Prime Minister Carney’s (Phone) Call to Reason
As published on Substack
After several days of increasingly heated exchanges between Washington, D.C. and Ottawa, it was an enormous relief for Canadian business leaders to hear Prime Minister Mark Carney describe his 30-minute phone call on Monday with President Donald Trump as a “very good conversation.” One hopes this constructive dialogue continues.
It was particularly encouraging to hear the Prime Minister say he used the call to personally let the President know Canada is prepared to “respond positively” to changes in U.S. trade policy “by building a new relationship through CUSMA” – known to the Americans as the United States-Mexico-Canada Agreement (USMCA).
As it happens, I was in Washington last week to meet with Administration officials, Members of Congress, and U.S. business groups to discuss the USMCA. In all my meetings, the first questions I was asked was whether Prime Minister Carney believed Canada had a future in the USMCA and was he working towards seeing it extended.
To be clear, it is not just Americans who have asked me those questions. I’ve been asked the same or similar ones by business leaders and government officials representing important trade and investment partners including Mexico, Korea, Japan, France, Germany, India and the United Arab Emirates. This is an important dimension to bear in mind.
Canada is a trading nation. The lives and livelihoods of Canadian families are inextricably linked to the global trade of goods and services. Trade is essential to ensuring Canadians have good-paying jobs and can afford everyday essentials for their families. That will not change no matter what may change around us.
Canada needs to diversify its trade and investment relationships globally. To do so, we need to build export-enabling infrastructure to get goods to both our east and west coasts. To build that infrastructure, we need both domestic and foreign investment. Those investors want assurances we’ll continue to have preferential access to the U.S. Everything is linked.
Of course, the USMCA doesn’t just benefit Canadians. The extension of the USMCA – what Congressional Republicans call ‘reupping’ – must be a priority for all three countries. The agreement, which is crucial to all our economies, is facing a mandatory review this year. As the PM told the House of Commons, our shared intent is to renew it on or before July 1st.
Prime Minister Carney also said he briefed the President on “what we intend to do going forward, as well as the opportunity to, of course, move forward on CUSMA”. He then added Canada-U.S. Trade Minister Dominic Leblanc had also done so with the U.S. Trade Representative Ambassador Jamieson Greer. These are both welcome developments.
Ten years ago, when he was Bank of England Governor, Mark Carney cautioned the British people that unilaterally decoupling from their closest and largest trading partner would be detrimental to their economy – and so it has proven. That same logic applies with respect to Canada and the United States. We can’t afford a BREXIT-style break.
Stabilizing our relationship with the United States, strengthening Canada, and strategic diversification is the three-pillared formula we need to follow. When I say strategic diversification, I mean a ‘U.S. plus’ – not a ‘minus U.S.’ – trade and investment policy. To his credit, this is exactly what Prime Minister Carney has outlined over the past several days.
In response to U.S. concerns, he detailed how the tariff deal with China, secured during his visit to Beijing, was entirely consistent with our obligations under the USMCA – specifically the article 32.10 provision requiring notice to be given before starting negotiations for a free trade deal with non-market economies. This is important on multiple levels.
First, it serves as a proof point that rules-based trade between Canada and the United States is not dead – much in the same way that President Trump has exempted virtually all USMCA-compliant goods from tariffs. Second, it’s a reminder that the USMCA is a comprehensive agreement of 34 chapters covering far more than tariffs.
That is why we need to prioritize strategic diversification, new agreements that complement or supplement our North American economic partnership with the U.S. and Mexico. This includes, for example, strengthening trade and investment ties with increasingly important markets in the Western Hemisphere such as Argentina, Brazil, Colombia, and Chile.
As I write this, I am in Panama attending the Latin America Development Bank’s 2026 International Economic Forum. I am meeting with and hearing from political and business leaders from across this dynamic region. My message to them is clear: We need to seize this opportunity to strengthen commercial trade and investment ties.
For this reason, it’s critical that Canada has resumed its free trade negotiations with Mercosur (Argentina, Brazil, Paraguay, and Uruguay). This bloc represents an enormous opportunity for Canada, especially as the EU just voted to refer its long-and-now-further-delayed trade deal with them to the European Court of Justice for a legal opinion.
Changes to the global trading order are creating new opportunities for those who can act quickly and with agility. Canada must take advantage of this fast-evolving deal environment at the same time as we nail down the best trade deal we have – our trilateral agreement with the U.S. and Mexico. Our policy must be ‘and’ not ‘or.’ Diversification isn’t decoupling.
