The most interesting aspect of Mark Carney’s speech on 22 August, which he delivered with dour resolve having just recalled his trade negotiators back to Ottawa, was not the promise to match Trump’s new tariffs on Canadian products with his own reciprocal tariffs. It was that he said this was a “question of sovereignty”. And that Canadian sovereignty necessitated that he did not capitulate and instead met this attack with a suite of actions that hurt the Americans in retaliation.
The backdrop to Carney’s speech was that a deal to end the trade war, which had been under negotiation for the past year, had fallen apart last week at the final hour. Trump has since suggested that he will rename Lake Ontario as Lake America and JD Vance has called Canada a “state”, implying it isn’t a real country. American demands that were unacceptable to Ottawa included a request for streaming services to be allowed to shunt locally produced and French-speaking shows down the algorithm, and that America had a say over Canada’s trade deals with other countries.
That final point is illustrative. Part of the “Donroe Doctrine” is that the administration now thinks it has the right to control what happens across the Western hemisphere. The implication is that governments in the Americas rule at Washington’s pleasure. Its ambassadors become provincial consuls. America hovers over their national parliaments to keep China from expanding its influence on the continent. The president becomes some sort of continental emperor.
And yet, here was the Canadian prime minister in rebellion. He framed a trade war in terms that made the maintenance of sovereignty the primary factor in whether he would sign the peace agreement. You don’t hear that language much from his fellow politicians on the Western left. Few see economic independence in terms of national sovereignty. In Britain, talk of sovereignty got sullied by those Little Englanders and their obsession with the British constitution. In Europe, the debate over how to inoculate themselves against Trump has focused on military independence, particularly the onshoring of the production of materiel. Trump’s tariffs have been interpreted as something that flattery and defence spending can ameliorate. The only time that European rhetoric has matched Carney’s is when the threat has been territorial (Greenland) and never economic.
“We recognised from the start that America has changed,” Carney said. Again, note how different his analysis is to that from many in Whitehall still wedded to the continuation of the “special relationship”. Carney pursued diversification away from the US from the moment he took office. His Davos speech proclaiming that what we were witnessing was a “rupture” not a “transition” singled him out among America’s allies for its sense of urgency and conviction that a new paradigm had arrived. In other words, Carney would have looked at the European deal and thought, “that might work for a while, but wait until Trump wants more”.
Instead of seeing Trump’s protectionism as the inevitable consequence of there being an erratic man in the Oval Office, and therefore something that would pass once Trump lost interest or power, Carney has cast the trade war in political, rather than personal, terms. “Last spring I warned that America is trying to break us so they can own us,” he said. The monetarist has become the political economist.
It’s worth dwelling on the framing because it has a material impact on the outcome of the trade war. Carney’s gamble is that the victor will not be defined by which side can inflict the most pain, but by the amount of pain each side can endure. And the pain will be real. Around 70 per cent of Canadian exports go to the US. Canadians have stopped buying American alcohol, leading to American alcohol exports across the northern border dropping by 85 per cent at one point last year. Both sides have now announced 50 per cent tariffs on around $20 billion of the other’s exports.
Carney’s martial language is designed to rally Canadians around this warlike mission to defeat an attack by a foreign power. He does not have the same leverage that China had in its own trade war with the US, such as rare earths and critical production of magnets. He knows that Canadian resilience will be necessary to overcome the probable factory closures and job losses. To steady them through that, he has not said that higher tariffs are the unfortunate but necessary cost of the American military alliance. Instead, he has cast the White House as a hostile actor.
Carney’s hope is that a defence of Canadian sovereignty is powerful enough to maintain national unity in the face of Trump’s onslaught. It will be a testcase for whether his singular response to the Trumpian age can hold under pressure. He will have noticed that further economic turbulence will increase the likelihood that Trump loses the House and the Senate in November, and that Trump backtracked in the trade war with China.
And yet, Trump has shown little interest in doing anything to reduce the losses he will suffer in these elections. Look at how long it took for him to try to extricate himself from the Persian Gulf. It requires a mammoth shift in public opinion for Trump to lift his eyes from Fox News. On top of that, Vance and Trump seem to have a personal hostility towards Canada, exemplified by their imperial designs on the country. It is unlikely that smacking their smaller neighbour around will soon lose its appeal. All of which justifies Carney’s view that the shift in the relationship is permanent. But let’s see. How this all plays out will be of much interest to those across the Atlantic.
[Further reading: Latin America will not go the way of Venezuela]
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Subscribe here to commentWhat I’m missing here is the important Carney statement regarding middle-sized economies e.g. EU members joining together in a single market to create a bulwark against US imperial overreach….surely the way forward
The British sent an army to meet the July 4 1776 Declaration of Independence. One half landed in Canada to make sure that any rebel success in the 13 colonies did not affect Canada. Congress nonetheless sent an army under Benedict Arnold to take Canada. They failed but the Brits chased them down to Saratoga where the Yankies were able to muster an army strong enough to beat the Brits. Those British soldiers were prisoners of war until the treaty in 1783 that gave America its independence (as far west as the Mississippi River), ( as if the Brits could enforce that limit). Looking at Carney it is obvious that most Canadians feel they are better off being a separate country.
How does Alberta play in all this ?