Guten Morgen. Ich bin Ethan Lou. Every once in a while, Canada rediscovers Europe. Each time the rhetoric has been lofty. But each time, the pull of geography has brought Canada back to the United States. Even now, with tariffs mounting and calls for a European lifeline growing louder, Canada risks repeating that familiar pattern. Prime Minister Mark Carney made a big trip to Germany in August. I was there, and I will tell you what you didn’t see.
Up firstIn the news
Trade: U.S. President Donald Trump announced a new round of punishing U.S. tariffs, including 100 per cent duties on imported branded drugs. Meanwhile, Ottawa dropped countertariffs on a broader range of U.S. goods than initially indicated last month.
Executive: Constellation Software founder Mark Leonard resigns prompting shares to extend a recent plunge after investor pressure
Labour: Postal workers announce immediate strike after Ottawa directs Canada Post to end door-to-door delivery
M&A: Financial services giant Raymond James acquires adviser teams from Richardson Wealth with $1-billion in assets
On our radar
- Today: We’re watching for data on Canada’s monthly GDP for July and wholesale trade for August.
- Abroad: Mark Carney will meet British counterpart Keir Starmer on the margins of the Global Progress Action Summit in London.
German Chancellor Friedrich Merz, receives Canadian Prime Minister Mark Carney in Berlin, Aug. 26.Soeren Stache/The Associated Press
In focusCanada wants to be more European, but can it?
Hallo, I’m the opinion editor in Report on Business. This summer I was one of two Arthur F. Burns fellows from The Globe in Germany. I spent two months in Berlin and reported on Prime Minister Carney’s trip there.
Two days before Carney swept into the city with military honours and quipped “sign me up” after touring a U-Boot at a shipyard, I wandered through Germany’s foreign ministry open house and found Canada looking a little small and cheap. Denmark offered Lego and liquor. South Africa had an opera singer and wine. We had a bingo sheet asking, “What is the name of the Prime Minister of Canada?” and rewarded visitors with a single maple syrup candy.
It was a tiny tableau, but it nagged at me: In a season of grand talk about “new corridors” and “reliable partners,” how big do we really look up close?
Merz (L) and Carney (R) walk during a welcoming ceremony in Berlin.ANNEGRET HILSE/AFP/Getty Images
That question is the spine of this weekend’s feature. It opens with that small scene — call it soft-power minimalism — and then tracks the much larger story: Ottawa’s attempt to pivot meaningfully toward Europe just as U.S. tariffs bite and the 2026 review of the United States-Mexico-Canada Agreement looms. Berlin was Carney’s fourth European trip as prime minister. A Canada–Germany critical-minerals pact was signed. On paper, it reads like momentum.
But the pact isn’t binding, German media barely noticed, this country hasn’t had an ambassador to Germany for more than a year, and there is still no Canadian chamber of commerce based in in the country.
The piece tries to reconcile those two truths: the urgent case for diversification and the stubborn pull of geography. We’ve been here before — in the 1970s “Third Option” moment, in Chrystia Freeland’s 2017 “clear and sovereign course” speech. Exports to Europe have grown, yes, but as a share of Canada’s total exports, the needle hasn’t moved. The problem: decades of infrastructure, standards and supply chains built around one customer.
Mentions of Europe on TSX-listed companies’ conferences calls haven’t budged, while references to the USMCA have spiked; major players are still sending capital south; many industries say the opportunities aren’t there in Europe.
In between, there were the hedges: Natural Resources Minister Tim Hodgson, also in Berlin, talked up liquefied natural gas only “if demand is here and infrastructure is built”; a Port of Churchill timeline measured in half-decades at the most optimistic; a hydrogen plan still waiting to materialize.
It’s not that the pivot to Europe is performative — but it will only stick if Ottawa matches the rhetoric with patient, unglamorous work: de-risking truly strategic projects (and only those), fixing a long-troubled foreign service, making trade help legible to small and medium businesses and nudging capital toward sectors less shackled to geography (artificial intelligence, quantum, clean tech).
If you take one thing away from this piece, let it be this: Diversification is a long game measured in percentage points and persistence, not headlines. In Berlin, the opera was literal. Ours will have to be figurative — and sustained.
Bis später.
ChartedTaking a hit
The interim parliamentary budget officer is warning that Ottawa’s fiscal standing is alarming, and that the country’s public finances will be unsustainable without changes. “We don’t lightly use the word ‘unsustainable,’” said Jason Jacques. The forecast, which comes as Carney’s government is preparing to table its first budget on Nov. 4, does not include any campaign commitments that haven’t been rolled out yet.
BookmarkedOn our reading list
Virtuoso: Canadian piano prodigy Ryan Wang is headed for the competition of a lifetime.
Movement: Trump signs executive order declaring TikTok sale meets U.S. requirements.
Tempo: FinTRAC issues a nearly $20-million penalty against crypto exchange KuCoin.
Attention mortgage seekers
Are you mortgage shopping? If you are under age 40 and shopping for your first mortgage, or looking to renew one in 2025 or 2026, we’d love to hear your story for an upcoming episode of our Stress Test podcast. How are you preparing? What options are you considering? What do you find confusing? We’re looking to speak with Gen Z and Millennial Canadians who are navigating these changes. To participate, please email host Roma Luciw or Zahra Khozema.Morning update
Global markets were mixed as investors awaited key U.S. inflation data that could sway bets on interest rate cuts, while also weighing the impact of fresh tariffs on a broad range of imported goods.
Wall Street futures were also mixed, while TSX futures pointed lower after major North American markets closed down yesterday.
Overseas, the pan-European STOXX 600 was up 0.31 per cent in morning trading. Britain’s FTSE 100 rose 0.37 per cent, Germany’s DAX gained 0.38 per cent and France’s CAC 40 advanced 0.45 per cent.
In Asia, Japan’s Nikkei closed 0.87 per cent lower, while Hong Kong’s Hang Seng fell 1.35 per cent.
The Canadian dollar traded at 71.66 U.S. cents.