OTTAWA– Canada and the Trump administration are locked in a war of words over Prime Minister Mark Carney’s bid to chart a new model for smaller powers to fight back against the U.S.’s aggressive use of its economic and military might.
In the past week, Carney has resolved a trade dispute with America’s biggest strategic competitor, China, and delivered a speech at the World Economic Forum in Davos, Switzerland urging smaller powers to unite against economic coercion from the world’s great powers.
The moves drew cheers at home and abroad as a template on how to stand up to the Trump administration’s perceived bullying, just as the president was threatening Europe with retribution if Denmark didn’t yield the Arctic island of Greenland to the U.S.
But it has also incensed the Trump administration.
On Wednesday, President Trump, speaking at Davos, called out Carney for his speech, saying he wasn’t grateful enough to the U.S. “Canada lives because of the United States,” Trump said. “Remember that Mark, the next time you make your statements.” On Thursday, Trump said on his Truth Social platform that he had revoked Canada’s invitation to join his Board of Peace, a proposition Carney said he was considering but hadn’t accepted.
Commerce Secretary Howard Lutnick accused Carney of “an arrogant kind of thought,” and likened the prime minister’s speech to whining and complaining. He also suggested the China trade deal was a road map for upending talks on a revised U.S.-Mexico-Canada free-trade pact, known as USMCA.
Carney and Trump met in Washington last month before the most recent round of tensions. © brendan smialowski/Agence France-Presse/Getty Images
Treasury Secretary Scott Bessent brushed off Carney’s speech. “I think Prime Minister Carney should say ‘thank you’ [to the U.S.], rather than giving this value-signaling speech,” Bessent told Politico in Davos.
Upon his return to Canada from Davos, Carney shot back in a speech targeting a domestic audience. He said Canadians must redouble their efforts to rebuild their economy, and drew on the country’s founding, when the British and French joined to choose “partnership over domination, and collaboration over division.”
“Canada doesn’t live because of the United States,” Carney said, in reference to Trump’s previous swipe. “Canada thrives because we are Canadian.”
The verbal dust-ups mark the latest rupture in U.S.-Canada relations since Trump took office last year and almost immediately began imposing tariffs on its northern neighbor after decades of duty-free trade. Each time Canada has signaled it wouldn’t bow down, the Trump administration has amped up pressure. Trump had mused early in his second term about using economic coercion to annex Canada as the 51st state, but has dropped that language since Carney came to power roughly a year ago.
Carney’s trade detente with China, which reduces tariffs on Chinese electric vehicles and Canadian agricultural products, and his speech deriding the Trump administration’s doctrine, underscore the Canadian leader’s belief that the decades-old economic and security bargain with the U.S. is over, said Fen Hampson, professor of international affairs at Ottawa’s Carleton University.
Hampson said Carney may be making a “calculated bet that USMCA cannot be salvaged on acceptable terms, so the best option is to diversify trade, look for investors, and lead a coalition of rules-based partners.”
The Trump administration is set to formally review, and renegotiate, the terms of USMCA, with Lutnick signaling talks will move into high gear this summer. Canada’s economy is highly exposed to trade with the U.S., and Carney has made reducing the country’s reliance with the U.S. a central policy priority. Talks with Canada regarding USMCA have yet to commence, said a spokesman for the minister in charge of U.S.-Canada trade.
About 80% of Canada’s exports to the U.S. arrive duty free as they comply with USMCA’s terms. Economic activity in Canada remains tepid, with businesses unwilling to accelerate investment and hiring plans until USMCA’s fate is determined, economists and officials say.
Carney’s Davos speech warned about the rupture in the old Western-run, rules-based global order, while not specifying the U.S. nor China. He said that global hegemons were deploying weapons like tariffs that posed threats to supply chains.
The trade deal between Ottawa and Beijing allows China to sell a limited number of electric vehicles in Canada at a preferential tariff rate.
© AFP/Getty Images
He said the best way to counter such economic coercion is to form various coalitions with different countries to work on specific issues of mutual interest. “Middle powers must act together, because if we’re not at the table, we’re on the menu,” Carney said. Middle powers that pursue bilateral talks with a big power “negotiate from weakness,” he warned. “We accept what is offered. We compete with each other to be the most accommodating. This is not sovereignty. It is the performance of sovereignty while accepting subordination.”
European powers have also begun pushing back harder against Trump since he mused about using force or new tariffs to take Greenland—threats that he dropped in Davos.
U.K. Prime Minister Keir Starmer, who has worked hard to maintain a tight relationship with Trump, expressed outrage on Friday after Trump derided the contributions of North Atlantic Treaty Organization allies in the Afghanistan war, falsely saying they didn’t fight on the front lines. More than 400 British soldiers were killed in Afghanistan after the U.S. invoked Article 5 requiring NATO allies to act in collective defense after the Sept. 11, 2001, attacks.
Carney has faced criticism for his efforts to woo China, despite allegations of Beijing-approved foreign interference in domestic affairs and China’s human-rights record. In response, Carney told reporters in Beijing that China is now a more reliable trading partner than the U.S.
“We take the world as it is, not as we wish it to be,” Carney said while in China.
“There are clearly domestic political reasons that Carney did this,” Bill Bishop, author of The Sinocism newsletter, said Thursday on the Sharp China podcast. “But if Canada starts relying more on China for trade, then that just gives the Chinese side more leverage to effectively make sure the Canadians behave well as China defines good behavior.”
On Friday, Trump said on Truth Social that Canada would regret increasing trade with China, warning China “will eat them up” within a year.
Louise Blais, a former senior Canadian diplomat at the United Nations, said Carney’s remarks resonated with attendees in Davos because he laid out in stark terms the challenges in dealing with an emboldened Trump administration. She added, though, the remarks carry risks for Canada because the economy is so closely tied to the U.S. and American demand can’t be quickly replaced without sustaining some pain. And Canada’s military is poorly equipped to defend itself without U.S. help.
“Statements of shared values still matter, but only when they are backed by the ability to say no without inflicting debilitating harm on oneself,” she said in a piece for Policy Magazine. “Canada is not there yet, not by a long shot.”
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