Canadian Prime Minister Mark Carney recently launched his ‘elbows up’ campaign in transforming Canada to trade more with the rest of the world & also with each other. Canadians appear to be spending more in the United States, while Americans are spending less in Canada. The strong U.S. economy, with its tax breaks under the ‘Big Beautiful Bill’, has reinforced the attractiveness of the globe’s largest market for Canadian investors. From mutual to pension funds, more Canadian dollars than ever before have headed southbound. Business investments have also done likewise. Carney may need to do even more on taxes & regulations to retain Canadian investment at home.
Despite the strong rhetoric surrounding tariffs, Canadian consumers have been slow to alter their habits. Highly visible brands, such as Tennessee whisky, were likely an easy early target. Vacations to Florida and Arizona have also been negatively impacted. To a large extent, Canadians are still watching Netflix, buying Ford cars, and even drinking Coke. These are still moving at the same rates as they were before the trade war.
A couple of generations back, during the Trudeau 1 era, Canada was attempting to shift away from a Vietnam-era America. There were similar tensions that reverberated even then through Canadian living rooms & board rooms. The probable perceived comparison of the U.S. elephant besides the Canadian mouse was about more than sneezes and colds. It was then about dependencies in the economy besides culture &, ultimately, on sovereignty. A varied approach emerged to the binary option of dependence versus independence. This was perceived as a 3rd option in which Canada may become closer in partnership with a reconstructed Europe, a re-emerging Asia & also a resurgent 3rd world.
Back then, there had been a strong concern about Canada as a branch-plant economy. This meant American branch plants. However, 5 decades later, Canada finds itself searching for new global alliances not from a position of strength, but during a time of maximum dependence and significant uncertainty about the United States.
