The recent revelation that Mélanie Joly had been briefing former Bank of Canada Governor Mark Carney on the effects of President Donald Trump’s tariffs — while excluding other prospective Liberal leadership contestants — has set the political landscape in Canada aglow with upside-down light. It also raises yet more questions about the future of the Liberal Party, and the motivations of that Party and the people who run it.
Joly’s Emphasis on Trump’s Tariffs: A Key Economic Worry
U.S.-Canada trade relations have recently soured under President Donald Trump. Products from Canada, including steel and aluminum, are now facing tariffs, disrupting Canadian industries. For Canada, which depends more heavily on trade with its southern neighbor than any industrialized nation — countries voting Sunday in Europe have only limited economic ties with the United States — processing these torpedoes is not just an economic question but a political one as well.
Joly, Canada’s international trade minister, has been leading the charge to help navigate these tensions. Her recent decision to brief Mark Carney on the tariffs — while excluding similar briefings from Liberal leadership hopefuls — has caught the attention of observers. But why Carney, and why now?
The Economic Toll of Trump’s Tariffs on Canada
Whether one likes it or not, Trump’s trade policies, which include the tariffs on Canadian steel, aluminum, and other products, hit Canada hard. The Canadian steel sector, for example, has suffered massive losses since Trump put a 25% tariff on steel imports back in 2018. The Canadian steel industry’s revenues dropped by almost $1 billion in the first year after the tariffs were applied, according to the Canadian Steel Producers Association.
So did the automotive sector, another pillar of Canada’s economy. The tariffs increased costs for Canadian manufacturers that depended on the U.S. marketplace for exports, which were transferred to consumers, causing lower sales and a slowdown in production.
Against this backdrop, Joly’s briefing of Carney, whom I view as one of the world’s foremost experts on global financial dynamics, makes sense. As a former Governor of the Bank of Canada and now working in environmental finance, Carney is a rich vein for analysis on and response to the economic consequences of these tariffs.
Why Mark Carney?
Mark Carney, by that point already a well-known name on the Canadian and global finance scene. His jobs as the Governor of the Bank of Canada and the Bank of England have made him one of the era’s most willing overlords of financial policy. His deep understanding of economic issues, especially about global trade and finance, positions him as a central figure in framing Canada’s response to the tariffs imposed by Trump.
Carney’s Expertise in Trade and Economic Diplomacy
Carney has a background with little on helping to navigate a complex economic and financial crises. He was one of the architects involved in steering Canada’s economy during the global financial crisis from 2008 and his leadership at the Bank of England during the Brexit negotiations played a crucial role in helping the U.K. through one of the most tumultuous periods in modern economic history.
Carney’s expertise in identifying and forecasting the economic impact of trade policies, such as tariffs, is well known. His insights are viewed as especially beneficial as Canada deals with persistent unpredictability in its business ties with the U.S.
The Carney Factor in Canadian Politics
Carney has long been seen as a potential future leader of the Liberal Party. Though unaffiliated with any political party, many observers credit him with a firm understanding of economics which, in conjunction with his foreign credentials, makes him a candidate to be noticed. But Carney has never expressly declared his desire to seek the leadership of the Liberal Party, thereby keeping the door ajar for speculation.
And Joly timing his briefing of Carney on the Trump tariffs — while leaving other leadership contenders in the dark — could signify a willingness to align with him when a leadership run is possible. While this is speculation, this decision had strategic overtones that should not be ignored. If the heat of the leadership race were to turn up a notch, an alignment with Carney could be seen as positioning herself with one of Canada’s most powerful economic figures.
The Liberal Party’s Political Implications
Mélanie Joly briefing Carney, as other Liberal leadership candidates were left out of the loop, has raised eyebrows within the Liberal Party. With the party struggling with internal rifts and mounting anxiety about its future direction, Joly’s move could have far-reaching consequences for party unity.
A Divided Party: The Leadership Vacuum That Has Arrived
Things have not been easy for Prime Minister Justin Trudeau’s Liberal Party in recent years. The party has been sailing murky waters from the SNC-Lavalin scandal to rifts over climate policy. As Trudeau’s future as leader comes under question, speculation about his successor has become a major talking point within the party.
Carney is viewed by some as a possible unifier, with his financial background and global standing. But his entry into the race for the leadership is likely to complicate an already complex field. Team Joly may hope that getting close to Carney now could set her up for a spot in the cabinet if his candidacy should succeed.
The Dangers of Political Alignment
But while an alliance with Carney strengthens Joly’s position in the party, it also comes with risks. The decision to reject other potential leadership challengers may even antagonize other powerbrokers in the party and at the same time leaving it even more divided. At a moment when the party’s ability to coalesce is vital to its future success, Joly’s choice could be interpreted as a risk.
Effects on the 2025 Federal Election
The internal divisions among Liberal Party observers will be one of the crucial things to watch when Canada prepares for the 2025 federal election. Carney’s candidacy would certainly affect the party’s direction and its capacity to effectively oppose the opposition. So the question of leadership before the next election is really important — Canadians want to see a leader who is effective at tackling domestic and international challenges and who cannot just manage those challenges, but who can succeed.
All of this legislation comes at a time where Canada is looking to diversify its international trading partners.
Trump’s new tariffs remain a hindrance for Canada, but the government has worked to diversify its trade relationships. Canada wants to find new markets for its goods — especially in Asia and Europe — to wean itself off of the U.S. and act as a buffer to tariffs.
The Comprehensive Economic and Trade Agreement (CETA) with Canada
The Comprehensive Economic and Trade Agreement between Canada and the European Union (CETA) is one of the biggest trade deals ever signed by Canada. The trade deal aims at providing Canadian businesses with improved access to the European markets when U.S. tariffs restrict that access and bolster Canada’s global competitiveness.
Since the elimination of tariffs under CETA, exports to the EU have increased across sectors, including agriculture, pharmaceuticals, and technology. That diversification strategy is key to mitigating the economic impact of Trump’s tariffs.
Developing Trade Relations with Asia
Japan has also worked to push Canada toward a more constructive relationship with its Asian neighbors. A key trade deal is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) where Canada benefits from access to markets in countries such as Japan, Australia, and New Zealand. This agreement is part of Canada’s plan to reduce reliance on the U.S. market and diversify its trading partnerships.
The End: A Calculated Move or a Political Risk?
The fact that Mélanie Joly briefed Mark Carney on Trump’s tariffs while leaving out other possible contenders to lead the Liberals, includes lingering questions for Canada: It remains to be seen whether this is a strategic realignment in anticipation of a leadership race, a political gamble, or both. But what remains to be seen is how Canada will respond to Trump tariffs and its ongoing trade relations. These will remain hot issues going forward.
The future direction of Canada’s economy and political landscape will depend on the leadership of the Liberal Party as it confronts these internal and external challenges. Joly’s move could foreshadow further steps and portend — within the Liberals — further divisions or a new political alignment.
FAQs
1. Why did Joly secretly brief Mark Carney on Trump’s tariffs?
Joly probably picked Carney because of his wealth of experience in global economics and trade. As a former Governor of the Bank of Canada, he is uniquely qualified to know what these tariffs mean for Canada’s economy.
2. How has Canada’s economy been affected by Trump’s tariffs?
Industries like steel, aluminum, and automotive manufacturing have borne the brunt of Trump’s tariffs in Canada. The tariffs have caused job losses, production disruptions, and strained Canada-U.S. trade relations.
3. What about Mark Carney, can he run for the leadership of the Liberal Party?
Despite Carney not formally announcing his intentions to run, he is a potential candidate based on his political profile and vast economic expertise. His involvement in the issue hints at broader political clout.
4. How is Canada diversifying its trading relationships?
CETA: Canada has been pursuing trade with Europe through CETA and trade with Asia through the CPTPP. The efforts are intended to lessen Canada’s reliance on the U.S. market and lessen the impact of tariffs imposed by the U.S..
5. What Joly’s decision means for the Liberal Party’s leadership race?
Joly’s decision to share information with Carney but not other leadership contenders could be a sign she’s aligning strategically with him. The move may affect the Liberal Party’s dynamics during the leadership race in the coming years.
