Without question, the biggest meeting in Washington D.C. today was the one between Prime Minister Mark Carney and U.S. President Donald Trump. Replete with political risk, Carney is walking a fine line amid the extraordinary circumstance of high tariffs and annexation threats.
Canada’s changing relationship with Washington, caused by the Trump administration’s radical recasting of American power and focus, must be Job One. But it is just the most fraught example for Canada of shifting tectonic plates. The 80-year postwar consensus of managed global governance under U.S. leadership is ending, as is the Western consensus since the early 1980s of fettered governments that favoured private sector investment and open trade.
What’s Happened?
What does this mean for Canadian companies investing at home and abroad, and for global companies investing in Canada? It means that political risk isn’t just for politicians anymore, as geopolitics imposes itself on decisions that not long ago were solely about dollars and cents.
Consider what’s changed in the last decade:
- The United States is becoming a country looking after itself alone, even in terms of North America, with politics that stretches the bounds of democracy itself; America First is tilting the playing field vis-à-vis an increasing assertive China, a revanchist Russia and a shocked Western Europe, which is realizing it must look after itself;
- Economic growth matters but a fairer distribution of the benefits of growth across the population matters more; likewise, economic security and sovereignty have become key as countries compete on AI, IT, technology adaptation, energy and natural resources, particularly extraction and production of critical minerals.
For Canada, this means we must regain some certainty in terms of our continentalist posture. To what degree will companies still be able to service the North American marketplace from Canada? Can we double down on CUSMA given what Trump has wrought recently, particularly in terms of manufacturing, or is this era truly over?
Then, to what degree can Canada pivot to a greater domestic focus, including stronger east/west energy ties, as the country embraces the elimination of interprovincial trade barriers? And to what degree will Canada be successful in seeking markets abroad, particularly for energy and natural resources? We’ve never done this well, but the world does want what Canada’s got.
This probably means a new national policy, or policies. In fact, they’ve already begun.
What’s Next?
As Canada begins the largest military build-up since the Second World War focused particularly on the Arctic, a new defence procurement agency will seek to not just accelerate procurement purchases , but maximize investment in Canadian technology and production. The same may well become the case in terms of procurement generally, as Ottawa uses its purchasing power to stimulate home-grown R&D capitalization and commercialization.
Likewise, the Investment Canada Act will be toughened to place a greater emphasis on the costs as well as the benefits of foreign investment. This will be balanced by a more muscular role for agencies like Invest in Canada that seek to attract global investment.
Canadian companies seeking overseas markets can expect, in turn, greater assistance from the likes of the Export Development Corp. (EDC), the Canadian Commercial Corp. (CCC) and the Trade Commissioner Service, which has hundreds of officials stationed in Ottawa and in Canada’s global network of embassies and consulates.
Changing circumstances pose both risk and reward and the global environment, as well as the continental one, is changing at an extraordinary pace. No one knows how things will turn out. But the private sector can be certain that a new balance is underway between political forces and market forces. Government can seem like a black box, but it’s actually not. It only requires deeper understanding and guidance in changing times as government policy matters more.
Need Support?
As Prime Minister Carney’s government begins to reshape Canada’s domestic and global posture, the need to understand political risk has never been greater. Whether it’s trade, procurement, investment, or geopolitics, McMillan Vantage is your partner in navigating what’s next.
Reach out to a member of our team to discuss how we can help you stay ahead in this rapidly evolving environment.
