May 15, 2025
Incoming Prime Minister Mark Carney’s meeting was US President Trump last week as widely regarded as a success. Mr. Carney avoided a ‘Zelinski’ moment in the Oval Office, and was seen to have successfully fended off the US President’s 51st state rhetoric – for now.
But the disruptions that Mr. Trump has brought to Canada’s economic, environmental, trade and security relations have raised major questions about Canada’s future pathway with the US and the rest of the world.
In reflecting on these questions, three potential directions seem to have emerged.
The first would be to seek to deepen Canada’s economic and security integration with the US. The second would lay the groundwork for a longer-term by-passing the US by working with countries and regions interested in building and sustaining a rules-based international trade, security and environmental order. The third option might combine elements of the first two, looking to stabilize the trade relationship with the US in key sectors in the short term, while focusing on expanding trade, security and environmental partnerships beyond the United States in the medium to long term.
The arguments for deeper economic and security integration with the US, sometimes presented as a ‘grand bargain’ option, would accelerate the pathway Canada has followed in a North American context since the signing of the original Canada-US Free Trade Agreement in 1988. At its root, this option seems based on the notion that deeper integration will create a situation where the US can’t harm Canada without harming itself in at least equal measure.
The problem with this approach is that Canada is already deeply integrated with the US in economic and security terms through trade agreements like the North American Free Trade Agreement (NAFTA) and Canada-US-Mexico Agreement (CUSMA), and the North American Air Defence (NORAD) and NATO alliances.
The consequences of disrupting these relationships seem to have had no discernible deterrent effect on the behaviour of the Trump administration so far. It is unclear why deeper integration would produce better results. At the same time, Canada would be intensifying its economic and security dependency on an increasingly unstable, unreliable, and untrustworthy partner, on what seems by many to be an irretrievable pathway to deepening economic, social, intellectual, political, and environmental decline. Some might even see the notion as a de facto surrender to Mr. Trump’s 51st state ambitions.
A second potential pathway might be to focus on our relationships with other nations and communities looking to maintain some degree of a rules-based trade, security, and environmental international order, looking to bypass an increasingly unstable United States. The European Union is an obvious potential leader of such a pathway, which along with the other non-US members of the Organization for Economic Cooperation and Development, and other nations around the globe, share values around democratic governance, the rule of law and human rights, and the need to address biospheric threats like climate change.
China would be the other major potential participant in such a partnership. It has a strong interest in a stable international trade regime, and has shown a willingness to address the climate challenge. At the same time, however, China’s expansionist ambitions and record of political interference represent serious political and security threats to Canada and other countries.
Although the Canada-Europe Trade Agreement (CETA) provides the foundation for a relationship with EU, it is also clear that the EU, and many other nations, tend to see Canada’s international economic role primarily as a geopolitically secure provider of resource commodity exports, like ‘critical’ minerals, in place of Russia.
Without Canada's traditional outlet for value-added economic activities of the North American market, this pathway does carry a serious risk of a doubling down on the resource ‘staples’ export dependency trap that Canadian governments have sought to escape since before Confederation.
That pathway carries other problems of its own. Markets for commodities like minerals are uncertain and in deep flux. As a relatively high-cost fossil fuel producer, Canada is unlikely to be among the last producers standing in a decarbonizing world.
A third option that has begun to draw attention, for be for Canada, in the short term, to seek to stabilize its trade relationship with US on a sectoral basis. Vehicle manufacturing and parts are an obvious potential starting point in these terms, leading to an effective return to the pre-Canada-US Free Trade Auto Pact model of sectorally managed trade.
Such an approach would have to be matched with a net-zero economic strategy for Canada, and continued efforts to expand rules-based trade, security, and environmental relationships with the EU, the rest of Americas - beginning with Mexico - and other like-minded countries.
In the end, such an approach needs to build systems that pay attention not just to the interests of international capital, but to those of people and the planet. A failure to do so will continue to feed the backlash against the social, economic and environmental consequences of unfettered global marketization that has lead to the emergence of populist authoritians like Donald Trump.