For nearly four decades, Canada built its economy around closer integration with the United States. Donald Trump has twisted that dependence into leverage, imposing tariffs, threatening Canada’s sovereignty, and openly seeking to pull Canadian industrial production south.
Canadian Prime Minister Mark Carney has moved on. Rather than return to trade talks or wait for the next U.S. president to restore the old relationship, he is urgently building a future in which Canada is less dependent on America.
In September, Carney embraced the prospect of Canada becoming the European Union’s first associate member, not as a step toward full membership, but as a way to reduce Canada’s dependence on any single country without ceding control over its own decisions.
“There is now a price to be paid for access to the United States market,” Carney said, pointing to tariffs, U.S. investment commitments and demands for domestic policy changes.
Carney told the European Parliament that countries need enough economic strength to keep any one power from dictating their choices.
BUILDING OPTIONS BEYOND THE U.S.
He carried that argument into a meeting with French President Emmanuel Macron in Saint-Pierre-et-Miquelon, the French territory just off Newfoundland’s coast.
“Canada and Europe will build an alliance for the future that will strengthen our collective resilience so we can live our lives as we choose based on the values that we share,” Carney said while standing alongside Macron.
Carney’s relentless schedule reflects the urgency of his push to build alternatives to the United States.
He began in Toronto hosting some of the world’s biggest investors, flew to Strasbourg, France, for European Commission President Ursula von der Leyen’s State of the European Union address, raced to Liverpool, England, to meet Britain’s new prime minister and returned to Strasbourg to address the European Parliament.
He met Macron in Saint-Pierre-et-Miquelon before flying back to Ottawa to meet Norwegian Prime Minister Jonas Gahr Støre.
EUROPE BECOMES THE ALTERNATIVE
Trump has suggested Canada’s closer relationship with the EU could amount to a “hostile act” and threatened “very heavy tariffs” on Europe if he judged the move unfriendly.
Canada could become a test case for other middle powers trying to avoid being pushed around by larger countries. In his speech at the World Economic Forum in Davos, Switzerland, in January, Carney argued that “middle powers must act together,” warning that “if you’re not at the table, you’re on the menu.”
Støre echoed Carney, saying tariffs should not become “a weapon to be used against countries, because we will all end up losers.”
The next major step in shaping that proposed relationship is an Oct. 29-30 Canada-EU summit in Montreal.
UNWINDING 40 YEARS OF DEPENDENCE
For Canada, that means undoing some of the reliance developed over nearly 40 years.
The 1989 Canada-U.S. Free Trade Agreement and later NAFTA deepened integration, creating cross-border supply chains in autos, energy and manufacturing. Roughly 70% of Canada’s exports went to the U.S. Europe remains nowhere close to replacing the U.S. market.
Trump underscored that pressure again on September 22, saying the United States was working on a deal to buy potash, a key fertilizer ingredient, from Belarus at prices “substantially less” than it pays Canada. The U.S. relies heavily on Canadian potash: Canada accounts for 79% of U.S. potash imports, according to the U.S. Geological Survey.
Carney walked away from trade negotiations in August rather than accept terms he said Ottawa could not live with. The talks remain suspended, and Carney said that leaving the table was the right decision.
“It was easy business, but it meant we relied too much on one economic partner,” Carney said recently. “That time is over.”
INVESTMENT CHAIR WANTS TO “CRANK THE NON-US”
Dominic Barton, Carney’s pick to chair Invest in Canada and a former global head of McKinsey & Co., said diversification does not mean abandoning the United States.
“We can’t complacently count on it,” Barton said. “It’s not about, let’s not do stuff with the U.S. It’s let’s crank the non-U.S. Let’s be way more ambitious on that side.”
Barton, a former Canadian ambassador to China, said Canada has been too inward-looking.
“We are not very global,” he said, calling Trump’s pressure a “jolt” Canada should use to build more global companies.
Carney wants to double non-U.S. trade over the next decade and aims for a free-trade deal with India by year’s end. He said Canada’s tariff-free access to 1.5 billion consumers could double within six months.
CANADA SELLS THE TRUST AMERICA IS LOSING
Carney is seeking to turn growing doubts about the U.S. as a predictable place to invest into an advantage for Canada. His pitch to global capital is increasingly clear: While Trump’s America uses tariffs and uncertainty as leverage, Canada offers stability, the rule of law and reliability.
“The most sought-after commodity today is trust,” Finance Minister François-Philippe Champagne said. “The world has changed and America has changed. And I think the world has taken notice.”
Trump may ultimately have done Canada a favor by forcing it to confront its economic dependence on the United States, Barton said.
“Maybe in 20 years, we’ll thank Trump for shaking us out of our complacency,” Barton said. “Let’s use the moment.”
The ambition has limits. EU “associate membership” does not yet exist, and Europe cannot quickly replace a U.S. market that buys nearly three-quarters of Canadian exports.
But Carney is hardly alone in concluding that Canada must rely less on the United States.
Former Conservative Prime Minister Stephen Harper said the government “had no choice but to take this path.”
Harper said that conclusion was particularly difficult for him as “one who has long been and known to be a great admirer of America” and who regarded Canada’s close relationship with the U.S. as “among this country’s most precious assets.”
He said the Trump administration views the countries’ economic integration as incompatible with Canada maintaining its sovereignty, he said.
“Thus, to maintain that sovereignty, we must pursue diminished reliance on the United States,” Harper said. “I do find this all very sad, just as equally necessary.”
