Prime Minister Mark Carney says decreasing Canada’s dependence on the United States as its primary economic ally could mean some tough times are ahead as the country launches its retaliatory tariffs against its southern neighbour.
The Carney government has implemented dollar-for-dollar retaliatory tariffs targeting around $20 billion worth of American goods in response to U.S. President Donald Trump’s levies on Canada.
It’s a move that the prime minister described as necessary in his most recent Forward Guidance video, which was published on Sept. 8—the same day Canada’s counter-tariffs went into effect.
“This won’t be easy, and I won’t pretend otherwise,” Carney said in the latest instalment of his video series. “But Canadians have faced difficult stretches before, and what’s carried us through has never been any one measure.”
Carney characterized the counter-tariffs as “necessary to protect our workers, companies, and communities,” arguing that Canada cannot allow American goods to enter the country tariff-free while the White House imposes tariffs on Canadian companies exporting to the United States.
He described the collapse of trade talks with the United States as “a shame,” but said his government “simply could not accept” what the U.S. administration was proposing.
He again accused American negotiators of introducing last-minute measures that would limit Canada’s capacity to protect and promote the French language and hinder future trade agreements with certain nations. He said they also proposed conditions that would gradually weaken several key Canadian industries, such as automobiles, steel, and forest products.
“In short, they were asking far too much and offering far too little,” he said. “We worked in good faith, to reach a fair deal. But since a fair deal wasn’t on the table, we made the right choice—to walk away from a bad one.”
Carney’s video comes two weeks after Canada officially walked away from trade negotiations and recalled its negotiators on Aug. 21. He told reporters on Aug. 22 one of the main sticking points was American efforts to “restrict our protections of our language, our culture, and in effect, our sovereignty.”
The U.S. government disputes Carney’s account of the negotiations. Both Trump and U.S. Trade Representative Jamieson Greer have rejected his characterization of the French-language issue, saying it was not a U.S. demand in the talks. Greer has instead pointed to Canadian policies, including rules requiring U.S. technology and streaming companies such as Netflix to contribute to Canadian broadcasting funds, as an area of concern.
The differing stories on both sides of the border led the Conservatives to call on Carney to publicly release the wording of the deal. The government has not responded to the request.
‘Plan A’
Carney said the last four decades have led Canada to become more economically integrated with the United States—an issue he said his government plans to change.
“It was easy business, but it meant we relied too much on one economic partner,” he said. “That time is over.”
Tariffs are just one part of Canada’s response, however, Carney said, adding that Canadians can support the response by continuing to buy Canadian products and travel domestically.
Another part of the plan is to seek other trading relationships, he said.
“I want to be very clear, building at home and diversifying trade abroad was never our plan B,” Carney added. “It’s been our Plan A from the start.”
He said part of that plan is building major projects in Canada in the form of new ports, mines, and energy corridors, estimating the projects so far represent $500 billion in new private investment.
All of the first five projects selected for fast-tracking by Canada’s Major Projects Office had already been started before receiving the federal designation, such as the construction of the small modular reactor site at the Darlington New Nuclear Project in southern Ontario.
Subsequent batches of projects referred to the Major Projects Office include concepts at much earlier, unapproved stages—such as the high-speed Alto rail network between Toronto and Quebec City and an Atlantic Energy Strategy using wind power—which still require extensive regulatory review and final investment decisions.
Another part of the plan, Carney said, is making trade deals with more countries overseas.
There has been a substantial rise in non-U.S. exports and Canada is projected to double these figures over the coming decade, according to Carney. He said foreign direct investment in Canada has reached its highest point in 20 years, operating at double the rate of the country’s closest G7 competitor.
He said his government has been moving quickly to diversify and pointed to what he described as “20 trade and defence agreements across four different continents.” He cited trade diversification with China as one such example, saying one aspect of the deal has allowed one of Western Canada’s top malt canola producers to sell their product at higher prices.
Opposition critics have described the government’s characterization of its international trade agreements as misleading, because only a few of these deals have been formalized. Most consist of non-binding Memorandums of Understanding (MOUs), letters of intent, or foundational terms of reference meant to start formal negotiations rather than finalized, fully ratified treaties.
The Conservatives have also criticized Carney for pursuing deeper ties with China after a public inquiry identified widespread interference by Beijing in Canada’s affairs. Conservative Leader Pierre Poilievre has called the Chinese Communist Party a grave security threat to Canada that needs to be kept at arm’s length from any trade or investment decisions.
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