Canadian Prime Minister Mark Carney\u2019s historic reappraisal of the global political and economic order at the World Economic Forum had persuaded Europeans and other middle-power leaders that they had someone willing to stand up to the pugilistic global hegemon that he didn\u2019t need to name.<\/p>\n
But less than two months later, after the United States and Israel started pummeling Tehran, Carney punctured that triumph with a show of support for the attack that dragged the world into yet another Middle East war. In Australia, the second stop on his Indo-Pacific trade mission, he compounded that shock by declaring that the decision had been taken \u201cwith regret,\u201d followed by a \u201chypothetical\u201d response about participating in military actions.<\/p>\n
More from Gabrielle Gurley<\/a><\/p>\n Back in Ottawa early last week and under pressure to make plain the government\u2019s intentions, Carney told Parliament<\/a> that Canada \u201cwill never participate in it.\u201d That somewhat sufficed until La Presse, a Montreal digital news outlet, reported that Iran had attacked a Kuwait air base where American and Canadian troops were stationed on the second day of fighting. The Carney government did not issue any public statements<\/a> about the incident at the time of the attack, and the prime minister is now wading in multiple contradictions.<\/p>\n What\u2019s apparent is that Canada is fighting very different wars on two fronts. On a parallel track, the U.S.-Mexico-Canada Agreement review talks are slowly coming back to life, after being snuffed out by a TV ad<\/a>. Could backing this shooting war, however ill-advised, deliver some leverage for Canada in the nasty trade imbroglio?<\/p>\n Mexico and the U.S. have launched their formal review, but Ottawa and Washington continue to negotiate about negotiations. U.S. Trade Representative Jamieson Greer met with Dominic LeBlanc, his Canadian counterpart, in Washington on March 6 for talks only described as \u201cconstructive and substantive.\u201d<\/p>\n July 1, 2026\u2014Canada Day<\/a>, coincidentally\u2014is D-Day for the formal USMCA joint review. The countries can<\/a> renew the pact, exit it, or operate without renewing it until the pact expires in 2036.<\/p>\n Although President Trump has threatened to dismantle his own agreement<\/a> in favor of bilateral accords, Prime Minister Carney has new, Middle East war\u2013driven options.<\/p>\n Could backing this shooting war, however ill-advised, deliver some leverage for Canada in the nasty trade imbroglio?<\/p>\n The list of American grievances<\/a> is long. One major debate involves dairy products. American dairy producers have penetrated<\/a> the Canadian market, but Canada\u2019s protectionist barriers are high. The country operates a unique supply management system<\/a> based on set prices, provincial quotas, and high import tariffs that make those products more expensive for Canadian consumers, but they help sustain the domestic production industry. (Supply management was a key element of New Deal farm policy<\/a>.)<\/p>\n The Trump administration wants to lower barriers facing American dairy farmers, in part to deal with an oversupply of milk stateside. But dairy protections are a third rail in Canadian politics. Supply management works for Ontario and Quebec farmers, who are critical consistencies in the country\u2019s top two vote-rich provinces.<\/p>\n Digital policies are another irritant<\/a> for the White House. Canada\u2019s Online Streaming Act requires<\/a> major American streaming companies to turn over 5 percent of their revenues to help fund Canadian programming. The Online News Act requires platforms to pay<\/a> publishers for access to content through links or republishing. Then there are the prospects of new social media regulation, which may include bans for some teens and young children, similar to Australia\u2019s restrictions<\/a>.<\/p>\n Carney had already rescinded a 3 percent digital services tax<\/a> on domestic and international companies like Amazon and Google, after Trump threats last year. But Trump, Big Tech\u2019s water carrier, wants more. The tariff war has also produced other unexpected consequences that have rattled the White House, like provincial bans on American beer, wine, and spirits.<\/p>\n Overall, the deal that President Trump keeps hyping isn\u2019t poised to do much for working Americans. That the agreement carved out in 2020 hasn\u2019t created more manufacturing jobs or leveled out trade imbalances is notable.<\/p>\n Canada\u2019s agenda includes seeing the 50 percent tariffs on steel and aluminum and certain copper products lifted along with punishing taxes on vehicles and lumber. Those tariffs were not affected by the recent Supreme Court decision.<\/p>\n The Iranian war and the midterms might force the administration to think differently about the aluminum tariff, given surging aluminum prices<\/a>. The Gulf region, a key aluminum smelting center, is now offline, but there\u2019s a ready supply available above the 49th parallel. Along with the sharp spikes in oil and gas prices, American manufacturers will suffer even more without some accommodations.<\/p>\n Fertilizer is another disrupted commodity, with about a third of the total product that typically passes through the Strait of Hormuz now blocked. Canada is the largest exporter of potash<\/a>, a vital fertilizer ingredient. Fertilizer prices are bound to skyrocket\u2014Canada\u2019s largest customer is the U.S.\u2014which will anger American farmers and affect crop prices just as the growing season<\/a> gets under way in the eastern states and provinces.<\/p>\n Canada is a major oil and gas exporter and plans to contribute to the International Energy Agency\u2019s release of emergency oil reserves<\/a> to tame price shocks, and the Canadian federal government as well as Alberta, Newfoundland, and Saskatchewan stand to reel in<\/a> billions, especially if the war drags on. (The contractions in demand as prices soar will pose their own pressures for Canadian producers.)<\/p>\n Another possible lever is Trump\u2019s fervent wish to restart<\/a> the Keystone XL pipeline project. President Biden shut down the original plan in 2021. However, South Bow, an Alberta-based energy infrastructure company, wants to partner with Wyoming\u2019s Bridger Pipeline to open new segments along a 645-mile pipeline from Alberta to eastern Montana and Wyoming<\/a>, using a new route.<\/p>\n Carney probably wouldn\u2019t mind a lower-key ribbon-cutting to open the Gordie Howe International Bridge between Windsor, Ontario, and Detroit. The bridge suddenly turned into yet another infrastructure controversy thanks to the president\u2019s threat to block its opening. Commerce Secretary Howard Lutnick met<\/a> with Matthew Moroun, a prominent billionaire Trump campaign donor and owner of the Ambassador Bridge, a competing span several miles away, prior to Trump\u2019s threat. The new bridge\u2019s opening date has not been announced, but its toll rates (lower than the Ambassador\u2019s) have been posted.<\/p>\n Above all, Carney\u2019s globe-trotting\u2014his latest trip to Norway involves energy and trade discussions and observing NATO\u2019s Arctic war games\u2014shores up new alliances that help Canada get out from under its former dependence on the U.S. Maclean\u2019s, the Canadian news magazine, has noted<\/a> that the country \u201cis inching its way to superpower status.\u201d<\/p>\n I talked to Fen Osler Hampson, a Carleton University international affairs professor, for a postmortem on Carney\u2019s perfect storm of crises. Trump was predictably not happy about being upstaged in Switzerland and made his displeasure known. \u201cHe got quite burned after his Davos speech,\u201d Hampson says. \u201cThere was also some criticism here in Canada, including by members of the business community and some of the leading associations like the Business Council of Canada who are very worried about what\u2019s going to happen to the Canada-U.S.-Mexico agreement.\u201d<\/p>\n Then came Iran. After backing the U.S.-Israeli offensive, Carney failed to show up for a debate in Parliament on Iran, was called out about his absence, and turned up the next day to repeat that he did not intend to involve Canada in the war. \u201cThere\u2019s been a huge amount of criticism from all sides,\u201d says Hampson of the prime minister\u2019s Iran positioning. \u201cHe doesn\u2019t want to throw the economy under the bus because you have a president who makes decisions on the basis of a whim,\u201d he says, adding that \u201cTrump has enough on his hands right now, and so the best strategy is to say as little as possible, stay out of the way, and hope that we don\u2019t get leaned on as this thing starts to go sideways.\u201d<\/p>\n There is some good news for Carney. Three by-elections<\/a> (special elections) coming up in mid-April\u2014two in Toronto and one in Quebec near Montreal\u2014may deliver a parliamentary majority to the prime minister\u2019s Liberal Party, albeit a very slim one. The Liberals are just two seats short of the magic number of 172. Carney has also benefited<\/a> from three Conservatives and one New Democrat<\/a> \u201ccrossing the floor<\/a>\u201d to join the Liberals.<\/p>\n