Canada And The US: What Carney Should Do, But Won’t

It is now mid-August 2026. Trump has decided to impose a 50% tariff on most imports from Canada, with a few exceptions like oil and gas. He may well “TACO” (Trump always chickens out) by the upcoming August 19^th deadline, particularly if it looks like the Canadian government is making concessions or is likely to do so.

Unfortunately, despite his election promise of “Elbows up”, PM Mark Carney has imposed only minor penalties or retaliation on the US, and instead has employed a strategy of delay or caving in.

The recent deal on the Gordie Howe Bridge is particularly galling. The owners of the nearby Ambassador Bridge reportedly increased lobbying activity in advance of President Trump’s threats and obstruction that delayed the Gordie How bridge.

The deal Carney ultimately got is terrible, and he made incorrect statements about the details of the deal (though there may be some doubt about how legally binding it is in the long run). Under the new deal, Canada gives up half the profits before debt payments for 15 years, to go into a fund entirely for the benefit of the US – and who knows how corrupt or improper that fund will be managed without clear oversight. Canada did not even negotiate a symmetrical fund for ourselves. Our paying down the bridge debt faster only benefits Michigan, which also loses out in the deal.

Carney also agreed to boost Canadian defence spending to 5% of GDP, and got nothing in return. Even Spain said no to Trump on this. But the 5% is really only 3.5% on defense, up from the prior 2% promise made by Justin Trudeau. The other 1.5% can be used on defence related infrastructure – some of which might be needed, some of it not particularly urgent or beneficial.

Previously, I have taken the position that Canada’s mindset is trapped in the past – in the Second World War or The Cold War, when it was critical for Canada to work with the US, UK, and other allies to defeat fascism in Europe, then defeat Communism, and then ensure Eastern Europe became stable and prosperous enough and recovered from the years of Communism to remain free and become democratic.

But over the years Canada’s ties to the UK have weakened, and these ties were the prime motivator for Canada’s involvement in the two World Wars. During the Cold War, Canada was positioned directly between the US and the USSR. We had little choice but to work with the US given that war would mean bombers or cruise missiles or other things using our airspace whether we liked it or not, and we certainly did not want to help the USSR and hinder the US.

The US under Trump has now ceased all aid to Ukraine in terms of money and weapons, other than selling weapons to Ukraine or allies who will give them to Ukraine. Trump continually goes easy on Putin or does things that seem one-sided in favour of Russia. NATO is no longer certain that Trump would meet its commitments to Europe in any conflict, and the US might be able to veto any decision that needs to be unanimous or that requires the US make major contributions.

Trump’s 2026 National Defense Strategy document sees China as the major rival or adversary to the US, though the US still has plans that can only be seen as defending against Russia, particularly the Golden Dome anti-missile system, and the US continuing to have bases in Greenland and even expand them. But in most respects, the document repositions the US as the “hegemon” dominating the Americas/Western Hemisphere. It extends doctrines put forth by prior Presidents Monroe and Teddy Roosevelt where the US will not only keep foreign powers out of the hemisphere, but otherwise dominate other countries. We saw this with the attack on Venezuela to kidnap President Maduro.

No other country in this hemisphere is in defence alliances with the US like those that Canada has signed onto. Not Brazil, not Argentina, not Chile, and not even Mexico, which also shares a long land border with the US.

Canadians are warned that Russia is militarizing the Arctic – but Russia is a power in decline because of its war in Ukraine, its poor economy, and shrinking population. It just decommissioned its only aircraft carrier. Russia has its own vast northern wilderness full of resources to exploit, and it has its own Northern Sea Passage, so Russia and China don’t need our Northwest Passage.

So, I am starting from the position that Canada does not particularly need the military help of the US against Russia or China. Canada has to deal with these countries in terms of attacks in cyberspace, or espionage, or election interference. A physical attack, however, is not likely.

The US needs and wants Canada for continental defence and national security, even as Trump claims the US needs nothing from Canada when he makes threats over trade or economic matters.

While national security and defence is important to Canada, generally Canadians have been willing to have low spending on the military and defence, though for a long time our participation in UN peacekeeping missions was seen as critical enough that we had to do something in nearly every mission.

Instead, I would say that four things are higher priorities than worrying about Russian bombers or missiles headed our way. These four are:

1. Economic prosperity
2. National unity
3. Having culture and identity separate from the US (particularly acute in Quebec).
4. Sovereignty

It is hard for a country to achieve much if it does not have wealth and resources, though in times of war, like Britain in the Second World War or Ukraine today, the economy does need to take a back seat to survival. But in a democracy, governments have a hard time getting elected without having some program to ensure greater prosperity. Canada is used to being one of the richest and most prosperous countries in the world, and Canadians are unlikely to accept less.

Canada is a “bi-cultural” nation, or that was our image of ourselves from the 1970s on, though Justin Trudeau called us “post-national”. Canada has to maintain security for the francophone population. Separatism is once again making an appearance in our politics today. In Quebec, the Parti Quebecois are promising a third referendum, and Alberta separatists have managed to get an Alberta separation referendum vote this fall.

Part of the problem we have is that as a country with a high degree of decentralization to the provinces, with regional or provincial interests frequently not wanting to yield to national interests, we cannot easily threaten the US with policies that will enflame provincial governments, like blocking electricity or aluminum exports from Quebec, or oil and gas from Alberta. That being said, defence policy is totally federal.

On culture, Americans view it almost entirely on economic terms. They are a major exporter of film, TV, music, books, magazines, and also dominate social media, streaming, and so on in their own market, Canada, and many other countries. English Canada is a smaller market and lacks economies of scale. Americans can recover production costs in their own market and sell abroad cheaply. Americans are not particularly open to foreign content, and particularly foreign language content, though with a growing population of Spanish speakers some niches are more open – telenovelas, music, and so on (and a few other forms of content like K-Pop are popular).

Canada cannot survive as a country when the majority anglophone population has little exposure to Canadian news, opinion, music, books, and history. Because the French language acts as a barrier of sorts, and France is nowhere near as dominant in global culture, Quebec is better positioned to have francophones demand and support content that draws high viewership and loyalty.

Sovereignty has different components. Canada needs to control what does or does not cross our borders, including land, sea, and air, against smuggling, terrorism, illegal immigrants, money laundering, tax evasion, spying, espionage, and other things including electronic means. We also have government regulations and laws that have to be enforced – including for public safety, culture, and so on.

But Canada also gives away sovereignty when we sign international agreements or trade deals, and in particular, trade deals that take power away from our governments and hand it over to foreign investors or other interests, including foreign governments. Canada cannot meet its other goals above, or even be a democratic country in any meaningful way, if Canada is turned into a vassal of the US.

There used to be a term called “Finlandization” meaning “the process by which one powerful country makes a smaller neighboring country refrain from opposing the former’s foreign policy rules, while allowing it to keep its nominal independence and its own political system”. After the Second World War, Finland in effect had to align itself with Russia in order to have peace and stop further military invasions and loss of territory.

If Canada does not stand up to the US, then over time, Canada loses sovereignty, as well as prosperity, through salami tactics of making more and more concessions to the US while gaining little in return.

A problem I have with Mark Carney is that his approach leans heavily on a form of stoicism. This type of statement is typical of what comes out from Carney or the federal government: “Canada’s new government continues to focus on what we can control – building a strong Canadian economy, diversifying our trade partners abroad, delivering responsible fiscal management, and supporting Canadians who are under pressure from everyday expenses…”

“Control what we can control” is not a bad idea, but in the real world, people often succeed by finding ways to manipulate others, or force them to do things they do not want to do, or accept what they do not want to accept. Stoicism is about personal ethics and virtues. We are dealing with a US leader who has no ethics, virtue, or morality, but believes in power, bullying adversaries, and “win-lose” rather than “win-win”.

Canada has to stand up to the US, and use continental defence and whatever else we have as bargaining leverage. We should not give this leverage away permanently, but instead continue to hold this leverage to ensure Canada is treated as an equal and not bullied.

My offer to the US would be like this:

1. Canada will cancel the 5% defence commitment, kill or reduce the submarine order from Germany, as well as over the horizon radar. We will not buy more than 30-40 F35 fighter jets, and let Germany take our spots.

2. Canada will make no commitments on critical minerals.

3. Canada will not help or allow or pay for Golden Dome.

4. Canada will not make any guarantees on energy or anything else.

5. We will essentially reverse CUSMA and go back to NAFTA – none of these constant “trips to the dentist” where the US pulls out teeth until we cannot bite.

6. All US tariffs and harassment imposed by Trump will end or be reversed.

7. The US will accept that Canada’s priorities are not defence, but prosperity, national unity, developing or maintaining our culture and media, and our political and economic sovereignty – these are not trade barriers but necessities for our survival against US and its economic power.

8. Canada will remain in Five Eyes or otherwise work with the US on issues of cyber-security, terrorism, and so on, and other areas where it is in our mutual interest.

9. US laws will not apply to Canada where issues of “extra-territoriality” impact our domestic sovereignty and foreign policy, including with Cuba.

In return, Canada:

1. Canada will remain in NORAD, instead of cancelling it outright.

2. Canada will not cancel agreements that let the US military fly over Canada, or use our waters – including the waters around Vancouver Island, and flights to Alaska.

3. Canada will not cancel other non-military agreements on things like tax collection information and so on.

4. Canada will continue to work with the US where it is in our interests instead of waiting for a new administration to take office.

Unlike Canada, Mexico is not in NORAD or anything like it. Russia is not really a threat to invade or attack Canada, nor is China (though they are adversarial in other areas). Our Arctic is a backwater. We are a Western Hemisphere nation that is not particularly reliant on shipping for imports, or exports. Unlike Mexico, Canada is not a major route for drugs or illegal immigrants. If we want to tax US social media companies, tough.

The US is 8.2 times our population and 11-12 times our GDP. We cannot win a trade war, but the US needs us to be an ally on continental defence. Were we not in NATO and NORAD, we would not be of much interest to Russia or China militarily. In fact, Canada is not that important now, as we are a backwater and not a front-line state.

Canada need not become as isolationist as Mexico. We can still support Ukraine or other countries, and work with allies and/or the US where there is a net benefit to Canada or it is impractical to go it alone.

The risk with Trump is that we sign a deal, then next week or month he comes back with more tariffs or attacks on our economy or autonomy. Trump cannot be trusted. Lawyer and trade expert Barry Appleton has laid out how there are likely a series of economic sanctions or attacks on us that Trump will use.

Trump is breaking the dispute mechanisms in NAFTA/CUSMA instead of using them to settle trade disputes. When it comes to international law and the World Trade Organization (WTO), Trump has not used those processes but undermined the ability of the WTO to function.

In another opinion piece for Dominion Review I laid out the idea that Canada might have to “go rogue” at some point. If the US will not abide by agreements it has signed with us, and we are massively dependent on the US, we might have to leave the WTO and other international agreements in order to fight back.

China managed to develop its economy and practice neo-mercantilist and protectionist policies until it made sufficient sense to sign on to such agreements. Canada runs trade deficits with most of the world, including Japan, China, Korea, and Europe. Most of what Canada exports to countries outside the US are commodities, but Canada cannot prosper as “hewers of wood, drawers of water” in the long run. Unfortunately, a lot of what Mark Carney is encouraging is for Canada to boost its exports of fossil fuels and other commodities to countries other than the US.

Perhaps the main exception is the federal government’s focus on military manufacturing. The problem with this strategy is we may be left with branch plants of foreign arms makers, including US based and owned ones, instead of Canada having companies that are owned here, headquartered here, and that own the intellectual property and trade secrets needed to export and thrive in international markets.

The reality is that Canada fell for the neoliberal theories that dominate Anglo-American economics, which go back to Adam Smith and David Ricardo. Asian countries followed a different path that actually traces back to the protectionism of Alexander Hamilton, and ironically, to a little know Canadian author of the 1800s named John Rae, as well as to German political economist Friedrich List and his 1841 book The National System of Political Economy.

The essential theory of List is that countries are better off being highly protectionist until they are able to out compete their trading partners, much as the UK did in the 1850s, and the US did after the Second World War. Sir John A. Macdonald’s National Policy was a reaction to high US tariffs, but Macdonald did not discourage foreign investment from the US or the UK, and Canada mainly industrialized to reduce imports of manufactured goods, and not to complete as an exporter or high value goods made by Canadian owned and controlled companies, which is the path that Japan, Korea, and even China took.

The problem for Mark Carney is that he has not taken a fresh look at Canada’s position in the world on both trade and defence, but muddled through with existing conventional wisdoms about our role as a junior member of both NATO and NORAD. As such, Carney accepted the idea of 5% defense spending willingly, without the US or European nations offering anything in return. In fact, Canada is actually in a one-sided relationship with Europe, particularly if we realize that our Arctic is a backwater and the Northwest Passage is not that important even as the Arctic warms and there is less ice.

To be effective in negotiating with the US, Carney would have to tie trade to continental defence – but these are traditionally siloed by our government and only really connected by trying to get economic benefits in return for buying foreign arms.

The Cold War is over, Europe is mostly rebuilt and able to defend itself, as Trump’s National Defense Strategy actually gets right. Russia is mostly a threat to its immediate neighbours, not to us with an ocean between us. From Murmansk to Toronto is 6,300km, and the line passes over Greenland. Anything launched in China would likely pass over Alaska before it passes over Canada, and the same is true of anything launched from the far eastern parts of Russia. Chinese and Russian submarines can fire nuclear warheads from any direction around the US – only bombers or cruise missiles might pass through Canada, and ICBMs fly through space too far above us for the “over the horizon” radar we are buying to be of use.

China is a threat to its neighbours, but it does not show any desire to expand and include other cultures, or even accept immigrants, since their desire remains to become as ethnically homogenous as possible.

If we stand up to Trump, there are risks. A key one is that US might escalate the trade war even more and cancel CUSMA, but more critical has been the willingness of Alberta separatists to go to the US to get the help or otherwise work with people in the Trump administration.

Canada could be more like Mexico and not be so obsessed with defence, if we took a fresh look at the world as it is now, and at Trump’s strategy. The US might again change course in 2029 under a new President, and maybe be less of a bully or threat to us and to other countries in this hemisphere, but we have been over-estimating the threat of Russia and China. In reality, the US is the major threat to our prosperity, our culture, and our sovereignty. Canada has to remain united, and using the “continental defence card” does not impinge on provincial jurisdiction, or on exports that key provinces do not want threatened or used as leverage against the US.

Ideally, Trump will TACO and delay the 50% tariffs, and Canada will not make long term or permanent concessions for only short-term gain. But Canada’s strategy has to extend beyond the negotiating table.

Our strategy has to include three components:

1. Fighting Trump in the US courts and tribunals,
2. Running ads and otherwise targeting US public opinion
3. Standing up to the US and retaliating

Lawyer and trade expert Barry Appleton has been pretty scathing about how Canada has done so little to fight Trump in the tribunals and courts. Canada should also work with Canadian and American corporations hurt by Trump’s actions to take things through the US courts.

The anti-tariff Ronald Reagan ads Premier Doug Ford ran were mild, but they made a mark, and Trump wanted them stopped. Canada should be running more ads, and only temporarily pausing them. Canada should also be getting lobby groups, US PACs, provinces and others to run ads on TV, radio, and social media making the points that will help us while not overtly interfering in the US midterm elections.

It is not election interference to stand up for ourselves, and it is not election interference to correct lies or disinformation. It is not election interference to say what great friends we have been to the US and that we need to work together, and that the US should not treat us like an enemy on trade while needing us as an ally on defence.

But the reality is that the midterms are in November, and we have more political leverage now, on top of wanting Trump’s trade harassment to end quickly.

And yes, we should stand up to Trump and play the continental defence card. We should also retaliate in other ways, including increasing tariffs on US dairy, alcohol, or other non-essentials we make ourselves or can import from elsewhere.

Carney might have to walk back his past policies like spending 5% of GDP on defence, the Gordie Howe Bridge deal, and so on, but Canadians are in a fighting mood. More retreats, caving in, and delays will only encourage Trump to keep mistreating us. China used rare earth minerals as their bargaining chip in trade with the US. Canada has a different bargaining chip nobody else has, and it is one Trump values, as we keep seeing with his obsession about taking over Greenland.