Did Mark Carney Pivot on Trump?

During the election campaign, Mark Carney presented himself as the leader best equipped to manage Donald Trump and protect Canada’s economy.

Since taking office, however, Canada has withdrawn its proposed digital services tax, removed most retaliatory tariffs, and shown greater willingness to negotiate over dairy, alcohol, automobiles, and Canada’s relationship with China.

That has created a basic political question: Did Mark Carney change his strategy after becoming prime minister?

Joseph Steinberg, a University of Toronto economist who specializes in macroeconomics and international trade, believes the answer is yes—but not necessarily for the reasons Carney’s critics suggest.

Carney may not have abandoned his objective. He may have recognized that the deal Canada once had is no longer available.

The Old Trade Relationship May Be Gone

Many Canadians assumed Carney’s promise to secure a good deal meant restoring the pre-2025 trading relationship: largely tariff-free access to the United States under CUSMA.

Steinberg argues that expectation may no longer be realistic.

The United States appears determined to maintain tariffs on steel, aluminum, and automobiles. American protectionism also extends beyond Trump. Many tariffs imposed during his first presidency remained in place under Joe Biden, suggesting that economic nationalism now has support across both major parties.

Canada may therefore be negotiating for partial relief rather than a complete return to zero tariffs.

That could mean lower tariff rates, industry-specific exemptions, quotas, or a long-term renewal of CUSMA with new conditions.

Compared with the previous arrangement, that would look like a setback. It may still be the best deal available.

Why Canada Softened Its Response

Canada initially responded to American tariffs with retaliation and a proposed digital services tax targeting major U.S. technology companies.

Those measures demonstrated resolve, but they also carried costs.

Steinberg describes the digital services tax as another form of tariff. It risked increasing costs, escalating tensions, and making a broader trade agreement more difficult.

Retaliatory tariffs create a similar problem. They may hurt American exporters, but they also raise prices for Canadian consumers and businesses that rely on American products, machinery, and materials.

From that perspective, Canada’s retreat was not necessarily surrender. It may have been a recognition that symbolic retaliation was doing more harm at home than creating leverage in Washington.

The problem for Carney is political. Canadians are understandably angry about Trump’s tariffs, his comments about Canadian sovereignty, and the increasingly hostile tone of the relationship.

But Canada remains heavily dependent on the American market.

Carney must therefore repair relations with a government many Canadians resent. If he confronts Trump aggressively, he risks further economic damage. If he compromises, he risks appearing weak.

What Carney Is Likely Trying to Secure

The government’s most important objective may be certainty.

Businesses can adjust to a known tariff more easily than they can adjust to constant instability. A company deciding where to build a factory needs confidence that goods produced in Canada will still have access to the United States years from now.

Without that certainty, companies have a strong incentive to invest south of the border.

A renewed CUSMA could therefore be more valuable than winning every individual tariff dispute.

The United States has raised concerns about Canadian dairy quotas, American alcohol being removed from provincial shelves, the digital services tax, and Chinese involvement in North American supply chains.

The largest issue may be China.

Washington wants stronger rules preventing Chinese electric vehicles and components from entering the American market through Canada or Mexico.

Canada has reasons to resist. Chinese electric vehicles could provide consumers with cheaper and more advanced options.

But Canada’s auto market is too small to replace access to the United States. Steinberg argues that if restricting Chinese vehicles helped secure a long-term CUSMA renewal, the trade-off might be worthwhile.

That may be central to Carney’s strategy: accept limited concessions to preserve the larger economic relationship.

Is Carney Giving Away Too Much?

That remains the key risk.

Canada has made concessions, but it has not yet secured major relief on steel, aluminum, or automobiles.

There is a difference between pragmatic flexibility and one-sided accommodation.

Withdrawing an economically damaging policy can be sensible. Making concessions in exchange for long-term certainty can also be sensible. But Canadians will eventually need to see what the country receives in return.

Carney’s strategy cannot be judged solely by whether he changed course. It must be judged by the outcome.

If Canada secures a durable CUSMA renewal, reduced tariffs, and greater investment certainty, the pivot may prove justified.

If Canada continues making concessions without obtaining meaningful benefits, criticism will become much harder to dismiss.

Canada’s Real Leverage

Steinberg argues that Canada cannot match the United States tariff for tariff. The American economy is simply too large.

Canada’s leverage comes from resources the United States needs.

American refineries rely on Canadian oil. U.S. manufacturers and defence industries need critical minerals. Canadian electricity could support growing demand from data centres and artificial intelligence.

Expanding pipelines, mineral development, electricity generation, and transportation infrastructure would strengthen Canada’s economy while making the country more valuable to the United States.

This may explain Carney’s growing emphasis on infrastructure and major projects.

The strongest bargaining position is not threatening to punish America. It is becoming too useful to ignore.

Did Carney Pivot?

Yes, at least in tone and tactics.

Canada has moved away from public confrontation and toward a more pragmatic negotiating posture. The government appears more willing to remove irritants, consider American demands, and prioritize long-term access to the U.S. market.

That does not necessarily mean Carney misled Canadians or abandoned the country’s interests.

It may mean he entered office and confronted a difficult reality: Canada cannot defeat the United States through retaliation, cannot replace the American market, and cannot assume the old trading system will simply return.

The real test is what comes next.

Carney’s strategy appears designed to preserve CUSMA, limit the damage to Canadian industries, and create enough certainty for businesses to keep investing in Canada.

Whether that strategy is successful will depend on what Canada ultimately receives in return.