At the G7 summit held in Canada’s Rocky Mountains on June 15-17, 2025, its host, Canadian Prime Minister Mark Carney, seemed to be speaking two very different diplomatic languages. In the presence of Donald Trump, he deployed calculated flattery, speaking of cooperation with the US president on defense, border security, and trade files. In meetings with the rest of the G7 and leaders of other democracies, especially after President Trump departed early, however, he spoke of the US administration as a threat to the international order and took a central role in discussing initiatives to disengage from the United States, including Canadian spending commitments toward an independent European-led defense of Ukraine and trade agreements intended to work around Washington.
That careful diplomatic tightrope walk reflected the truly unprecedented set of circumstances that had brought Carney into office in a highly unlikely April 28 election victory for his center-left Liberal Party, and the uniquely awkward position Canada now holds in the community of Western democracies. On the one hand, no other country is so vulnerable to America’s turn to ultra-nationalism and protectionism: Almost 70 percent of Canada’s economy consists of trade in goods and services, and almost 80 percent of that trade is with the United States, much of it in natural resources that cannot logistically be shifted to other markets.
A Mood of Anti-American Defiance
On the other hand, few countries have experienced such a dramatic change in national mood and in attitude toward the United States. Prior to Trump’s January 20, 2025 inauguration, polls showed that a strong majority of Canadians held favorable views toward the United States, and were poised to give the opposition Conservative Party a strong House of Commons majority in the forthcoming election—hardly a surprising development, given that the Liberal Party under Prime Minister Justin Trudeau had been in power for almost 10 years, through several economic and political crises, and faced the international anti-incumbent mood that had swept many pandemic-era parties out of office. But as soon as Trump began promising punitive tariffs against Canada and threatening Canada’s sovereignty with near-daily suggestions that the country become the “51st state,” Canadians erupted in a surge of anti-American defiance.
Within months, Canadian air travel to the United States declined by 40 percent over the previous year. The Canadian boycott of US products—which included the government-owned liquor retailers in the largest provinces, which are among of the largest alcohol buyers in the world, removing all US bottles from their shelves—had a dramatic effect on Canadian retail preferences.
The issues Canadians told pollsters were motivating their voting decisions, which in January were dominated by housing, inflation, and immigration, all but disappeared, replaced by the end of February by an almost exclusive focus on the single issue of Trump and his administration. And the Conservative Party, which in January had been poised to win a very large parliamentary majority, suddenly plummeted in the polls. It was the first Canadian election in decades dominated entirely by a foreign-policy issue, and the Trump threat forced both major parties to pivot away from their previous approaches.
The Conservatives had gambled on a shift to the populist right, choosing a leader, Pierre Poilievre, who had been influenced by Trump’s MAGA movement and who had peppered his speeches and social media feeds with conspiracy theories and memes popular with that movement, including claims that the Liberals were agents of the sinister World Economic Forum and appeals to the anti-vaccination protests that had arisen on the political fringe during the pandemic. After January, those messages sounded far too similar to Trump’s speeches, and he dropped them.
Facing waves of defensive nationalism from voters and huge public rallies against Trump, the Conservatives pivoted, holding their own nationalistic rallies and pledging to combat the Trump tariffs. But it was too little, too late: Poilievre mainly stuck to his pre-Trump domestic-policy campaign messages and refused to speak of a major break from the United States, to the dismay of the moderate conservatives who dominated his parliamentary caucus. This resulted not only in his party’s surprise election loss, but also in Poilievre losing his own seat.
Managing a Mercurial Trump
That had a lot to do with the decision of the Liberals to replace Trudeau with Mark Carney, an economist with no experience in electoral politics who lacked his predecessor’s camera-friendly charisma and celebrity but who had a reputation as a technocratic problem solver and international negotiator. He had served both as governor of the Bank of Canada during the 2008 financial crisis and as governor of the Bank of England during Brexit and the height of the COVID-19 pandemic.
From the moment he became Liberal leader on March 14, Carney campaigned almost exclusively on his ability to respond to the Trump threat and manage the mercurial president. Key to this was his recasting of domestic policy issues as a core component of his foreign-policy agenda: He promised an emergency “nation-building” response consisting of large-scale public investments in the rapid construction of significant transportation and energy infrastructure projects and the building of millions of houses. Fiscal concerns were largely shunted aside on the grounds that Trump’s trade attacks posed a national emergency on the scale of the 2008 crisis or the COVID-19 pandemic, and required a similar Keynesian fiscal response.
In response to the dramatic change in national mood, Carney campaigned from the beginning on making a break from the United States. “The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperations, is over,” he declared in a March 27 speech. “We will need to dramatically reduce our reliance on the United States. We will need to pivot our trade relationships elsewhere, and we will need to do things previously thought impossible at speeds we haven’t seen in generations.”
In this regard, he seemed to echo the other G7 leader elected on a mandate to break from the United States. German Chancellor Friedrich Merz, who on his own election night, February 23, declared that “my absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the United States,” and then proceeded to abandon his center-right Christian Democratic Union’s political and fiscal traditions in order to organize and finance such a break.
No Replacing the US Market
Carney has used similar language, and has worked actively with European leaders from the beginning on the major projects of military, trade, and political disentanglement from the United States (his first trip as prime minister, in a break from the longstanding tradition of going to Washington, was to London and Paris for meetings with European leaders). He immediately began negotiating a free-trade and economic cooperation agreement with the United Kingdom (to supplement the active but not yet fully ratified Canada-European Union Comprehensive Economic and Trade Agreement, which was signed in 2016).
But Carney, as an economist, is well aware that Canada cannot replace the American market with new trading partners the way European and democratic Asian countries potentially can. A major part of his “managing Trump” agenda was always going to involve making whatever sacrifices were necessary in order to maintain the free trade relationship with the United States.
Canada is uniquely dependent on the United States, by some measures even more than Mexico is, and in ways that would be all but impossible to disentangle. One 2024 analysis, by Bloomberg, found that US tariffs of 20 to 25 percent would have wildly different effects on various countries. One certain victim would be the United States itself, whose citizens would face formidable inflation, especially if they were applied to Canada’s largest export, petroleum. Most trade partners would be relatively unaffected in the long run, the analysis concluded, because they would be able to fall back on their domestic economies and neighboring countries. The European Union, with 450 million consumers in its 27-country free-trade zone, would actually experience a small net increase in trade under this projection—as would China, with billions of increasingly prosperous consumers in its neighborhood.
But Canada, with a low population distributed across the world’s second largest landmass, a geographically and linguistically fragmented domestic consumer market, no major regional consumer backstop outside the United States, and even fewer alternative sources of investment, would be swept under: In the face of a 20 percent US tariff, the analysis found, its net exports would decline by a third. A lot of those Canadian exports consist of petroleum and natural gas, whose only viable physical market is the United States. Though the primary petroleum-exporting province, Alberta, has lobbied for the federal construction of a major gas pipeline to the Atlantic to reach the European market, it is likely that Europe’s rapid shift away from carbon-based energy and transportation would render such an expensive and time-consuming project unprofitable by the time it was completed.
Calls for Realist Foreign Policy
This has confronted Carney with the foreign policy paradox other leaders witnessed at the G7 summit: His citizens are demanding a complete break from the United States, but he cannot afford to do anything that would alienate Trump or his administration from Canada. He is aware of what happened to his predecessor, Justin Trudeau, who initially had good relations with Trump. At an earlier G7 leaders’ summit, in 2018 in Quebec, Trudeau angered the US president by mildly criticizing his proposed protectionist trade policies, leading Trump to denounce his Canadian counterpart in angry tweets and threaten to tear up the North American Free Trade Agreement—which he did abandon, requiring a new agreement to be painstakingly negotiated.
Because Canada’s core national interests are so tightly enmeshed with the United States, there were calls from the beginning for the Liberal prime minister to forge a strictly realist foreign policy. Both Trudeau and his Conservative predecessor, Stephen Harper, had largely presented themselves as foreign-policy idealists (albeit with very different ideals), whose international engagements were often devoted to symbolic projections of national values: Harper had officially boycotted China, refusing to attend its Olympics in 2008, and had committed Canada to a major military role in Afghanistan; Trudeau had promoted a “feminist foreign policy” devoted to funding projects focusing on equity and gender justice abroad. The advent of Trump’s extreme-right demagoguery, some argued, required a pivot to realism: “Canada needs to take control of the steering wheel. We need to come forward with a plan that identifies where our national interests converge and where we can deepen the relationship,” three Canadian political analysts wrote days after Trump’s re-election.
Not for Sale
So, Carney has attempted, in his White House and G7 meetings with Trump, to hold his tongue and build a congenial relationship, while at the same time quietly trying to signal to Canadians that he is not selling out. He has somehow persuaded the US president to stop referring to the Canadian prime minister as “the governor of the 51st State”—his ubiquitous nickname for Trudeau. At his initial White House meeting he impressed both Trump and Canadian audiences by using Trump’s language of real estate to spurn the annexation threat: “Having met with the owners of Canada over the course of the campaign, last several months, it’s not for sale, won’t be for sale, ever.”
Behind this language are a number of policy commitments likely intended at least in part to satisfy Trump’s designs and demands. The Liberal immigration and border-security bill, tellingly named the Strong Borders Act, consists partly of policies designed to shift Canada’s high number of asylum applicants and irregular immigrants (most of them temporary workers who have overstayed their visas) into immigration categories whose bureaucracies are not as overwhelmed. But other parts of the bill are best described as acts of border-security theater designed to tighten security at the Canada-US border, in tandem with a C$1.3-billion increase in spending on border patrols announced in February. One of Trump’s many rationales for imposing tariffs on Ottawa has been his claims that Canada’s porous border is flooding the United States with fentanyl and illegal immigrants. Both claims have been thoroughly disproven, but Carney has chosen to humor them with security commitments.
Likewise, Carney appeared eager to have Canada participate in Trump’s grandiose “Golden Dome” continental missile-defense program, which defense-technology experts describe as unworkable and implausibly expensive. But given that Carney made this commitment (without any spending pledges) at the same G7 session in which he pledged to negotiate a new trade agreement with the United States within a 30-day period, he was likely in no position to be rejecting any participation in the military-technology megaproject.
Shift Toward Europe
At the same time, Carney has been active in talks with European and Asian partners toward breaking away, as much as possible, from dependence on the United States in defense, trade, climate policy, and other key fields. He pledged an additional $4.3 billion in Canadian spending on arms and other support for Ukraine, part of the Europe-led initiative to replace lost US support, and increased Canada’s military spending by almost 25 per cent, which he claims would cause Canada to meet the NATO target of 2 percent of GDP for the first time, in part in preparation for a potential withdrawal of the United States from NATO or its replacement with a new European-led collective-defense pact. And he joined France and the United Kingdom in issuing a statement censuring Israel for its denial of aid to Gaza and pledging to recognize a Palestinian state—a gesture seen as an effort by the prime minister to break Canada both from its comparatively neutral Middle East policy and from any alignment with US policy on Israel-Palestine, part of a larger attempt to shift diplomatic allegiances away from Washington and toward Europe.
So far, Carney’s “dual-use” foreign policy, intended to please Trump’s often delusional ambitions while simultaneously engineering a break from Canada’s southern neighbor, has managed to maintain a balance between these two ultimately irreconcilable goals. That’s in part because he has had the support of other G7 leaders, who tolerated and even actively encouraged a fairly results-free Alberta summit in order to keep Trump at bay (some, such as Carney’s British counterpart Kier Starmer, had their own reasons for wishing to appeal to Trump, in his case a pending trade agreement).
And Canadian voters, for the moment, seem to understand the need to “manage” Trump, including with otherwise questionable legislation. In the longer term, Carney’s Janus-faced US policy is sure to be unsustainable and collide with itself. But then his strategy may only need to last until Trump’s control of all branches of US government has a chance of ending in the mid-term elections in 2026. In the meantime, the economist prime minister appears to be engaging a practice known, in the language of Canada’s national sport, ice hockey, as “skating out the clock”—pushing the puck around the rink, and keeping it away from either team’s net, until the whistle blows and the period has finally ended.
Doug Saunders is the international affairs correspondent for the Canadian newspaper The Globe and Mail.
