Welcome back to Adjournment Proceedings, our weekly long read series. We publish a new edition every Friday. In this week’s edition, we assess Prime Minister Mark Carney’s trade strategy. 

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One year into Mark Carney’s premiership, the defining challenge facing Ottawa has not simply been Donald Trump’s tariffs.

It’s been the growing realization that the assumption underpinning Canada’s economic relationship with the United States — that it offers predictability and abides by the rules-based trade — may no longer exist.

Carney inherited a volatile Trump trade environment, where major sectoral industries like auto, aluminum, steel and copper were hit by sweeping U.S. tariffs  as Washington increasingly tied economic policy to national security and industrial strategy. 

In response, Carney’s government began advancing a broader vision of economic resilience under its “Build Canada Strong” agenda, one that emphasized reducing Canada’s overreliance on the U.S.

But as Ottawa attempted to translate that vision into policy, experts say the challenge quickly evolved beyond managing Trump himself. The deeper question became whether Canada was confronting a temporary disruption or a fundamentally different United States. 

iPolitics sat down with Carlo Dade, director of international policy at the School of Public Policy at the University of Calgary, in mid-April to discuss the rapidly shifting state of Canada-U.S. trade relations.

He said no one’s going to do “good” when dealing with Trump, and Carney has handled it the best that he could while keeping Canada’s national interest as the forefront of the agenda. 

“[Carney] has woken up to the realities of Donald Trump. Negotiation is fraught, faces uncertain returns, the past calculus and frameworks we have for dealing with the U.S. have been thrown out the window,” Dade said. 

Dade pointed to the first tactical mistake as announcing to the world that Canada is going against Trump.

In the now famous — or the speech that some high school students are now required to read as Diana Fox said — Davos speech, Carney called on “middle powers” to build strategic autonomy and diversify partnership. He emphasized reducing vulnerability to coercion by diversifying trade, including with nations like China, while strengthening the domestic economy. 

In many ways, the Davos speech became the intellectual blueprint for Carney’s first year in office. But translating that worldview into practice is considerably more complicated. 

In a reference to Fight Club, Dade said Carney should have abided by the first rule: never talk about the fight club. 

While there’s a need to form more alliances, Dade said the speech openly went against Trump. 

“We still put too much emphasis on the rational, which is like 90 per cent of our thinking,” Dade said. 

The Gamble 

Earlier this year, Carney brokered a deal with Beijing, marking the first visit to China by a Canadian prime minister since 2017.

Beyond talks on energy and clean technology, and agri-food and trade, including lowering tariffs on Canadian canola seed – the agreement also allowed up to 49,000 Chinese EVs into the Canadian market. 

The decision raised alarm within parts of the domestic auto sector, with industry players warning how the move could expose Canadian manufacturers to deeper competitive pressure while further complicating trade relations with the U.S. 

The optics didn’t help when floor-crosser Liberal MP Michael Ma aggressively questioned a witness on their claims on forced labour in China. 

READ MORE: Floor-crossing MP Michael Ma casts doubt on reports of forced labour in China

Following that trade deal, Carney’s stance on war in Iran also appeared to evolve.

In the immediate aftermath of the U.S. military action, the prime minister expressed unequivocal support, but then expressed regret because no consultation took place with the U.N. 

The shift drew criticisms from both Iran’s opponents, and advocates for international law, who argued that Carney was contradicting his speech at Davos about rejecting hegemonic behaviour by great powers. 

Taken together, the moves gave the impression that Ottawa was deliberately openly challenging Washington.

But Fen Hampson, professor of international affairs at Carleton University and co-chair of the Expert Group on Canada-U.S. Relations, pointed that the deeper problem facing Canada goes beyond Donald Trump himself. 

Hampson said Trump’s tariff agenda is part of a much longer-term effort to pull manufacturing capacity, particularly in the auto sector, back into the U.S., even at the expense of longstanding continental supply chains. 

“The automobile sector in Canada is facing a long-term death sentence, but you can’t say that politically, you certainly can’t act on that basis politically,” he said.

Hampson added that trade negotiations with the U.S. have never been easy, especially when looking back at NAFTA under the first Trump administration. 

“The bottom line is, the Americans have broken the rules,” Hampson said, arguing that accommodating the Trump administration has not necessarily shielded allies from economic pressure. 

In his view, Ottawa’s responsibility is ultimately to defend Canada’s own national interest. 

Economic effects 

Still, while some sectors face mounting long-term pressures, others argued the broader Canadian economy may prove more resilient than the political rhetoric trade dispute often suggests. 

Dade estimated Trump-era trade policies have shaved roughly 1.8 to 2.4 per cent off Canada’s GDP. While significant, it’s not economically devastating even in a scenario where CUSMA negotiations deteriorate.  

Recent research co-authored by Dade and Sharon Zhengyang Sun argued that Washington’s shift toward sector-specific Section 232 tariffs could transform what was once a national economic threat into a series of concentrated provincial shocks.  

The paper found products currently under Section 232 investigations already account for roughly 37 per cent of Canadian export to the U.S., including steel, aluminum, autos, pharmaceuticals, aircraft parts and critical minerals. 

Unlike the broader tariff threats issued under Trump’s earlier use of emergency powers, the report argues the newer approach gives Washington the ability to apply pressure unevenly across provinces and industries, with Ontario and Quebec facing some of the highest levels of exposure due to their concentration in manufacturing and auto production. 

Following the Spring Economic Update, Ottawa’s own fiscal watchdog suggests the economic impact is already being felt. 

The Parliamentary Budget Officer has warned that trade uncertainty tied to U.S. tariffs represents a “material downside risk” to Canada’s economic outlook, with key export sectors seeing weaker manufacturing output and business investment. 

The office also notes that while Canada has increased exports to non-U.S. markets – rising roughly 36 per cent since early 2024 – that shift has been uneven and concentrated in a narrow set of sectors, rather than reflecting a broad-based diversification of trade. 

The CUSMA review: Who holds the leverage? 

Conservative Leader Pierre Poilievre has called out Carney for not bringing meaningful discussions to the trade talk on many occasions. 

A day after Carney’s video message in mid-April, Poilievre launched a pointed attack on the Liberal government’s handling of the Canada-U.S. file. 

“What has Mark Carney really done in a year on this? He hasn’t held negotiations in five months. The only talks that Mark Carney is doing are YouTube videos where he’s comparing himself to Sir Isaac Brock,” Poilievre said in a scrum on April 21. 

U.S. Ambassador Pete Hoekstra said a deal had come close to securing a broader agreement as early as last fall, including understandings around steel, aluminum, autos, energy and uranium. 

READ MORE: ‘We’re going to get a deal’: U.S. Ambassador says as CUSMA review deadline inches closer 

Even so, he told iPolitics that businesses on both sides remain “thrilled” to work together, particularly in sectors such as autos, critical minerals and energy, last month. 

“There may be so much water that has flowed underneath the bridge that it’s hard to get it back,” he said, warning that any eventual agreement may no longer be the “optimal” deal once envisioned. 

While business groups and political opponents are pushing Ottawa to end uncertainty quickly, Carney’s Liberal may be “cooking” with strategic patience. 

Hampson pointed that a combination of geopolitical and domestic pressures, including the economic fallout from the widening conflict involving Iran, rising energy prices and the approaching U.S. midterm elections, could gradually weaken Trump’s negotiating position. 

“There’s some who are saying, let’s rush for a deal,” Hampson said. “But as Trump’s political position weakens, it does put us in a stronger bargaining position.” 

A source familiar with trade talks also noted that Trump could benefit from a few “good words” from Carney, as U.S.’s economic outlook takes a sharply pessimistic turn with 61 per cent of Americans believe the economy is “on the wrong track.”