I’ll be honest: I did not expect this outcome. Like many observers, I assumed Donald Trump was using tariffs as leverage—to pressure countries into making concessions on their left-leaning trade practices—not that he would actually finalize significant trade agreements. Yet here we are: Trump has struck a deal with the same European Union that Prime Minister Mark Carney once imagined he could use as leverage against the United States.
Canada’s Economic Direction Under Mark Carney
To clarify for readers, this blog has long maintained that Canada requires a period of serious austerity. However, Canadian voters appear to prefer a “better managed” welfare state rather than a leaner, more competitive economy.
On paper, Prime Minister Mark Carney’s economic vision is deficit-driven growth, heavily reliant on carbon credits and ESG (Environmental, Social, and Governance) frameworks. His plan—if it succeeds—would expand the public sector and compel Canada’s private sector to conform to an ESG regulatory model. This is unsurprising, given that Carney has been one of the world’s leading proponents of ESG, and has been associated with Brookfield Asset Management, a company that has taken out large loans, including significant financing from China.
The logic here is straightforward: if ESG policies become entrenched, Canadian companies will be obligated to participate in ESG-related projects—potentially enriching entities such as Brookfield, which could then repay its foreign loans. Critics, including us, have argued that this structure places China in a position of influence over Canada’s economic future, given that Chinese companies are not bound by ESG standards and dominate global manufacturing.
The Broader Geopolitical Landscape
Carney’s confidence in this strategy likely stems from the assumption that European nations, united under the Paris Agreement, would collectively enforce ESG requirements worldwide, leaving private companies little room to maneuver. These policies have already been cash-flow negative in many countries, but China has profited immensely by manufacturing ESG-related technology and infrastructure.
What the Trump administration has done, however, is disrupt this pattern. While it may appear that Trump is targeting Canada and the EU, the broader strategy is to apply economic pressure on China. This includes bolstering alliances with countries such as India—recognizing the strategic importance of Taiwan and the global reliance on Taiwanese semiconductor chips. The U.S. has no desire to fight a war over Taiwan, but it is using economic and trade tools to reduce China’s leverage in the event of a conflict.
What This Means for Canada
Trump’s deal with the EU shifts the landscape. Mark Carney’s domestic approach has so far been focused on deficit spending combined with regulatory schemes, not structural reforms. It is worth noting that Carney’s political success thus far has been largely about absorbing NDP support rather than presenting a bold new vision. Canada is edging toward a three-party system, dominated by Liberals, Conservatives, and the Bloc Québécois.
If Carney were to pivot toward austerity measures, the Bloc’s influence would decline significantly. However, as it stands, Canada’s left-leaning political establishment remains committed to policies that prioritize speech restrictions, mass immigration, and censorship rather than economic competitiveness.
Lessons from Europe
Europe itself is now rethinking its position. Two key factors are driving this change: Russia’s invasion of Ukraine and China’s growing economic power within Europe. Italy, for example, once the center of Roman engineering excellence, has recently struggled to build basic infrastructure such as roads and bridges due to decades of socialist policies that have weakened its private sector. When local expertise became too expensive due to overregulation, China stepped in—at a price, of course. These deals, like Carney’s ties with China, come with strings attached.
This has forced parts of Europe to shift, at least slightly, toward nationalism and pro-growth economic policies. Trump’s stance on immigration and trade has found a sympathetic audience in many European countries that are tired of stagnation.
The Clock is Ticking
For Prime Minister Carney, September represents a critical moment. To date, his tenure has been long on speeches and short on results. If he intends to shift course or deliver a meaningful win for Canada, time is running out. Meanwhile, as the global economic environment continues to change, Canada risks falling further behind.
We will continue to monitor whether Mark Carney adapts or doubles down on his ESG-driven approach in a world that is becoming more competitive—and less patient.
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