Carney sets out foreign policy shift as G7 convenes under the shadow of Trump's trade war

Globe and Mail

a day ago

The audacity: Prime Minister Mark Carney is set to host U.S. President Donald Trump at the G7 summit, and in his first big foreign and defence policy speech on Monday he declared that the U.S.'s predominance on the world stage is 'a thing of the past.'
But Mr. Carney wasn't trolling Mr. Trump. He wasn't delivering a morality tale for Americans as he spoke about rising threats from hostile powers and rogue actors. It was a stark recognition that the world, and Canada's place in it, is in a period of disruption.
The diagnosis is not unique. The U.S. is withdrawing from its global role as backbone of economic systems and security guarantor. It is, in Mr. Carney's words, 'beginning to monetize its hegemony,' charging tariffs for access to its market and threatening to withdraw its security umbrella.
When Mr. Carney hosts leaders of the G7 group of nations this weekend in Kananaskis, Alta., the leaders of Britain, France, Germany, Japan and Italy will come with questions about that disruptive change on their minds. How much of the old U.S.-led world will be preserved? How much will their countries have to change to meet the new one?
There's no shortage of dangers. On Friday, G7 countries scrambled to co-ordinate, and urge de-escalation, after Israel launched a series of strikes on Iran – and the volatile Mr. Trump posted dark warnings to Tehran on social media. There are deadly conflicts in Ukraine and Gaza. China's rising power has raised nerves in Taiwan and across East Asia.
For G7 leaders, immense global challenges weigh on agenda overshadowed by Trump
At the G7, the trade war will be everywhere but on the agenda
The whole world is facing a shakeup – first and foremost the closest U.S. partners, the countries that have relied on the superpower for stability, security and prosperity.
Canada, tied to the U.S. by trade and geography, is on the front lines of a global reset.
'It feels like the first moment since the fall of the Iron Curtain when we may be going into an interregnum between the end of one international order and emergence of another,' said Patrick Travers, who served as foreign policy to former prime minister Justin Trudeau.
For Mr. Carney, the G7 summit is not simply a début as host to a group that, including non-G7 invitees, now counts the leaders of 15 countries plus the heads of the European Commission, World Bank and NATO. The rookie Prime Minister has no shortage of confidence, including in his ability to steer a global meeting.
Yet this one means moderating between the unpredictable Mr. Trump and Canada's other close allies, ensuring there's no blow-up. A wider rift can leave Canada more alone. A tantrum from Mr. Trump might even jeopardize bilateral talks on trade.
Kananaskis will be just the start of Mr. Carney's summer sprint through summits: In a week, he will travel to Europe for a Canada-European Union summit where he promises to make a deal of military procurement, and a North Atlantic Treaty Organization summit where the alliance's members are under pressure to commit to a massive expansion of military spending.
On foreign policy, Mr. Carney is already marking a sharp turn.
That speech he gave about the changing world on Monday wasn't just a rationale for his sudden announcement of a $9.3-billion increase in defence spending. It laid the underpinnings for a sharply different Canadian foreign policy.
For so long, Canadians felt safe, surrounded by three oceans and a friendly superpower, prosperously situated next to the world's largest market. For decades, spending more on defence was deemed unrealistic. Politicians – Liberal and Conservative – found voters didn't care about foreign policy, so Canada didn't really have one.
Now the world is crashing in on Canada.
Mr. Trump's tariffs threaten entire industries, most notably the auto sector. Demands for far greater defence spending, if fully adopted, would force tough choices about Canada's social spending.
Now Mr. Carney is proposing to meet what he called a 'hinge moment' by embracing a harder-nosed foreign policy. At the heart of it is the Big Hedge.
Mr. Carney is proposing to hedge against U.S. influence over Canada. Part of it is doing more at home, by expanding the military, building a domestic defence industry and also strategic industries such as critical minerals. But a lot of it is aggressively courting relationships with other countries, including a defence-industry partnership with the European Union.
If that sounds very similar to the economic policy Mr. Carney propounded during and since the election campaign – building the domestic economy with national projects and diversifying trade – it is because both are aspects of the same strategy, driven by the same urgent external pressures.
Fearing Trump's anger, non-U.S. G7 members will pursue low-bar victories in Kananaskis
'I think he understands that foreign policy and domestic policy, in the world we're living in, are two sides of the same coin,' said Carleton University international affairs professor Fen Hampson.
Mr. Carney argued Monday that more defence spending is necessary for Canada to protect itself, promising submarines, drones and long-range rockets to rebuild Canada's depleted military. But he was also pitching that as a driver for the domestic economy, and as a lever to diversify trade.
And Mr. Carney was also rushing to finally meet the long-standing NATO target of spending 2 per cent of GDP on defence, before the G7, in the midst of talks on tariffs with Mr. Trump – who links trade deficits and military underfunding together into one big claim that the U.S. subsidizes Canada.
But Mr. Carney's speech signalled it is part of a more tough-minded approach. He deliberately departed from the preachy tone and talk of promoting values that had been a staple of Canadian diplomatic rhetoric. 'Canadian leadership will be defined not just by the strength of our values, but also by the value of our strength,' he said.
The list of non-G7 leaders invited for 'outreach' sessions included reaching out to leaders that Mr. Trudeau would not have chosen – leaders with whom Canada has had clashes of principle, but who are substantial economic and geopolitical players.
Saudi Prince Mohammed bin Salman won't attend, but Mr. Carney had invited him to thaw relations chilled since 2018 because of Canadian complaints about his country's human rights record. India's Prime Minister Narendra Modi will come – over objections of Sikh-Canadian organizations and some Liberal MPs – even though Canada accused Indian agents of organizing the 2023 assassination of Hardeep Singh Nijjar.
'I think it's realpolitik, in a lot of respects,' said Vincent Rigby, a former national security and intelligence adviser to Mr. Trudeau, and now a professor at McGill University's Max Bell School of Public Policy. 'I think he is going to be a hard-headed realist.'
Mr. Rigby noted that also means Mr. Carney has to recognize the limit of a hedging strategy. Canada can try to diversify its defence relationships, perhaps using procurements of needed equipment like a fleet of diesel submarines to build a strategic alliance with a European supplier. But just as Canada can't replace trade with the U.S. overnight, it still must co-operate with the U.S. on North American defence. Mr. Carney has indicated he is considering joining Mr. Trump's proposed Golden Dome ballistic missile defence system. He has also put the purchase of additional U.S.-made F-35 fighters under review.
'The foreign policy is very much about strategic autonomy. But how do you define it? How much autonomy is enough?' Mr. Rigby said. 'With the United States it's all about finding the sweet spot.'
The search for that sweet spot is also the preoccupation of all the other traditional U.S. allies in the G7 coming to Kananaskis. In March, the European Union loosened rules for national deficits to allow for more defence spending, in a plan called ReArm Europe. Japan has embarked on a massive military build-up. In May, British Prime Minister Keir Starmer struck a new trade and security deal with the European Union, closing some of the distance created by Brexit. European countries are working on various forms of hedging.
'I'd like to say it's hedging, but I'm more inclined to say it's a bit of thrashing around. Hedging would imply that there is a clear view that stands behind a collective European position. There isn't,' said University of Kent professor Richard Whitman, an expert on British and European foreign and defence policy.
Some European countries still hope to ride out Mr. Trump's term, while others want to act, he said.
'Some European governments are in a difficult place, because their head tells them one thing but their heart, and probably their pocketbook, tells them something else − which is that we're not quite ready to take on all of these burdens.'
For Europeans, the reckoning has been different. Canada has been confronted with tariffs that threaten its economy and Mr. Trump's talk of making it the 51st state. In Europe, the 2022 Russian invasion of Ukraine was a shockwave that brought a new urgency to domestic military spending and energy security. Mr. Trump's re-election, and his ambivalence and sometimes hostility, toward supporting Ukraine has been a second shock. That will be a potential fault line in Kananaskis.
The last time Donald Trump came to Canada for a G7 summit he had kiboshed a common trade initiative before it started and tried to blow it up as he left.
In 2018, the G7 co-ordinators from each country, dubbed sherpas, were working on co-operation to curtail Chinese dumping of low-cost steel on foreign markets. Six weeks before the summit in Charlevoix, Que., Gary Cohn, the director of Mr. Trump's National Economic Council, phoned Senator Peter Boehm, then the sherpa for Mr. Trudeau, to say the whole thing was off.
Mr. Trump had instead decided to impose 25-per-cent tariffs on steel – including on the other members of the G7.
At the end of the summit, Mr. Trump, more consumed by his imminent meeting with North Korean dictator Kim Jong-un, left the summit early – and tweeted angrily from Air Force One when Mr. Trudeau, responding to Mr. Trump's comments on trade negotiations, said Canadians are polite but won't be 'pushed around.' The President tried to unapprove G7 communiqués that had already been issued.
In between, however, the Charlevoix summit wasn't full of conflict, Mr. Boehm said. At the time, a widely circulated photograph from inside the summit – with leaders standing across from and around a seated Mr. Trump with arms folded across his chest – was seen as evidence the summit had been a tense gang-up on an obstinate president. In fact, Mr. Boehm was debating communiqué wording with then-U.S. national security adviser John Bolton, and Mr. Trump had commented, 'Game on.'
'It was a little bit more jovial than the picture might indicate,' Mr. Boehm said.
That is part and parcel of the famously mercurial behaviour of Mr. Trump, who welcomes foreign leaders to the Oval Office for visits that can be love-ins or ambushes.
'Unlike normal times you're preparing for unpredictability,' Mr. Travers said. 'Everyone's aware that things might emerge at this summit. The United States might put new things on the table.'
There are ways to smooth things, Mr. Boehm said. In Charlevoix, Mr. Trudeau followed the tradition of asking the U.S. president to open a discussion on the economy by talking about his 2018 tax cuts, and he warmed to the talk. But his interest waned in long talks with many speakers. Mr. Trump didn't care for talk about the rules-based international order.
This year, Mr. Carney's team has trimmed the agenda into narrow topics. Instead of butting heads on climate change, for example, leaders will talk about combatting wildfires. Sherpas are expecting to agree on specific 'outcome' statements, not a broad final communiqué.
Tariffs aren't officially on the agenda, though they will be on every leader's mind. Mr. Carney has invited Mexican President Claudia Sheinbaum, so there will certainly be discussions about North American trade on the sidelines. Defence spending is more a topic for the NATO summit a week later, but will certainly come up, too.
'There is a distinction between collective outcomes and what's discussed at the table. And both matter,' Mr. Travers said. 'In the G7 they have real conversations around the table as peers. It's a huge opportunity to speak to and influence the President.'
There are scheduled discussions on global security, which will now almost certainly be dominated by Israel's strikes on Iran and the fear the conflict will escalate to full-scale war.
One specific topic on the formal agenda – Ukraine – has the potential to spark disagreement.
Ukrainian President Volodymyr Zelensky is invited, but there has been a split between Mr. Carney and European leaders, staunch backers of Ukraine, and Mr. Trump, who has pushed Ukraine to make concessions to Russia to end the war and has threatened to slash military support. A disagreement, a failure to find some bridge between them, could lead to a rift that flows into the NATO summit the following week.
'This is probably the nightmare for everybody that is preparing for the summit,' Mr. Whitman said.
For Mr. Carney, that could be a nightmare scenario, too.
A bigger rift between the U.S. and the rest of the G7 could leave Canada in the middle, and more alone. Mr. Carney's foreign policy hedging rests on building stronger ties with other countries. Mr. Carney has an interest in ensuring that Europeans don't apply their own hedging strategy by turning inward to each other in a way that leaves out Canada.
He also doesn't want a confrontation within the G7 to leak into his so-far warm relations with Mr. Trump, possibly scuttling his trade and security talks with Mr. Trump. He certainly remembers that the 2018 Charlevoix summit marked the break in Mr. Trump's personal relationship with Mr. Trudeau.
Underlying those summit risks is the broader unpredictability in the group of democratic nations – the G7, the EU, and others such as South Korea and Australia – that now question what kind of ally and partner the U.S. is becoming. And how fast the change will be upon them.
The U.S. retreat, motivated in part by its high debt and competition with China, started before Mr. Trump and could endure after. Certainly, Mr. Carney appears to be working on the assumption that it is a lasting paradigm shift.
That means a different kind of foreign policy. Canadians aren't used to the calls for sacrifice to pay for the military that Mr. Carney made in his recent speech. The extent of the sacrifice, the scale of the potential shift to be mooted in a matter of weeks, hasn't really entered the public consciousness.
Andrew Coyne: Twenty years late, Canada hits the old NATO target, just in time to fall short of the new one
At the NATO summit that opens in The Hague on June 24, NATO leaders are expected to commit to ramping up defence spending steeply, to the equivalent of 3.5 per cent of their GDP. In current terms, that would amount to an increase of nearly $50-billion per year for Canada, over and above the increase Mr. Carney announced. Spending that much more on the military – adding about 10 per cent to all federal spending – would almost certainly force tough choices on cutting social spending.
Yet there has been a remarkable shift in public opinion. For decades, Canadian prime ministers found no constituency for increasing defence spending to the 2-per-cent NATO target. In March, Nanos Research found three-quarters of Canadians are in favour. But the potential future sacrifices haven't yet been counted.
'Do you support more defence spending if you are going to get less health care, you're going to get less housing, less transfers to the provinces?' Mr. Rigby said. 'That's a slightly different question.'
For now, such questions haven't slowed the sudden change in Canada's foreign policy. Mr. Trump's tariffs, his threats, the 51st state talk – all jolted Canadians to see that a more risky world is now here. And their country is more alone. Mr. Carney has embraced a harder-nosed approach to a world facing an unpredictable interregnum.