Mark Carney is on a roll. The tariff war with the US may have hit industry, but it has so far been a political windfall for the Canadian Prime Minister. Having ridden into office on a wave of anti-Trump sentiment, Carney made a splash at Davos in January with a speech declaring a ‘rupture’ with the US-led global order. A standing ovation was followed by swooning coverage in the liberal press. His reputation for defiance reached a crescendo last month with the surprise announcement that Ottawa was breaking off negotiations with Washington. Declaring the US untrustworthy – ‘its signature is written in pencil’ – and ‘at war’ with Canada, Carney imposed retaliatory tariffs, matching Trump’s ‘dollar for dollar’. He has earned Canada an offer to become an ‘associate member’ of the European Union; delivered an address to the European parliament calling for an ‘alliance for the future’ between Canada and the EU that would include ‘deep cooperation’ across a swathe of strategic sectors; and announced a ‘Defence, Security and Resilience Bank’ to fund allied military rearmament and reindustrialization.
Last weekend, Carney granted an extended interview to the New York Times – held with ten journalists at the paper’s Manhattan HQ – in which he disclosed that he was re-considering the purchase of Lockheed Martins’ F35 fighter jets in favour of Swedish alternatives, and suggested that a move away from the dollar towards a range of reserve currencies would ‘provide more flexibility’. When asked if he was concerned about the possibility that the US might use military force against Canada (which Trump has threatened to make a ‘51st state’), Carney replied that ‘when a leader of a country threatens your sovereignty, you adjust accordingly . . . it would be irresponsible not to take certain things into consideration’.
The cautiously tough talk has cemented his reputation as the doughty Prime Minister willing to stand up to US pressure, and as the dependable technocrat the world’s ‘middle powers’ need. Trailing their interview, the New York Times was effusive: ‘Over the past year, he has emerged as the most prominent global leader to take on Mr. Trump. Along the way, he has also begun to define a path toward reducing dependence on a superpower neighbour that he has come to regard as predatory. Around the world, other leaders have looked to him as a model for dealing with an erratic, unreliable ally’. The Financial Times’s Edward Luce was similarly admiring: ‘Carney isn’t just positioning the country for the next election cycle; he is reshaping Canada’s place in the world for decades to come.’
The role has largely been thrust upon Carney by circumstance: the re-election of a volatile US President, which is a symptom of a deep and wide crisis in Canada’s only land neighbour and overwhelmingly important trade, investment and defence partner. Trump’s election in November 2024 threw ‘Governor Trudeau’s’ already troubled and discredited government into crisis. After Trudeau announced his resignation in early January 2025, all rivals to succeed him as Liberal leader got in on the ‘defying Trump’ act. Having bounced between finance and politics in Canada and then the UK for a quarter-century – serving as governor of both central banks and in various advisory capacities to both governments – Carney gave up his position as UN special envoy on climate change, winning the Liberal leadership in March and calling an election the following month.
He was returned to office shy of a majority but having eclipsed the Conservatives’ Pierre Poilievre, who until Trump’s re-election had been considered guaranteed to win, at one stage leading the Liberals by nearly twenty points. Poilievre’s styling as the Canadian Trump, railing against the liberal establishment, woke politics and immigration, had curdled in the context of Trump’s talk of annexation. Carney the suave banker managed to pass, if a little stiffly, as an ‘elbows up’, honest-to-goodness boy from rural Alberta campaigning on a ‘Canadian sovereignty’ ticket. He did not stint on summoning Canadians’ considerable reserves of sentimental anti-Americanism: ‘America’, he declared in his victory speech, ‘wants our land, our resources, our water, our country . . . President Trump is trying to break us so that America can own us.’
While the rhetoric has continued, taking Carney’s approval ratings to 70 per cent – unprecedented for Western politicians in the neoliberal era – his actions tell a different story. In the months following his election, he sought ‘a comprehensive economic and security deal’ with Trump through a charm offensive. Carney passed a Trumpian Strong Borders Act stigmatizing migrants as dangerous, tightening eligibility rules and strengthening the deportation machinery. He talked down the trade deal struck with China at the beginning of 2026. He kept climate change off the agenda, despite two summers of wildfires having ravaged Canada’s forests and notwithstanding his own previous commitments to climate action – or at least, climate finance. He agreed to Trump’s demand that NATO members commit 5 per cent of GDP to defence, even promising to meet the threshold early – diverting money from social spending on housing, health and education, and naming Russia and China as Canada’s main threats. He has muted criticisms of Israeli actions in Gaza, flying to Egypt on short notice to hail Trump’s ‘peace deal’, and immediately declared his support (‘with regret’, he later added) for the US-Israeli war on Iran. He has also expressed interest in Trump’s dubious ‘Golden Dome’ missile defence scheme, overturning decades of Canadian resistance going back to Reagan’s Star Wars project. Even the withdrawal from the trade talks in August was less defiant than it appeared. Carney set the date for imposing reciprocal measures two weeks’ away and continued negotiating in the hope of some minimally acceptable deal. The imposition of Canadian tariffs – answered, of course, by more US tariffs, as well as import bans – has changed nothing.
Although the tariffs are unpopular in the US, and the tit-for-tat levies on steel, aluminium and auto-parts will take a toll on industry in Midwestern states which host key Senate elections in November, the Trump administration has declared it feels ‘no urgency’ to wind down the dispute. The much smaller size of Canada’s economy and its deep integration with the US leaves it more vulnerable. The US accounts for nearly three quarters of Canada’s exports and 60 per cent of its imports. Canada’s exposure to the US market is overdetermined by the proclivities of its capitalist class. As an export-oriented settler-colonial society, it was initially reliant on the UK as the chief destination for its primary exports and principal source of investment. For a brief interlude – the four decades or so either side of 1900 – amid a rise in protectionism across the capitalist world, Canada showed signs of becoming a Polanyian ‘Crustacean nation’, using ample capital exports from London to build national industry behind protectionist walls. Yet from the 1920s it began to integrate with the US, just as its industrial expansion received a huge boost from the Great War. This process accelerated in the postwar period: the famous ‘auto-pact’, merging Canada’s car industry with the US’s far larger one, was signed in 1965.
However, by then alarums were beginning to sound. Already in 1955, the Liberal government commissioned a report that expressed concern about growing foreign ownership of the Canadian economy. In the following decade, another government report elaborated on the issue. Intellectuals warned of a ‘silent surrender’ to the US and the relegation of Canada to a ‘branch plant’ economy. Politicians called for a ‘third option’ – neither the current drift towards greater integration with the US, nor a policy to accelerate it, but a plan to ‘develop and strengthen the Canadian economy and other aspects of its national life and in the process reduce the present Canadian vulnerability’ through trade diversification and industrial policy. In the 1970s, a substantial infrastructure of economic nationalist policy was created, including the Foreign Investment Review Agency, the Canada Development Corporation and a National Energy Programme. But this agenda did not survive the arrival of neoliberalism; tighter integration was central to its Canadian version. Canada’s ruling classes plunged the country deeper into the US’s capricious embrace with the 1988 US-Canada Free Trade agreement, followed by NAFTA in 1992. They have not looked back. Most are still hoping for a deal with the US and, failing that, a more amenable US administration in 2029.
If Carney were to match his rhetoric with action, he would have to stand up to Canada’s capitalist classes. He would have to commit to an anti-neoliberal platform, including boosting Canadian demand through an expanded welfare state and support for unions and higher wages, making public investments in industrial innovation, regulating the financial sector to focus on supporting production rather than predatory lending and speculation. He would have to pursue the real alternatives to trade with the US that lie across the Pacific rather than the Atlantic – where Carney has been concentrating his recent efforts – as well as spend less on the military and re-orient it from its role as an aid to US imperialism to one focused on national defence.
Instead, Carney has been using the opportunity created by the dispute with Trump to advance a neoliberal agenda under the covering fire of economic nationalist rhetoric. He has lowered inter-provincial barriers by passing the ‘pro-growth’ One Canadian Economy Act, which will restrict the ability of local governments to protect the environment, stimulate their economies and protect labour and consumers – all of which will please Canadian capital. He rushed the Building Canada Act through parliament, permitting the government to override laws protecting health, the environment and Indigenous rights for projects designated as in the ‘national interest’. He has cut taxes and is legislating to further undermine labour protections. These reforms are undiluted by the modicum of social liberalism and environmentalism that was once considered necessary to distinguish Canada from the US. With the nation in peril, such frivolities are unaffordable.
The latest boon for capital and the neoliberal agenda has been Carney’s Investment Summit, held in Toronto on 15 September. Notwithstanding his claim that Canada is ‘not for sale’, he invited over a hundred major international investors, half of them from the US, representing $120 trillion of assets, portraying Canada as a ‘safe harbour’ in a time of uncertainty, flogging data centres and pipelines, ports and airports, as well as major tax incentives and a quicker approval process. Capital is delighted and demanding more. And, since Canadian neoliberalism is joined at the hip with US integration, Carney now clarified to his audience of investors that the US-Canada relationship was far from over: ‘To our American friends, let me say this. We will always be neighbours, and Canada will continue to be the US’s most important partner in many key areas . . . After all, even at times of disagreement during our long history, we have always maintained deep ties.’
There is however an element of authenticity in Carney’s David to Trump’s Goliath act. Having spent most of his mature career serving ‘middle powers’, he is mindful of the price of US domination. Back in 2019, at Jackson Hole, the annual conference of central bankers typically dominated by US concerns and priorities, Carney proposed that a ‘synthetic hegemonic currency’ would be better than the dollar. However useful such a stance may be for getting a better bargain within the parameters of US domination, it does not offer a plausible alternative to it; organizing Western hegemony without the US would amount to staging Hamlet without the prince. A countervailing ‘middle power’ alliance at a time when the EU remains a bunch of squabbling nations in the throes of economic difficulties – quite apart from those imposed by Trump – is hardly viable. US domination united the West; now it appears to be ending, and Western politicians are unlikely to find an alternative source of cohesion.
Read on: Susan Watkins, ‘Trump Abroad’, NLR 157.