The elephant in the room: As G7 host, how does Canada deal with Donald Trump?

Toronto Star

2 days ago

In two weeks, Prime Minister Mark Carney will host his fellow G7 leaders for their annual summit.
While the stakes are high, expectations are low.
At a recent Ottawa meeting of the 'B7,' a group of business leaders from the G7 nations, participants saw the G7 as essential to global stability. Predictions for it, however, ranged from 'unity' to merely 'survival.'
The elephant in the room — always top of mind, rarely mentioned — was U.S. President Donald Trump.
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After his inauguration in January, business leaders' concerns about Trump's character and ideas on tariffs were balanced by optimism for lower taxes, regulatory restraint and capital markets growth.
Today, the president's promise of a new 'golden age of America' looks increasingly hollow as his losses mount.
After leading the G7 in 2024, the U.S. economy contracted in early 2025, the worst result since the pandemic.
And economists' forecasts are bleak with some predicting a U.S. recession should Trump follow through on his trade threats.
While Trump tried to blame his predecessor, his fingerprints are all over this economic crime scene.
As policies change with each presidential whim, so has business and consumer behaviour.
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Imports have surged as buyers stock up on foreign goods. Capital markets went on a roller-coaster ride. U.S. consumer confidence has plummeted, dropping eight per cent in April alone.
Businesses have paused investment, hiring and sourcing decisions amidst the crippling uncertainties.
The problem is, despite the president's propensity for lies, he's actually truthful about what he believes:
Trump believes trading partners are ripping America off, and fantasizes about 'reshoring' manufacturing jobs
He fails to understand that America's standard of living depends on a global ecosystem in which products and labour from around the world combine to deliver good products at good prices — and that investors won't invest without policy certainty.
Trump believes tariffs are a weapon to force allies to comply with his wishes
He overlooks U.S. reliance on these alliances, the harm his actions cause to American brands and businesses, and the punishing impact of higher prices on consumers.
Trump believes the U.S. is besieged by immigrants, and that the nation's great universities must be punished for 'woke' policies
So, he is indiscriminately cancelling billions of dollars of research.
He ignores how much the U.S. benefits from attracting world-class researchers to generate breakthrough discoveries — and that talent will avoid a country whose government vilifies newcomers and dictates the nature of scientific inquiry.
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Trump believes there should be no constraints on presidential power
He has suspended anti-bribery enforcement, fired independent watchdogs and attacked judges who rule against his violations of U.S. law.
He did so again this week, when a court found his use of emergency powers to impose tariffs was illegal.
Trump can't comprehend that this will deter investors, reduce America's influence, and embolden repressive regimes abroad.
For G7 participants in Kananaskis, Alta., the elephant in the room is real with a U.S. economy the size of the other six members combined.
And yet, the elephant can't be named.
When G7 finance ministers met in May, their communique warned of 'economic policy uncertainty' but avoided mentioning the word 'tariff' or the biggest cause of uncertainty — its own largest member.
It's like talking about losing weight without mentioning food or exercise.
But it's the price of unity.
We can expect Carney and others to take a three-pronged strategy to deal with Trump.
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Find unity: They will try to identify common concerns such as China's behaviour, trade imbalances, market instability, or wars in the Middle East and Ukraine.
If they can't agree on the problems, the G7 would lose relevance as a source of solutions.
Contain the damage: Watch for them to try to contain the damage by prodding the U.S. into multilateral processes, from trade negotiations to peace talks.
Invest in the 'G6': While the U.S. is powerful, the other six nations combined (Canada, France, Germany, Italy, Japan, U.K.) are even more so.
The 'G6' leaders will invest in their relationships with one another, recognizing that while Trump is in office, they have an unreliable partner.
Canada and Mexico learned this when the president reneged on his own North American trade deal.
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If America enters a period of decline, Canada's proximity to the U.S. will go from an asset to a liability.
As the smallest of the world's large economies, we have the greatest need to diversify our export markets, and to shed our complacency for competitiveness.
Amid these dark clouds, there's a silver lining. Canada has much to offer: a stable policy and investment environment; a skilled workforce; a political consensus to build trade-enabling infrastructure, add supply to the housing market and patch holes in our health system; a commitment to the rule of law, and to free, fair trade; and an embrace of diversity that's unique in the world.
As Canada hosts its peers, we can't ignore the elephant in the room.
But we also have a genuine — and long overdue — chance to lead.