Carney's plan to manage Trump: Keep calm, find new friends

Japan Times

30-04-2025

Canadian Prime Minister Mark Carney won the election Monday by promising to manage a mercurial U.S. president bent on waging a global trade war.
Leaders around the world — desperate to defend their own beleaguered economies — will be watching to see if he knows how.
A banker turned politician, Carney's calm demeanor appealed to Canadians unnerved by seeing the U.S. switch from trusted neighbor to adversary overnight. President Donald Trump's tariffs and threats to turn Canada into the 51st U.S. state turned the fortunes of Carney's Liberal Party, which for months appeared poised to lose the election to Pierre Poilievre's Conservatives. He assured anxious voters that the country could not just survive the trade war — but win it.
Carney is likely to take that same sober approach — honed by steering two central banks through the aftermath of the 2008 financial crisis — into his negotiations with Trump. He has already ditched the acrimonious tone of his predecessor, fellow-Liberal Justin Trudeau, who promised to punch back at every tariff.
"Carney is unflappable when it comes to his negotiating style,' said Lori Turnbull, a political science professor at Dalhousie University. Up to this point, he's shown he "can come out of a conversation with Trump and manage not to say anything that gets under Trump's skin in a way that Trump then feels he has to come tweeting.'
Carney's plans rely on creating a more resilient Canadian economy — one better able to withstand U.S. pressure. His proposals include dismantling internal trade barriers among provinces, boosting housing construction and accelerating the development of energy infrastructure. He's also trying to build stronger alliances in Asia and Europe, to lessen Canada's dependence on the U.S.
His even mien, however, accompanies a determination to fight. In nearly every campaign speech, Carney returned to a familiar line, delivered in the pan-Canadian language of hockey metaphor.
"We didn't ask for this fight, but Canadians are always ready when someone else drops their gloves,' he said Saturday night, addressing a crowd in Windsor, Ontario, an automotive town whose economy is tightly integrated with neighboring Detroit.
And Carney, the former chair of Bloomberg, has cast the risk of losing the trade war in stark terms. "If we lose the negotiations because we give them what they want, we will lose as a country,' he said at a news conference two days before the election. "We'll be damaged.'
For Canada, geography and history make decoupling from the U.S. almost impossible. About three-quarters of its exports flow south, from millions of barrels of crude oil via pipelines to more than 1 million vehicles shipped from its assembly lines each year. Agriculture, tourism, mining and other industries rely heavily on two-way trade with the U.S. The country simply has far more to lose from a protracted trade war than the U.S. does.
"Canada Is Not For Sale" hats in a souvenir store in Montreal, Quebec, Canada, on Tuesday. |
Bloomberg
Thousands of Canadian factory workers have been watching with worry and anger as Trump ratcheted up tariffs and said he'd like to "permanently shut' Canada's auto industry — among other threats. The U.S. has targeted key Canadian exports including steel and aluminum and is coming for more, including lumber.
In places like Windsor, the stakes of the trade war are deeply personal. Near the back of Saturday night's rally, retiree Sue Gaul held a red "Carney for Canada' sign and spoke about the unease sweeping through her community, home to plants owned by Stellantis NV and Ford Motor.
Gaul said she doesn't expect Carney to immediately solve everything, but she feels more comfortable with him in charge. "Mark is a very calming person,' she said. "I just trust him, period.'
Companies like Algoma Steel Group have a lot riding on a trade detente between Canada and the U.S. Three days before the election, Carney made a campaign stop at Algoma's plant in the border city of Sault Ste. Marie, Ontario, pledging to "stand with every single Canadian targeted by President Trump's attacks on our country.' Laura Devoni, an executive with the company, said it has already laid off 30 workers and is losing millions of dollars a month under the U.S. tariffs.
Carney, 60, will have to manage the unpredictable Trump while juggling an unstable political situation at home. Voters kept him on as prime minister, but it appears they've denied the Liberals the 172 seats needed for a House of Commons majority. The Liberals were leading or elected in 169 seats as of Tuesday afternoon Ottawa time, compared with 144 for the Conservatives and 30 for other parties.
That means the prime minister will need to work with lawmakers from opposition parties in order to pass budgets, legislation — to accomplish anything major.
"If I were him, I would draft some Conservatives onto a 'Team Canada' to negotiate with the U.S. and to coordinate on restructuring our economy and trade relationships,' said Jim Leech, former chief executive officer of the Ontario Teachers' Pension Plan.
Some worry Carney's own competing priorities could hamper his response to Trump. He has, for example, called for building pipelines and trade corridors for Canadian oil to reach new markets other than the U.S. But he's also committed to the fight against climate change, which could require leaving some of the country's vast oil reserves untapped.
"Carney saying that he wants to leave that stuff in the ground means we're going to starve to death,' said Philip Reichmann, founding partner of ReichmannHauer Capital Partners in Toronto.
Carney and Trump spoke Tuesday, the prime minister's office reported, with Trump congratulating him on his election. They agreed to meet in person soon, although Carney's office did not give a specific date. "The leaders agreed on the importance of Canada and the United States working together — as independent, sovereign nations — for their mutual betterment,' the office said in a brief statement.
Asked at a news conference Saturday if he's worried Trump would escalate beyond tariffs — even resorting to military force to back up his rhetoric about absorbing Canada — Carney shrugged off the idea. "The short answer is no,' he said.
But then he outlined the scenario he is worried about: the use of tariffs to crush Canada's economy — and the nation's will. "The U.S. is trying to put economic pressure on us to gain major concessions,' Carney said, adding that Trump's threats of annexation should not be taken as a joke.
"Right from the start, I took it seriously,' he said. "That drives the strength of our response to their tariffs.'