Carney pivots Canada toward EU as US trade tensions deepen

Mark Carney stood before investors, executives, and government ministers at Canada's inaugural Investment Summit on Tuesday with a message that amounted to a strategic pivot: his country would no longer depend so heavily on the United States. Instead, Canada would build what he called a "unique security and economic alliance" with Europe, positioning itself as a stable base in what he described as a fractured and dangerous world.

The timing was not accidental. Over the past eighteen months, the relationship between Canada and the US had deteriorated sharply, leaving Ottawa searching for ways to insulate itself from economic damage. Trump's appetite for tariffs as a negotiating tool had become a defining feature of the landscape, and Carney did not shy from naming it. "Economic integration is being weaponised," he told the summit. "Tariffs are used as leverage." The Canadian government, he suggested, had recognized this rupture earlier than most and had drawn two conclusions: it needed to strengthen itself at home and diversify its partnerships abroad.

The European courtship was already underway. Carney noted that Canada held a unique position as the only non-European member of Europe's defence procurement initiative. His government was exploring possibilities that had seemed unthinkable months earlier—visa-free travel and work arrangements between Canada and the EU, though he cautioned these discussions were still in their infancy. The symbolism was unmistakable: Carney would be the guest of honour at the European Parliament's plenary session in Strasbourg that week, attending European Commission President Ursula von der Leyen's state of the union address on Wednesday and addressing members of Parliament on Thursday. Von der Leyen had initially planned to skip his speech, drawing criticism for what was called an "unacceptable" decision, and had hastily rearranged her schedule to stay.

European officials were eager to draw Canada closer without offering formal membership. The distinction mattered—the EU had learned from Brexit that splitting the four freedoms of its single market created endless complications. Any deepening of ties with Canada would have to respect that boundary, though the EU saw immediate opportunities in raw materials, energy, and defence cooperation. Javier Moreno Sánchez, a Spanish socialist MEP leading the European Parliament's Canada delegation, called for "concrete steps"—greater professional mobility, student exchanges, joint work on defence and artificial intelligence. "Canadians are the most European people outside Europe," he said, "and that is the key point for the development of our relationship."

The existing relationship was already substantial. The two had a free-trade agreement, digital cooperation deals, raw materials agreements, and a shared green alliance. Canada had become the first non-European country to join the EU's €150 billion defence loans scheme, opening doors for Canadian defence firms. Yet friction remained. Ten EU member states, including France, Italy, and Poland, had still not ratified the Comprehensive Economic and Trade Agreement signed nearly a decade earlier, leaving parts of it unimplemented. French lawmaker Valérie Hayer, an ally of Emmanuel Macron, acknowledged the problem but noted that trade figures between the two were "extremely good." The ratification delays looked unlikely to resolve quickly, with major elections scheduled in France, Italy, and Poland in the coming year.

The numbers told part of the story. Trade between the EU and Canada in goods and services had reached €130 billion in 2025, an eighty percent increase since the trade agreement was signed in 2016. Yet this paled against the scale of Canada-US trade, which stood at nearly $880 billion. Carney did not pretend otherwise. "We will always be neighbours," he said, "and Canada will continue to be the US's most important partner in many key areas." The pivot toward Europe was real, but it was not a replacement—it was a hedge against a relationship that had become unpredictable.

At the summit itself, Carney announced that foreign investment had surged and that the federal government would balance its operating budget a year ahead of schedule. He unveiled a corporate tax incentive allowing companies to immediately deduct one hundred percent of the cost of new investment across a broader range of assets. Four major Canadian airports would open to foreign investment. The prime minister's office reported nearly half a trillion Canadian dollars in new domestic investment commitments. "Canada has what the world wants," Carney said. "The difference, this week, is that we didn't cross an ocean to make our case. The world came to us."

Not everyone saw it that way. Thousands gathered in downtown Toronto for a counter-protest called Many vs the Money, arguing that public resources should not be used to reduce the risks of private investment while communities bore the social and environmental costs. Stephen Hill, an Aboriginal-led investor from British Columbia, stood outside the hotel as Carney arrived. "Mark Carney's here selling Canada to the international community," he said. "I'm Canadian. We want in. But you can't get a returned email. You can't get a returned phone call." The summit had drawn the world's attention, but whether it would deliver for all Canadians remained an open question.