When asked last weekend about stalled U.S.-Canada trade talks and when he’d last spoken with President Donald Trump, Canadian Prime Minister Mark Carney replied, “Who cares? It’s a detail. I’ll speak to him again when it matters.”
Days later, in the face of criticism and claims he wasn’t taking the issue seriously, Carney walked back his comments, calling them “a poor choice of words about a serious issue.” Serious, indeed. For Canada, dealing with Trump is all but an existential issue—a question of sovereignty, economic security, and geopolitical strategy.
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Carney may have some defense for being abrupt. Trump last month threatened an additional 10% tariff on Canadian goods and froze talks after the province of Ontario released an ad on American TV networks that quoted former U.S. President Ronald Reagan as saying tariffs “hurt every American.” The spot infuriated Trump, who called it a “FRAUD.” Carney has since apologized for the ad, and Trump has quietly held off on the additional tariff.
Trump’s threats are a reminder of the challenges Carney, and Canada, face. A year ago, when Trump was preparing to return to office, Canada found itself singled out. Trump had started suggesting Canada should become the “51st state,” and tariffs pose an acute risk for a country that sends over 75% of its exports south of the border. Trade makes up two thirds of Canada’s GDP.
Read More: How Canada Got Hooked on the U.S. Economy
Carney, who took office in March, has been trying to reduce or eliminate U.S. tariffs ahead of the expected renegotiation of USMCA next year. But achieving that may be like Waiting for Godot. Carney is traveling to the U.S. next week for the FIFA World Cup draw, and will see Trump there. But he said he doesn’t want to oversignal, and the U.S. hasn’t “reengaged yet” on trade talks.
As the prospect of a deal with Trump erodes, Carney has moved to keep crucial sectors afloat and his government is deepening ties with other nations. That includes countries that Canada had, until recently, faced diplomatic standoffs with.
A notable example is the news last weekend that Canada and India are restarting trade talks—with an aim to double bilateral trade to $50 billion by 2030. It’s a significant shift from just two years earlier, when the government of former Prime Minister Justin Trudeau accused the Indian government of involvement in the assassination of a Sikh Canadian on Canadian soil. The fallout prompted the two nations to expel each others’ diplomats.
Another is Carney meeting last month with Chinese leader Xi Jinping—the first such high-level engagement between the two states in eight years—to “resolve outstanding trade issues and irritants.” Relations had soured when Canadian authorities in 2018 arrested Huawei executive Meng Wanzhou on a U.S. warrant for bank fraud. China shortly after arrested—effectively kidnapped—Canadians Michael Spavor and Michael Kovrig on what Ottawa called “trumped-up” espionage charges. All three were released in 2021 but tensions between the two nations lingered.
Canada today has little choice but to pursue trade with more nations, in light of the unprecedented threat posed by Trump. But even on the economic front, trade diversification can only achieve so much—at least in the short and medium term.
And Canada ought to consider where its trade relations red lines will be, if it is to have any. It can’t sell and buy everything from, say, New Zealand. But Canada needs to have a deeper conversation about who it should do business with and how much, rather than simply reacting to Trump.
Discussing Canada’s shift in tone in its relationship with India, Canadian foreign minister Anita Anand said it represented “a completely new approach to foreign policy that is responsive to the global economic environment in which we find ourselves.” That was a not-so-oblique reference to Trump and the global free trade regime that Carney has said is all but dead and buried.
All signs point to Canada entering an era of realpolitik, less precious and some might say less principled than the foreign and trade policy of years past but nonetheless focused on the bottom line of national prosperity. After all, you can’t eat your principles.