little bit of skepticism on my part.

- No, no, but they want to see clear-- and I'll debate this point with you.

They want to see clear rules.

What the president has done is said there are no rules, and we'll leave it up to you.

And let me tell you something, leaving it up to these tech guys to make their own rules, that is the exact wrong approach.

That's what I was getting to in my answer.

We cannot allow them to be running.

I'll give you just a simple example.

We let Boeing build airplanes.

But you don't get on that airplane until the FAA certifies that it's safe to fly on it.

We hope that Boeing does a good job building the planes.

We hope that they create safety for our aircraft.

But you still want some outside regulator, in this case the FAA, to look at it.

I think we need a similar-- - I don't know what that is for the algorithms that people are engaging with.

- I think we need a similar construct, though, at the federal level.

- The federal level.

This is not something that the states are able to do one-off.

We're taking steps to do that, but we've got to have an approach where the federal government works with states, where we know how to effectively do this work to ensure that there's clarity across the board.

So I believe that the technology companies absolutely want some regulations.

I think they would resist that regulation.

They might, but that's where government has to step up and stand up to.

Let me give you one more example of that, where states are leading, but where we really need a federal answer to this.

More and more young people, teenagers, and I'm the father of four in that age cohort, about 30% to 35% report using these AI chat companions or AI chatbots to communicate with regularly.

We have found increasingly real dangers associated with that.

Pennsylvania just came along, first state to do this, and sued Character AI, a company because this AI chatbot was holding itself out as a licensed medical professional in Pennsylvania, which is against the law to do that in our Commonwealth if you're not really licensed and you're not really a medical professional.

- You're not really a person.

- And you're not really a person.

And they were dispensing behavioral health advice to young people.

We're holding them accountable.

And they're gonna change their behavior as a result of that.

We need a federal approach to being able to do this in a way that protects our kids and protects all Americans from the dangers of AI.

We can't simply rely on these tech companies to do it themselves.

That's where I think we've got to have more robust regulation at the federal level.

The broader issue that this touches on is trust.

And it is who do the American people trust are looking out for them, their families, to help ensure that they're going to have opportunities in the future.

And so much of the trust that the Americans have had, whether it's in the media or it's in corporate America or it's in their political officials, has - we've watched - you and I have watched it deteriorate over the past decades.

How does the United States best address that?

I can tell you how I try and address it as a governor of a large state.

I try and get stuff done for folks.

And I know that may sound trite.

Let me explain what I mean by that.

I believe government can be a force for good in people's lives.

What we have seen now increasingly over many years is the government is actually failing to address people's problems.

Failing to fix your issue for your kid or the broader issues, say, of health care access and affordability.

And both are important, the one-off issue for that family and the broader issue.

In Pennsylvania, we've tried to solve these problems.

This is going to sound silly to you, but it's important.

We went from 48th in the country on permit speed to now being a national model on permit speed.

Why is that important?

National model, you're number one now on permit speed?

Well, depending upon how you calculate it, we're easily top one or two on that.

Okay, that's pretty good.

- What am I getting at here?

I think the blocking and tackling the government used to do well, they're no longer doing.

And also, solving big problems, bringing big change, that's not happening either.

You look at the one big thing legislatively Donald Trump and his enablers in Congress did this year, they took health care away from millions of Americans to pay for a tax cut for the people at the very top.

That's not only not solving problems, that's eroding even more trust.

That's breaking that compact with the American people.

And that's creating more cynicism in our system.

So we're not dealing with the one-off challenges well enough.

We're not solving these big problems as an American government anymore.

And the things that are happening are being done in a way that really hurts the middle class and hurts people who are struggling just to get by.

And that is leading to a breakdown of trust.

And then finally, of course, we have a president of the United States who can't tell the truth.

We have a president of the United States who attacks Americans based on what they look like or where they come from, who they love, who they pray to or choose not to pray to.

Every day, every day, he's segmenting out certain parts of our population and attacking them, whether it's people with disabilities or people who don't vote like him.

That erodes trust.

We've got to get back to having a commander-in-chief, a president of the United States, that wants to lift up our entire country.

Maybe we have differences of opinion on policy, but what we need to do is have someone who's there trying to lift everybody up.

Instead, this guy's trying to tear down huge segments of the population with his chaos, with his corruption, with his cruelty every day.

So Josh, you haven't said whether or not you're running, and I'm certainly not expecting you to make that announcement in Canada, but I do wonder if you were on the stage as the primary start.

What's the slogan that the American people are going to hear from you?

Well, here's what I'll tell you.

I'm running for re-election in the Commonwealth of Pennsylvania.

And I'm proud of the work that we've done, but I'm hungry to do a lot more.

I'm proud that we've got the only growing economy in the Northeast.

I'm proud that violent crime is down about 15%.

I'm proud that we're seeing test scores go up and truancy rates drop because of our historic investments in public education.

Good things are happening.

We've got a lot more work to do.

And I'm focused on running for re-election and serving the good people of Pennsylvania.

And every day I go out, they know my motto is GSD, get stuff done, because I believe government can be a force for good in people's lives.

You got to get stuff done.

You got to deliver.

And that's what I do every day in the Commonwealth.

See, I thought it was God Save Democracy.

So here you go.

You got lots of ways you can play with that.

Governor, Josh Shapiro, thanks so much.

Great to be with you.

Thank you.

Thank you.

And now the puppet regime, where we see how many Europeans it takes to screw in a lightbulb.

Okay, fine.

I guess we will not build this stupid fighter jet together.

Well, it was hardly we to begin with, Emmanuel.

That's easy for you to say.

The lights are out?

Thanks, Angela.

Well, what do we do now?

Just be practical.

We need to screw another lightbulb in.

I think I have one here.

Does it have to be a French bulb?

What, you think it's going to be German?

Where are you going to get it?

You're going to steal it from a hospital or what?

That was part of the plan, yes, but... Look, maybe it's just easier if we get one more shipment of bulbs from... you-know-who.

- God... Fine, but this is the last time.

The very last.

For sure.

Cuba, Calindo, Santos, Paisajes... Hello?

- Monsieur President.

Oh, hello, Mr.

Macaroon.

- It's Macron.

But anyway, could you send us a shipment of light bulbs?

- A light bulb?

Yeah, we are here in the dark and facing our fears.

Oh, really?

Are your fears in the room with you right now?

Well, figuratively speaking, we are... - Putin.

- Putin.

- Sorry guys, just checking wiring here.

That's our show this week.

Come back next week and if you like what you've seen, or even if you don't, but you've got a heck of a Philly accent and a cheesesteak, check us out at GZEROmedia.com [music] Funding for GZERO World is provided by our lead sponsor, Prologis.

Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains.

With a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at Prologis.com And by Cox is proud to support GZERO.

The planet needs all of us.

At Cox, we're working to seed the future of sustainable agriculture and reduce plastic waste.

Together, we can work to create a better future.

Cox, a family of businesses.

Additional funding provided by the Andrew Carnegie Foundation, Koo and Patricia Yuen, committed to bridging cultural differences in our communities, and... (music)