Mark Carney is right to hedge Canada against the US with the EU
By Bram de Vries · Reporting from Amsterdam ·
The world is once again learning that the "special relationship" is a fairy tale told to children and diplomats.
# The Special Relationship is a Myth
The "special relationship" is a diplomatic myth. When the United States weaponizes its market, a partner must stop acting like a dependent and start acting like a merchant. Mark Carney, the architect of Canada's new economic strategy, has finally accepted this reality.
Euronews and IndexBox report that Washington has slapped half-tariffs on 28 billion Canadian dollars of goods, from lumber to aluminum. Ottawa fired back with its own levies, but counter-punching does not create growth. Carney’s push for a "unique security and economic alliance" with the European Union is not a betrayal of North American ties; it is a necessary hedge against a partner that uses tariffs as leverage.
Why Canada Needs a Hedge
Washington weaponizes shared supply chains. During the trade war between the United States and China, the U.S. government used levies on steel and electronics to force geopolitical concessions. Canada is simply refusing to follow that playbook into a corner.
Critics fear for the nearly trillion-dollar trade link with the U.S. They argue that pivoting toward Brussels is a strategic error that will provoke Washington further. This is the logic of the frightened. The opposition is correct that Canada cannot replace the U.S. market, but the goal is not replacement. The goal is leverage.
The Trade Expansion Act of 1962 provides the blueprint. That American law proved that allies need a legal floor to manage tariffs and prevent total economic rupture. Carney is attempting to build a modern, transatlantic version of that stability. By diversifying his partnerships, he ensures Canada is a player with options rather than a subordinate.
Can Europe Actually Open Up?
Carney is walking into a trap of European making. He seeks a deal that lets Canadians work in the EU without visas, but he is dealing with a bloc that praises alliances while guarding its borders.
The European Union protects the four freedoms: the movement of goods, services, capital, and people. The Guardian notes that ten member states, including France, Italy, and Poland, still refuse to ratify the Comprehensive Economic and Trade Agreement (CETA). This is the same dysfunction that stalled CETA's full rollout, even though the deal already wiped out nearly all tariffs.
Valérie Hayer, a French lawmaker, said she wants responsibility, but Brussels typically writes the rulebook before asking why. The EU functions as a bureaucracy designed to protect the status quo. Canada is acting with the agility of a firm in a crisis; the EU is acting like a slow-moving committee. If the EU cannot ratify a deal it already signed, the promise of a "unique alliance" is little more than a diplomatic postcard.
Investment and Infrastructure
The most promising part of Carney’s strategy is the domestic ledger. Canada is now offering a full immediate tax deduction for new investments in factories and refineries. This free-market signal tells the world that Canada is open for business, a move complemented by the decision to sell stakes in four major airports to foreign investors.
Stephen Hill and his Aboriginal-led investment coalition feel this shift leaves them behind. While their frustration is real, the hard math of trade suggests that Canada cannot fund social equity while its primary export market chokes its growth. The government must expand the economy first before it can distribute the gains.
Canada is redefining its role in the world, much like the UK did during Brexit, though Carney is more careful about maintaining his trade bridges. He is pursuing a path of mercantile realism.
Canada has the lithium, the potash, and a balanced operating budget to be a global protagonist. The tragedy is that they are seeking a partnership with a European Union more interested in its own red lines than in the flow of goods and people. Canada will arrive in Europe ready to trade, but they will likely find that Brussels is still debating the minutes of the last meeting.