What am I doing wrong?

[Blaupanzer]

I say give her the horses. To each their own. Now when she gets cavalry, that's the end of that trade. Even nerfed, Cossacks can be a real hassle.

BTW, Frederick has been the most reliable of allies in my games. However, as noted elsewhere, he capitulates too easily, so I have to keep an eye on him if vassalage is turned on.