Carney of Canada: An Economist Prime Minister with a Doctorate from Oxford and the U.S. Tariff

Mark Carney, the new Prime Minister of tariff-embattled Canada, equipped with a rich experience in the skill of banking and knowledge of economy, is in; with a sound that echoes like giving a tough fight to challenges thrown up in his country by U.S. President Donald Trump.

What lies ahead in reality?

In his victory speech, Carney laid out his stance. He said, “President Trump is trying to break us so America can own us. That will never … ever happen. We are over the shock of the American betrayal, but we should never forget the lessons”.

U.S. President Trump, however, has his own logic in favour of the tariff—which he brings in to correct trade deficits that the U.S. has been incurring from its partners during the years.

Prime Minister Carney has pledged to address housing crisis, expand energy infrastructure so as to reduce Canada’s dependence on the United States, and boost manufacturing and trade. He also wants to increase defence spending by 2 per cent.

United States President Trump has imposed huge tariff on Canada—25 per cent tariff on all products, additional 25 per cent on steel and alumnium, 25 per cent on automobiles, and 10 per cent duty on energy imports from Canada. This leaves Canada with a huge problem, no less than that of China. While China, a major trade partner of the United States has been positioning itself putting up a brave face, its economy back home has started suffering from Trump tariff. Canada’s economy too has been badly hit by Trump tariff.

U.S.-Canada Mutual Trade

Canada has been an important trade partner of the United States with a mutual cross-border commerce volume exceeding $3.6 billion a day.

In 2023, the total value of goods and services traded between the two nations reached $916 billion, with the U.S. having a trade deficit of $36 billion.

According data available in the public domain, $1.3 Trillion is the annual volume of trade between the United States and Canda, in which $1.7 Trillion is the volume of cross-border investment. The whole exercise provides 1.3 million American jobs.

The high tariff upon Canada holds potency to severely harm the U.S.-Canada trade relationship, negatively impacting business and employment on both the sides.

Canada has been a reliable trade partner for the U.S. for many decades, supplying energy, critical minerals, autos and other essential inputs for U.S. companies. Energy trade is a very big component in the mutual trade between the U.S. and Canada. As Canada has the third-largest oil reserve and Saudi Arabia and Venezuela, the United States has been a huge purchaser of Canadian energy like natural gas and oil. As huge as 90 per cent of Canadian oil export is purchased by the United States.

Trump has put in motion a policy of Drill Baby Drill, which implies that U.S. will minimise its Canadian energy purchase. In fact, U.S. wants to sell its own energy to other countries after expanding its oil and natural gas production in direct conflict of interest with its immediate neighbour-partner now turning rival, Canada.

Canada to Look for New Partners

The new Prime Minister, Carney, will thus has to look for new and alternative market for Canada’s oil export. Carney in his victory speech has charted out his trade priorities and he might well be expanding trade relations with Europe, Asia and Australia.

China, Canada’s traditional rival, too has shown interest in Canada. China-Canada were trade rivals as Canada often sided with the United States in the trade U.S.-Canada rivalry. Now that the U.S. has imposed a heavy tariff, Canada is free from the U.S. and China rethinks to build its relations with Canda. "China is Canada's opportunity, not Canada's threat," Chinese Ambassador to Canada, Wang Di, had stated in one his public statements before the Canada election. Canada traditionally has been cautious of China as the previous public utterances of Carney himself suggest. But in the changed scenario, Canada may give a thought to China’s trade partnership suggestions.

Canada also supplies materials for EV batteries to the United States. Blessed with huge deposits of critical minerals like lithium, nickel, and cobalt, Canada holds an important string in its trade with its neighbour, the United States. The minerals also help Canada significantly figure in the list of global players in the EV battery supply chain. The nation is a leading technology hub for battery recycling.

Who is Mr. Carney, the new Prime Minister of Canada?

Carney has headed Bank of Canada as well as Bank of England, and thus comes in with a huge experience in trade and economy to head his country. as compared by his rivals or predecessors, he is most suited to fit the top chair in Canada when it is passing through one of its toughest times due to the foreign and trade policies of the United States.

Carney, before being sworn into the position of the Prime Minister after his predecessor Prime Minister Justin Trudeau resigned, never held any political position. He then called for a poll and got elected ensuring make a come-back for the Liberals, against the Conservatives whose main political plank was criticism of Trudeau policies. However, the electorate chose Carney because they found in him someone who can stand the challenges thrown up by U.S. President Trump.

Carney has already shown his skill in steering his nation out of the 2008 financial crash when he headed the Bank of Canada as its governor. Also, he was the first non-British head of Bank of England.

Carney holds a Doctorate in Economics from Oxford University.