On Friday night, Canadian Prime Minister Mark Carney ordered his negotiators to walk away from a trade agreement with President Donald Trump, less than an hour before a new round of American tariffs was set to take effect.
To hear Carney tell it, the reason was simple: It was a “bad deal.”
Carney increasingly looks like a prime minister in China’s pocket.
“We take this step confident that it is in the best interests of Canada,” Carney said Saturday. “And that, by rejecting a bad deal, standing up for Canada, and focusing on what we can control, we are building a Canada strong for all.”
On Tuesday, his government announced retaliatory tariffs of up to 50% on $27.6 billion in U.S. goods, effective September 8.
“When the United States of America asked too much and offered too little, we made a choice,” Finance Minister François-Philippe Champagne said. “We chose Canada.” Does anyone really believe that?
‘War’ cry
Carney walked away not because the deal was necessarily bad for Canada, but because confrontation with the United States serves his politics. He is prepared to endure 50% American tariffs on roughly $20 billion in Canadian exports because he is frankly ecstatic to be “at war” with the United States — it cements his appeal with an anti-American base that thrives on Canadian martyrdom.
“You’re at war when you’re attacked, and we got attacked,” Carney said.
Just as Carney vilified the U.S. and Trump in his last “elbows up” federal election campaign, he is again playing the victim card in his latest attempt to cast Trump as the unreasonable aggressor. Carney certainly appears to have planned for this rejection, and politically he is enjoying it — just as his Liberal Party has long galvanized its supporters with anti-American rhetoric.
Carney has provided few details to Canadians about just exactly why the trade deal was so “bad,” except to make outrageous suggestions that the U.S. was trying to strip Canada of its official bilingualism — which would be a wonderful phenomenon — and erode its French-language culture.
He has also claimed that Trump was demanding restrictions on trade deals Canada could make with other countries.
Playing around
But this is clearly a smoke screen. Carney hardly behaved as though securing a trade deal was urgent when he went on vacation to Italy just 10 days before the tariff deadline. He returned to Canada with the tariffs about to take effect but managed to gain a three-day moratorium as negotiations continued.
He wasn’t serious about preserving the old economic relationship with the United States then, and he isn’t now.
If Carney had been serious about preserving Canada’s economic relationship with the United States, he would not have spent years arguing for a world economy less dependent on American economic power.
As early as 2009, while serving as governor of the Bank of Canada, Carney declared that “globalized product, capital, and labour markets lie at the heart of the New World Order to which we should aspire.”
A decade later, as governor of the Bank of England, Carney was explicitly discussing the growing international importance of China’s currency, the renminbi, or yuan. In his 2019 Jackson Hole speech, he noted that “the greater use of the renminbi in international trade is also leading to its growing use in international finance” and discussed the possibility of it becoming “a truly global currency.”
Carney argued that the dollar-dominated international monetary system was becoming unsustainable and proposed a new “synthetic hegemonic currency” that would reduce the world’s dependence on the U.S. dollar.
New order
Now, as prime minister, Carney has gone considerably farther in embracing Beijing.
During his January visit to China, where he forged a new strategic partnership with Beijing, Carney told Chinese Premier Li Qiang that the progress in their relationship “sets us up well for the new world order.”
Days later at Davos, Carney spoke of a “rupture in the world order” and argued that middle powers such as Canada should seize the opportunity to build a new order. He pointedly noted that Canada had concluded strategic partnerships with China and Qatar in the past few days.
Carney increasingly looks like a prime minister in China’s pocket. Rather than retreat from Beijing in response to American concerns, he has been accelerating Canada’s economic embrace of it.
But what, exactly, was the “bad deal” that Carney rejected?
In an interview with the New York Times, U.S. Trade Representative Jamieson Greer revealed previously undisclosed details of the American offer.
“The United States had offered to reduce its tariffs on steel, aluminum and autos, and eliminate a recently imposed tariff on Canadian lumber,” the Times reported, adding that Greer said the measures “would have given Canada the most preferential treatment of any trading partner.”
There were, of course, sticking points. One involved Chinese goods entering the United States through Canada.
According to an August 2026 White House report, “The Great Transshipment Scam,” Canada is among the countries the Trump administration identifies as “Tier 1” conduits for illegal transshipment — the practice of routing goods through third countries to evade American tariffs:
In plain terms, illegal transshipment is smuggling disguised as trade — fraud cloaked in paperwork — and, in truth, nothing new. For centuries, traders have routed goods through third countries to exploit tariff gaps, dodge imperial duties, skirt embargoes, and take advantage of preferential access offered by certain ports.
Washington wants its trading partners to crack down on Chinese transshipment. Mexico did — and got a trade deal.
Milking it
Then there’s Carney’s fealty to Canada’s powerful dairy cartel.
Carney has pledged that he is “loyal” to Canada’s supply-management policies, especially as they apply to dairy products. The system protects Canadian dairy, poultry, and egg producers from foreign competition and keeps prices artificially high.
Trump has repeatedly eviscerated this economic policy and demanded greater access for American farmers.
The dairy cartel is exceedingly powerful in Canada and played an important role in the 2017 Conservative Party leadership race, when Maxime Bernier, a former foreign affairs minister who campaigned against supply management, was narrowly defeated by Andrew Scheer, who supported it.
Bernier recently told me that Carney’s refusal to put supply management on the negotiating table amounted to sabotaging the discussion with Washington.
He specifically blamed Canada’s protected dairy, poultry, and egg producers for standing in the way of a better agreement.
“We must put on the table the cartel in supply management, the cartel in dairy, poultry, and eggs,” Bernier said.
“If you put that on the table, we will be able, I believe so, to have a deal with President Trump.”
And Bernier was blunt about where he believes Canada’s political leaders stand: “Carney and Poilievre are on the side of the cartel. They are not on the side of Canadian consumers.”
Politics as usual?
Bernier knows something about the political power of supply management. Recalling his own Conservative leadership defeat, he said dairy interests “decided to buy membership cards for the Conservative Party of Canada … to be able to beat me at the leadership contest.”
“They know what happened to me when I did fight against the cartel,” Bernier said.
So was this really a bad deal for Canada, or just the usual machinations of a prime minister who deeply comprehends the political advantages of being “at war” with the U.S.?
Carney has effectively placed his political future in the hands of the dairy cartel and his wager on China, even though Canada’s economic and military future remains inextricably tied to the United States, its largest trading partner and defense ally.
Some might call this insanity. But it’s really just politics as usual for Mark Carney.
American tariffs, Canadian prime minister, Illegal transshipment, Mark carney, New world order, President donald trump, Retaliatory tariffs, Trade agreement, Supply management, Canada, Mexico, Lifestyle, Culture, Dairy, Tariffs, Trade war, Letter from canada