Canadian Prime Minister Mark Carney’s trade plan to pivot away from the U.S. has been on full display the past two weeks. There was the prime minister’s televised address to the nation where he repeated his dire analysis that the Canadian-American economic relationship is over, while stating his goal will be to double Canada’s non-U.S. exports in the next ten years. Then there was Canada’s foreign affairs minister, Anita Anand, who recently returned from Beijing and declared that Canada has a “strategic partnership” with China. And Canadians witnessed an Ontario anti-tariff ad fiasco that precipitated U.S. President Donald Trump calling a halt to all Canada-U.S. trade negotiations.
With that drama unfolding in Ottawa, Carney boarded a plane for Kuala Lumpur, Malaysia, where he was intent on advancing trade relations with the Philippines, Malaysia, South Korea, Singapore, Japan – and China. Carney looked to pitch Canada as a reliable trading partner for Asia and positioned his administration as one committed to rules-based trade, in contrast to the American administration. He was looking for some win to expand Canada’s trade opportunities and counter the country’s U.S.-centric trade realities. In the end, Carney achieved no new Indo-Pacific trade deals, and his overtures for a new world trade order outside of the U.S. influence were largely, politely passed over.
The new world trade order, according to Carney, would place Canada as “an honest broker” between European and Asian countries. In Kuala Lumpur, Carney suggested this scenario with choice sniping comments directed at the U.S. In an address to Asian leaders, Carney stated, “We have all been reminded of the importance of reliable partners – who honour their commitments, who are there in tough times, and who engage collaboratively to fix something that isn’t working.” In a conference media session he stated, “There are a lot more countries by GDP that are willing and keen to continue to have relatively open trade; certainly to have rules-based trade, to respect rules-based trade.” He further commented in a public session with business leaders that countries will seek new relations apart from the tariff-crazed U.S., “It’s also shifting because it’s more expensive to trade with the U.S. – that’s what a tariff does.”
In Canadian media, the prime minister held out the promise of new export opportunities throughout southeastern Asia, “The Indo-Pacific is one of the fastest-growing economic regions on earth, and right now it represents only 10% of our total exports.” However, current Liberal policies make it unlikely Canadian business will be able to competitively trade into the Asian market. For example, the Carney government is currently championing a United Nations global shipping carbon tax that will double the cost of shipping for Canadian exporters looking to access the Asian Pacific markets. Canadian labour and energy costs present considerable challenges for exporting goods to Asia but add an additional shipping carbon tax to the equation and Canada is priced out of the Asian market for most manufactured goods.
A major uncomfortable disconnect for the Carney Liberals is the fact that the country’s energy resources – oil, gas, coal – are the commodities Asian countries want most from Canada. There is also the reality that Canada today lacks the infrastructure to increase exports west. Plus, Canadian exporters lack the necessary supply chains or business relationships, and these essential elements in trade take time and effort to develop. Most significant to establish within the Asian region is trust; frankly, Canada is not viewed as a reliable trading partner. On this point, in a Hindustan Times news article last week, the High Commissioner of India to Canada, Dinesh Patnaik, observed that Canada is not yet a reliable trading partner to source oil and gas.
The second leg of Carney’s trade jaunt was to South Korea for the Asia Pacific Economic Cooperation (APEC) meetings. There is great anticipation of his face-to-face meeting with Chinese President Xi Jinping, where Carney is expected to reset Canada-China trade relations and build on that “strategic partnership” between the countries, first signed by the Liberal government in 2006. Carney has recently publicly suggested that Canada could “engage deeply” with China on commodities, energy, and basic manufacturing.
Carney is making much of the two countries’ current $110 billion-plus trade relationship. To put this in perspective of potential Canadian business opportunities, Statistics Canada in 2024 recorded Canada importing $88.8 billion from China (12 per cent of Canada’s total imports) while exporting $29.9 billion worth of goods (four per cent of Canada’s total exports) – nearly half of which were oil, coal, canola, and wood pulp (in that order). Given the current foreign affairs and trade irritants between the countries, what might a recalibrated relationship look like? There is speculation that China will cancel their tariffs on Prairie canola if Canada drops tariffs on electric vehicles. What else: perhaps, more coal to China for more solar panels, perhaps EVs to Canada? What foreign relations factors will be involved in resetting this trade relationship: possibly re-establishing joint medical research, re-starting joint military initiatives, and removal of barriers to Beijing investment in Canadian businesses and property?
The larger questions still are what the Canadian government’s redirected efforts from the U.S. to China means for relations with our southern neighbours. The American administration, from the White House to Congress to U.S. security and intelligence agencies, is already suspect of the Chinese Communist Party (CCP) influence in Canada. The Carney government is dealing with many sensitive files respecting China: money laundering, fentanyl production in Canada and drug cartel activities, the integrity of our intelligence network – and there is also the issue of the government providing $1-billion financing to pay to a China shipyard with ties to the CCP’s military to build new ships for BC Ferries.
Fostering closer relations as a strategic partner with China places Canada offside with the U.S. It is another signal Carney is sending to the Americans that Canada is aggressively pursuing economic and foreign affairs options that do not involve the U.S. Though Canadian media and punditry were fixated on the Ontario’s $75-million ad buy and the pugnacious attack of Trump’s use of tariffs, it has become evident that Canadian trade tactics that have tested the patience of all involved in the bilateral negotiations are the root cause of Trump’s abrupt cancellation of the Canada-U.S. trade talks.
In a White House media scrum, following the Trump’s announcement to cancel the trade negotiations, Kevin Hassett, U.S. National Economic Council Director, stated that Canadians have been “very difficult to negotiate with… You look at all the countries around the world that we’ve made deals with, and the fact that we’re now negotiating with Mexico separately, reveals that it’s not just about one ad, that there’s frustration that’s built up.” He continued, “A lack of flexibility and also leftover behaviours from the Trudeau folks that can be very frustrating for people who are negotiating.” Later in a Fox Business News interview in which Hassett was reflecting on how the Canadian trade team was slow walking the talks, he said, “I think there’s been frustration with the behaviour of the Canadians, the demeanour of the Canadians, the positions of the Canadians, and so it’s probably a good time to take a break.”
The fallout of the past two weeks suggests that likely Carney overplayed his hand in publicly postulating a new trade order with himself cast as the facilitating agent. Trump has said of Carney, “I don’t want to meet with him. I’m not going to be meeting with him for a long time.”
U.S. Ambassador to Canada Pete Hoekstra has been very vocal calling out the “anti-American” sentiment in Canada. He did not mince words in a CTV interview when he concluded, “Canada burnt the bridges with America. Donald Trump did not slam the door… Canada slammed that door shut – all – by – itself.” And the Ambassador stated flatly, “I don’t know how we get this back on track.”
While supporters of Carney and his trade tactics attempt to spin and counter-spin the recent collapse of Canadian-American relations, dozens of countries are signing bilateral trade deals with the U.S. In meetings this week, President Trump signed deals with Japan, South Korea, Malaysia, and Cambodia, and achieved framework agreements with China, Vietnam, and Thailand. He has previously secured trade deals with the U.K., Australia, and the European Union. These bilateral agreements have resulted in the Americans establishing low tariff rates for their trading partners; for example, low 10 percent tariffs were set on U.K. imports, and the 19 per cent tariff rate was dropped completely this week for Malaysia, Cambodia, and Thailand. Business is resuming with the world’s largest and most dynamic marketplace, while the Carney government and Canadians have been placed at the back of the line.
Sean Speer, political commentator and senior fellow at the University of Toronto’s Munk School of Global Affairs and Public Policy, aptly sums up Canada’s predicament with what has become a growing divide between Carney and Trump, “Whatever leverage we may have had becomes weaker and weaker in a world in which the United States has signed deals with the other major economies in the world and Canada finds itself on the outside looking in.”
Recall The Economist interview of less than four weeks ago where Carney was feted as “The Player of Games” leading “a new free-trade revolution,” building trade relationships that would exclude the U.S. Yes, well, judging from the news in Asia this week, that plan envisioned by the global-banker-turned-prime minister certainly has not aged well, has it?
Chris George is an advocate, government relations advisor, and writer/copy editor. As president of a public relations firm established in 1994, Chris provides discreet counsel, tactical advice and management skills to CEOs/Presidents, Boards of Directors and senior executive teams in executing public and government relations campaigns and managing issues. Prior to this PR/GR career, Chris spent seven years on Parliament Hill on staffs of Cabinet Ministers and MPs. He has served in senior campaign positions for electoral and advocacy campaigns at every level of government. Today, Chris resides in Almonte, Ontario where he and his wife manage www.cgacommunications.com. Contact Chris at chrisg.george@gmail.com.
