Six months in, Canada’s Mark Carney faces two-front trade war with little leverage
OTTAWA – After some six months as Canada’s Prime Minister, former banker Mark Carney faces a tepid economy and mounting obstacles as he attempts to forge a new path for the country amid tariff disputes with its two largest trading partners.
Mr Carney has not sealed a new economic relationship with the United States, as promised during an election campaign defined by President Donald Trump’s tariff and annexation threats, and is
locked in a trade war
with Canada’s No. 2 trading partner, China.
While his minority government has passed one key piece of promised legislation, his policies have angered some in his Liberal party’s progressive wing, including migrant advocates and environmentalists.
Mr Carney, elected in April arguing he was best-placed to negotiate with Mr Trump and steer Canada’s economy through crisis, was widely seen as a test case for how other global leaders might stand up to the US President’s trade demands.
But his administration has made concessions to the US, such as removing many retaliatory tariffs, and dropped much of the fiercely patriotic language that mobilised Canadians against their southern neighbour.
The moves suggest Mr Carney has few options to exert pressure on the US, the destination for nearly three-quarters of Canadian exports.
Tariffs have hit Canada’s steel, aluminium and auto sectors, and while Canada has avoided a recession, some analysts warn economic malaise might broaden in the coming months.
Polls suggest nearly six in 10 Canadians approve of Mr Carney and recognise the unique challenges of his job, though some show that his approval rating has slipped in recent months.
“Carney cannot realistically control the pace of any discussions with Donald Trump,” said Mr Nik Nanos, chief data scientist at Nanos Research, which shows 50.7 per cent of Canadians favour Mr Carney’s leadership versus 28.6 per cent for the opposition Conservatives led by Mr Pierre Poilievre.
Mr Carney said last week that talks with Mr Trump would mostly move to a future review of the trade agreement between the US, Canada and Mexico.
His office did not respond to further request for comment.
Mr Carney is also negotiating with China, which slapped import duties on Canadian canola in August, in response to Canada imposing tariffs on Chinese electric vehicles in 2024.
Canadian Trade Minister Maninder Sidhu is expected to travel to China in November in an effort to lower trade tensions.
“Canada is living in the land of bad options,” said Mr Michael Kovrig, a geopolitical adviser and former Canadian diplomat, adding that capitulating to China to counter the damage being done by the US would be dangerous.
Canadian officials in 2024 concluded that
China interfered in at least two federal elections
.
The Nanos poll showed a rising unemployment rate and the economy have replaced US relations as Canadians’ primary concern.
Mr Carney has said Canada “needed the rupture” with the US and that it can thrive despite the rift.
“We have what the world wants,” Mr Carney said last week, referencing Canada’s natural resources and its expertise in artificial intelligence.
A former UN special envoy on climate and finance, Mr Carney supports increasing Canada’s energy production, hoping to export oil and liquefied natural gas (LNG) to new markets.
Earlier in September, several thousand protesters gathered in various cities to protest Mr Carney’s policies on issues from indigenous rights to climate to migrants.
“We’ve got a prime minister who I know knows very well about climate change and the threat, but he’s still supporting pipelines and LNG,” said environmentalist David Suzuki.
Dr Jeremy Paltiel, a political science professor at Carleton University, said there were few palatable options for Mr Carney amid continued uncertainty.
“Canada does not have a lot of leverage with Trump or China and so we have to use state investment to substitute for foreign investment,” he said.
“We’ve got to figure out how to keep up investment and prepare for whatever might be coming next.” REUTERS