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Experts react: What Mark Carney means for the US-Canada relationship

Mark his words. Mark Carney, the former governor of the Bank of Canada and the Bank of England, will become the next Canadian prime minister this week, after he was elected leader of the Liberal Party by a landslide on Sunday. In his victory speech, Carney had hockey skate–sharp words for Canada’s southern neighbor. “America is not Canada. And Canada never, ever will be part of America in any way, shape, or form,” Carney said in response to US President Donald Trump, who has threatened tariffs and floated the idea of Canada becoming the fifty-first US state. He added, “We didn’t ask for this fight, but Canadians are always ready when someone else drops the gloves.” So, what’s next for Carney, who takes office ahead of a required national election before October 20? And what’s next for the Washington-Ottawa relationship? Below, Atlantic Council experts answer these questions and more.

Click to jump to an expert analysis:

Josh Lipsky: Central bankers are no strangers to politics

Imran Bayoumi: Forget the border—Carney’s biggest security challenge is in the high north

Michael Bociurkiw: Canada—and the world—must now wait for the Carney-Poilievre face-off

Maite G. Latorre: Carney comes to power at a moment of growing Canadian patriotism

Stuart Jones: Canada may now look to Europe as tensions with the US grow

Central bankers are no strangers to politics

Think Carney’s experience leading two different Group of Seven (G7) central banks isn’t relevant for his new role? Think again. Carney wasn’t just any central banker—he was a central banker during multiple crises. First, he led the Bank of Canada during the global financial crisis and won praise from his colleagues for quick action on interest rates that helped Canada weather the storm. In fact, he did such a good job that he became the first non-Brit to lead the Bank of England. In that role, he had to lead the bank through Brexit—one of the biggest shocks the UK economy has experienced in decades.

All of this prepares him quite well to handle the toughest economic test he has ever faced—how to handle a trade war with a neighbor who seemingly has much more leverage. Carney has already highlighted how Canada will use US reliance on Canadian energy to try and even the playing field. Perhaps this is a negotiating tactic and he will seek to reset US-Canada ties following the frosty relationship between Trump and outgoing Prime Minister Justin Trudeau. But don’t expect a pure technocratic approach despite his CV. Remember, trade wars are also currency wars. The way a country’s currency appreciates or depreciates can have an enormous impact on who bears the costs of tariffs. And Carney is uniquely suited to lead his country in that kind of battle.

—Josh Lipsky is the senior director of the Atlantic Council’s GeoEconomics Center and a former adviser to the International Monetary Fund (IMF).

Forget the border—Carney’s biggest security challenge is in the high north

While tariffs have put a spotlight on the US–Canada border, the biggest security challenge that Carney will have to deal with is instead hundreds of miles away in the Arctic.

Climate change is melting sea ice, making the Arctic more accessible, opening new shipping routes, and creating new opportunities for resource extraction. Canada’s relatively undeveloped Arctic makes the region an “attractive, strategic, and vulnerable destination,” for foreign adversaries according to the Canadian Security Intelligence Services, which notes that enemies will likely be interested in investing in infrastructure and resources to gain a foothold in Canada’s high north.

With an upcoming election, Carney should make strengthening Canada’s Arctic security a priority. For his part, Poilievre pledged a substantial increase in Canada’s military presence in the Arctic if the Conservatives are elected.

The Trudeau government announced last week an investment to build three Northern Operational Support Hubs, acting as a presence for the Canadian Armed Forces in the region. However, the development of these hubs will take place over twenty years, far too long a timeframe to meet a real and already present threat, and Carney would be well suited to expedite this timeline.

In aiming to boost Canada’s Arctic security, Carney should look south. Cooperation with the United States may seem fraught today, but in the long term it is essential for the security and stability of the North American Arctic.

The two nations’ continued close cooperation, alongside Finland, is essential to the success of the Icebreaker Collaboration Effort (ICE Pact), which aims to build Arctic and polar icebreakers while sharing information and knowledge among the three nations.

Additionally, Carney should seek to clarify and advocate for Canada’s participation in Trump’s plan for the Golden Dome missile defense system. Canada’s role in the Golden Dome has never been clear, but Ottawa and Washington already work together via North American Aerospace Defense Command (NORAD), with both nations planning to install modern over-the-horizon radar stations and seabed-based sensors in the Arctic to better detect cruise or ballistic missiles. Carney should look beyond advocating for just sensors and instead work to install interceptors to knock down incoming threats. Doing so would require Canada to reverse its 2005 decision against joining the US homeland Ballistic Missile Defense System, a politically bold move for Carney, but one that would enhance the security of the Arctic—and North America as a whole.

—Imran Bayoumi is an associate director at the Atlantic Council’s Scowcroft Center for Strategy and Security.

Canada—and the world—must now wait for the Carney-Poilievre face-off

The Canadian Liberal Party leadership race had a Ukrainian twist to it, with former finance minister and deputy prime minister, Chrystia Freeland, in the running—but she ended up with devastating results in the single digits.

What is amazing is that Carney managed to pull off such a stunning result for someone who has never held public office. The Ukrainian community in Canada, the largest outside Russia, pulled hard for Freeland in the hopes she would become, at least temporarily, the first Canadian of Ukrainian origin to hold the post of prime minister. However, it seems that she was hurt by being too closely tied to the policies of the politically toxic Trudeau. Her abysmal performance may exclude her from a prize seat at a vastly slimmed-down cabinet table in a Carney government. Another possible path for Freeland is to pursue a future career outside politics in a multilateral body such as the International Monetary Fund, the World Economic Forum, or elsewhere.

My prediction is that, in a national election, which has to happen by this fall, the opposition Conservative Party under Poilievre will become the new government but without the strong majority they had hoped for (the huge gap between the Liberals and Conservatives has been narrowed by the Trump trade war, with Trudeau’s Liberals gaining significant ground by positioning themselves as the team best suited to defend the country’s interests in an era of Trump’s whiplash foreign policy). Watching Carney for the first time addressing his followers, I sensed very little fire or emotion, and that could benefit Poilievre, who’s been criticized in the past for being too stiff on the hustings. He has since gained some mojo.

Last week, the leader of His Majesty’s Official Opposition made some sound remarks on Canadian foreign policy toward Ukraine, saying that the country should move quickly to help Europe wean itself off of Russian oil and gas (which, he correctly said, powers Russian President Vladimir Putin’s war machine) by building terminals on the east coast to ship liquefied natural gas (LNG) across the Atlantic. But whichever party is in power, cross-aisle support for aiding Ukraine will continue, albeit with a global influence that’s been vastly diminished under the Trudeau Liberals.

—Michael Bociurkiw is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

Carney comes to power at a moment of growing Canadian patriotism

Like many Canadians, Carney once had dreams of being a hockey player. An Edmonton Oilers fan, he likely never imagined his path would lead him to politics. Yet, with a staggering 86 percent of the vote, he has emerged as the new Liberal leader. Notably, he is the first leader of the country to have never held elected office.

Carney, much like Trump, is not a career politician. And that might be exactly what Canada needs to move past the Trump era. “I know how the world works,” he remarked, signaling his understanding of the private sector and the global economy. With Washington no longer the Washington of the past and politics evolving rapidly, Canadians are hungry for change, and the Liberals seem to have recognized that.

Carney’s election is a strategic move by the Liberals. While he may not have political experience in the traditional sense, he certainly knows how to tackle crises and make tough decisions. As Carney said on Sunday, “We are facing the most significant crisis of our lives.”

At the same time, Canadians appear to be feeling more patriotic than ever, and they want a leader who can harness that energy. If he succeeds, then Carney could be the Liberals’ best shot at making the party competitive again. His time in power may be brief, depending on when he calls the elections, so his strategy will have to focus on quick but impactful wins to prove himself to Canadians. With the economy front and center, negotiating on US tariffs should be at the top of his agenda. The puck has been dropped, and Carney is stepping onto the ice. Now, it’s up to Canadians to decide if he’s the right player to lead the team.

—Maite G. Latorre is a program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center.

Canada may now look to Europe as tensions with the US grow

Carney’s landslide victory over Freeland in the leadership race for Canada’s Liberal Party will be welcome news for Europe in the near term. Under Trudeau, the Liberals have advanced a steadfast alignment with the European Union (EU) prioritizing trade. The government did this through the EU-Canada Comprehensive Economic and Trade Agreement, or CETA, which eliminated 98 percent of tariffs between the two blocs since its provisional implementation in 2017. It has also focused on joint participation in research initiatives, such as Horizon Europe and with the “A7” in the Arctic, as well as on defense cooperation in NATO, exemplified by Canada’s leadership in Latvia’s Multinational Brigade. Should the Liberals win this year’s impending general election under Carney’s leadership, Canada will likely seek to continue this track record and further deepen ties with Europe.

In his acceptance speech on Sunday evening, Carney vowed to “create new trading relationships with reliable partners”—a clear jab at Trump, who was in many ways the central focus of the event in Ottawa and a common pain point for Europeans in recent weeks. Across the pond, European Commission President Ursula von der Leyen in a Sunday press conference in Brussels specifically named Canada as a “like-minded” ally to work with in today’s contentious geopolitics. Closer Canada-EU alignment in the face of the transatlantic crisis was already on display last week with Trudeau’s attendance at the emergency summit on Ukraine in London.

The question now is about the long term: when the next election will ultimately take place, which Conservatives are calling for as early as possible, and whether Carney can lead the Liberals to victory as its candidate against Poilievre. The Liberals are now enjoying a momentum which few could have foreseen given the state of national polls even just a few weeks ago. However, if Carney does win in the upcoming contest with Poilievre, it remains to be seen whether he can successfully expand CETA to offset Canada’s increasingly costly trade with the United States. So far, CETA has increased the value of Canada-EU trade in goods by 65 percent and in services by 73 percent. But the agreement remains unratified by ten EU countries, including the major economies of France, Italy, and Poland, and has faced protests across Europe in the past.

—Stuart Jones is a program assistant at the Atlantic Council’s Europe Center.