O! Canada! – Optimistic that the Carney government can thrive? We can hope

Mark Carney (Canadian government photo)

The biggest unsung “success” in Donald Trump’s second “first 100 days” in office is possibly this: He’s breathed new life into discussions about governance and political philosophy in nearly every country in the world. Canada – America’s nearest neighbour geographically, economically, and culturally – has undergone perhaps of the greatest of those regenerations.

On April 29, Donald Trump celebrated his own self-proclaimed “most successful” first 100 days in office of any US president “in history”. He was visiting Michigan, the traditional home of the US automotive industry.

The same day, just across the border, where the global supply chain of US carmakers begins, Canadian Prime Minister Mark Carney celebrated the resounding election victory – perhaps even the resurrection – of his Liberal party. Carney ran a campaign based largely on opposition to Trump’s aggressive trade policy and his threats to the sovereignty of his neighbour and second largest trade partner.

A normally calm Canadian businessperson I know said Carney “came out swinging”, and added: “Canada is over the shock of the American betrayal.”

At the start of the year, the Liberals under Justin Trudeau looked doomed to irrelevance even before Trump entered the picture in January, calling – playfully, seriously? – on Canada to become the 51^st US state. Carney called an early general election, held on April 28, and his direct rival for prime minister, Conservative Pierre Poilievre, seen as a Trump admirer, lost his seat in Parliament.

Carney, a non-politician who was governor of the Bank of Canada and then governor of the Bank of England, became leader of the Liberal Party only a couple of months before, then immediately prime minister after the resignation of the unpopular Justin Trudeau. Carney is an economist and, supporters say, has already articulated a plan – even say a strategy – to cope with the disruption that the 25 per cent tariffs on much of Canada’s exports that Trump had applied in the opening weeks of his administration, and paused until March, and then reapplied with a reduction for oil and gas exports. Canada, via Carney, expressed outrage and responded with tariffs of its own in kind.

Supporters might say the plan is designed to address the problems that plagued the Trudeau government before Trump’s election in November, as well as address the challenges that Trump’s policies have added to the mix.

• Trudeau had allowed immigration to soar, including many illegal migrants. Canada’s population has risen by about 15 per cent to 41 million during his 10-year tenure as prime minister, and 9 per cent in the last five years.

• That rise was not matched by housing construction, pushing up rents and pricing Canadian citizens out of their homes and into food banks.

• Medical care – a state-run system, free at the point of use and thus so different from the US one – has thus become strained, exacerbated by an ageing population.

• The lack of a pipeline from the oil and gas fields of Alberta to the refineries in eastern Canada left an energy-rich country dependent on imports and dependent on exports of oil to the US, now subject to a (now reduced) 10 per cent tariff.

But Carney’s plans would address these:

• He wants to build 500,000 new homes a year, double the 2024 pace.

• Regulation has been another obstacle to prosperity that. Carney wants to reduce planning delays, in mining for example, where it can take easily more than a decade to get them in operation.

• Trade between Canadian provinces is hindered by differences in rules in each. Carney has promised that his government would end such practices.

Is that enough? Is it even possible?

The joy of Carney’s many well-wishers may be the sort of wishful thinking that comes after a flush of patriotism in the face of adversity and the thrill of an election victory with a prime minister who speaks with authority. Building homes takes time, however. So too does building new mines, even if planning restrictions are lowered. Expanding the capacity of the medical system takes even longer. Building a west-to-east pipeline looks even more challenging, even if expanding oil and gas production were a sensible idea. And let’s remember, Mark Carney has been a strong voice advocating the dangers of fossils fuels and climate change.

The tariffs that Canada has imposed on imports from the US will add to inflationary pressures even as American tariffs on Canadian exports put pressure on economic activity north of the border. Carney, a novice in politics, has plenty of work to do just coping with the new pressures, let alone solving those that persist.

And that catalogue doesn’t address the imperative to increase spending on defence in response to Trump’s ambivalence over the NATO and the implications of the war in Ukraine. And with Arctic ice melting, Canada has another defence-related imperative: patrolling the north extremities of its land mass.

And remember: Carney’s Liberals may have won the election, but with 169 seats, they fell three short of a majority in Parliament. The Conservatives’ leader may not be in the new Parliament, but members of his party increased the number of seats by 24, to 144. Getting big bills enacted could be difficult.

Justin Trudeau enjoyed a long honeymoon with voters when he first rose to power a decade ago. But those were happier times, for Canada and the world. The great financial crisis lay behind. The world had not heard the word “covid”. Russia had seized Crimea, but no one expected a full-scale invasion, let alone that the war would take three years and more to reach a stalemate. Trudeau had worked through the first Trump presidency, bruised by the Trump’s abandonment of the old NAFTA trade agreement between the US, Canada, and Mexico. But he could accept its replacement, the clumsily named CUSMA. Now even that entente has fallen apart.

And this:

Canada isn’t alone in facing these pressures on finance, investment, demography, and trade. Many countries share these problems, and all look more problematic with the return of Trump to the White House. Around the world we are all grappling with the question of how to govern, and …