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US–Canada trade war: Carney has outplayed Trump

On Wednesday (16 September) Canadian Prime Minister Mark Carney had a good day at the EU Parliament in Strasbourg. Commission President Ursula von der Leyen indicated that she would like to work with Mr Carney “on opening the door for Canada to be the first associate member of the European Union", writes Dick Roche.

Prime Minister Carney was given a standing ovation by the Parliament’s Members. While it is not clear  what ‘associate EU Membership’ means, the offer from the Commission President and the welcome by MEPs was a plus, of sorts, for Mr Carney in his battle with President Trump.

A bumpy relationship

The relationship between Prime Minister Carney and President Trump was always destined to be a bumpy one. Days before President Trump was sworn in for his second term Justin Trudeau stepped down as Prime Minister of Canada. As Trudeau was leaving office the president-elect repeated comments that he had made during the 2024 US elections about Canada becoming the 51st US State.

On 1 February 2025, as the contest to replace Mr Trudeau as the Liberal Party leader was getting underway President Trump, announced a 25% tariff on imports from Canada, Mexico and Canada: Canadian energy exports were subject to a 10% tariff. Trump explained the tariffs were intended to address the emergency related to fentanyl trafficking and illegal immigration.

Nine days later Trump announced a blanket 25% tariff on all imported steel and aluminium to “protect US industry and national security.” This hit Canada the biggest foreign supplier of steel and aluminium into the US market badly.

The pain for Canada did not stop there, on 26th March Trump announced his 25% tariff on all automobile imports into the US. Again, another bad hit on - most Canadian vehicle production is destined for the US market. The impact on Canadian auto producers was somewhat ameliorated by the fact that the tariff applied only to non-US content vehicle imports from Canada.

The stream of tariff announcements from the US while hurting Canada played to Mark Carney’s advantage in the race for leadership of Canada’s Liberal Party. While a "political ingénue" never having held political office or been a Member of a Member of Canada’s Parliament Mr Carney brought deep economic experience to the contest. He won almost 87% of the votes cast in the leadership election.

Mr Carney was sworn in as Prime Minister of Canada on 14th March 2025 - seven weeks into President Trump’s second term. Six weeks after his swearing in Mark Carney was elected to the Canadian House of Commons in the General Election of 28th April 2025.  

Placating a cranky neighbour

From the outset  Prime Minister Mark Carney invested considerable effort in improving relations with President Trump. The two leaders met in the White House on 6th May. The meeting, reportedly, went well.

Asked at the press briefing after the meeting about Trump’s suggestions that Canada should become the 51st US state, Carney responded humorously. He recalled that during the recent elections he had met the owners of Canada. They were not he said interested in ‘selling the property’, something that Mr Trump as a property man would understand. Smiling President Trump responded ‘never say never.’

At the G7 meeting held in Kananaskis, Alberta, in June President Trump and Mr Carney had another cordial meeting.  

The cordiality  did not last long. At the end of June the first payments on Canada’s Digital Services Tax (DST) were due to be made.  The DST legislation enacted during the Trudeau Government, hit US tech companies causing fury in the White House. Trump called the tax a "direct and blatant attack on our country" and announced all trade talks with Canada would cease immediately.

Within days Carney announced that his administration would rescind the DST and halt the collection of the tax to advance negotiations with the US.

There was another flashpoint in January when President Trump reacted to reports that Canada and China were pursuing a comprehensive free trade deal. Prime Minister Carney defused the situation by explaining the talks with China were focused on adjusting existing arrangements.

While Carney faced criticism for ‘climbing down’ on the DST issue and for being too eager to placate the White House on China, his approach got US-Canada trade talks back underway.

By August 2025 there was some optimism that a breakthrough trade talks was close.  On August 18th President Trump announced that a tentative understanding had been reached and as a result he was prepared to push back on the late August deadline for US tariff increases. 

The talks came to an abrupt halt three days later when Carney instructed Canada’s negotiating team to return to Ottawa.

That decision came as a surprise. Walking away risked incurring the wrath of President Trump. That was a risk that the Canadian PM had clearly calibrated.

When the US Trade Representative Jamieson Greer sought to blame Canada for the breakdown Carney responded that it was the US United States that made last-minute demands which Canada considered unacceptable, including efforts to introduce provisions that would impact Canada's trade autonomy and sovereignty.

President Trump  reacted immediately to Canada’s decision.  Using  a section of the Tariff Act 1930 that had never been used previously Trump imposed 50% tariffs across US$20 billion worth of Canadian products exported to the US.  

Carney announced that Canada would hit US exports to Canada with “dollar for dollar” retaliatory measures. These would come into  effect immediately after Labour Day 7th September –the day when the starting gun for US mid-term elections is ‘fired’ to get into full swing.

Asked at the press conference whether Canada was starting a trade war with the United States, Mr. Carney responded: “you’re at war when you get attacked—we got attacked.”

In a televised address, Carney acknowledged that the steps he was taking  would come at a cost but argued that U.S. actions had left him with little alternative. He characterized the measures being taken by the United States as an attempt to hurt and divide Canadians. That, he suggested, was a miscalculation. Rather than weakening Canada, U.S. pressure would, he said, bring Canadians closer together.  

Backing Carney

All of indications suggest that Prime Minister Carney was correct in his assessment.

The leader of the Conservative Party Canada, Pierre Poilievre who previously accused Carney of being too willing to concede to Trump, strongly supported the decision to walk away from those trade talks.

Mr Poilievre  was not alone, with one exception the Premiers of Canadian Provinces publicly supported Prime Minister Carney’s stance.

The Premier of Ontario Canada’s most populous province, Doug Ford, an open critic of the US President, encouraged PM Carney to respond to Trump “tariff for tariff, dollar for dollar.”

The Quebec Premier, Christine Fréchette, was particularly supportive  of Carney’s refusal to make concessions to Trump on Quebec’s cultural protections.

Other Premiers have encouraged Carney to “fight back,” praised “team Canada,” criticised US tariff threats as unjustified, promised “full support,” and urged that Canada not accept a ‘subordinate economic relationship’ to the US.  

The Premier of Alberta where a referendum on a range of questions including Alberta’s future within Canada is to be held on 19th October was the lone outrider,  cautioning against celebrating retaliatory tariffs and expressed the hope that negotiations be resumed.

Public support in Canada for the position taken by Carney has been positive. Reuters referred to  the tariff dispute encouraging a ‘rally around Canada’ effect that will likely dampen support for Alberta separation from Canada.

Ten days after the Canadian negotiating team abandoned the trade talks in Washington Carney’s Liberal Party received a very tangible indication of voter support when it won three by-elections for seats in the Canadian House of Commons including a seat in Quebec that had previously been held by a Conservative Party Member.

Opinion polls since the Canadian team walked away from the negotiations also show strong support for the position taken the Carney government.  

An Ipsos poll taken on August 26-27 indicates support across party lines for Canada standing up to the US - even if it resulted in higher costs and job losses: 63% of those surveyed felt Canada was right to stand firm in the negotiations.  Just 18 per cent said Canada should have made additional sacrifices to get a deal.

An Angus Reid Institute poll taken on 22 and 23 August immediately after the talks were ended found that 76% supported the line taken by the Canadian government.

A third poll by Abacus Data one of Canada’s most cited polling firms found that 60% approved of how the Carney government had handled the dispute while  18% disapproved.

Negatives for Trump

In the US, unsurprisingly, positions on the trade war with Canada splits along party lines. Democrats overwhelmingly oppose the Trump’s position arguing that tariffs cost consumers and businesses.

On 9th September a group of nine Democrat Senators from states with close business ties with Canada issued a joint statement attacking President Trump’s “senseless trade war” with a key trading partner, primary export market and most enduring defence partner, pointing out that the President’s actions would force Canada to “diversify away from the US and deepen trade ties with other countries including China.”

Republicans generally, but not universally, support Trump’s position, arguing that Trump’s tariff stance is ‘putting America first.’ Concerns have been flagged in the Republican ranks that the tariffs will be an issue in the November mid-terms, particularly in competitive Senate and House races.  

Senator Susan Collins of Maine, the US state most exposed to the tariff dispute with Canada, who is facing a tough re-election contest in November has labelled the tariffs on Canada ‘a mistake’ pointing out that Canadian retaliation could cost Maine up to $170 million in export losses.  The Republican governor of Vermont has also been openly critical.    

The position for President Trump is considerably less positive than that of Prime Minister Carney. The Canadian Prime Minister enjoys the public and political support that President Trump conspicuously lacks. As this week's appearance in the European Parliament demonstrated Mr Carney’s support is not confined to Canada; he has international support which, President Trump again conspicuously lacks.

At the moment there is no obvious ‘off ramp’ to facilitate  a return to the negotiating table. Politically and temperamentally it will be harder for President Trump to pull back from the position he has taken in the tariff war than it will be for Mark Carney. Mr Carney has more political support for his position, at home and internationally than President Trump. He has also  played an infinitely better game than Mr Trump. For the moment the ball is very much in Mark Carney’s court. 

Dick Roche is a former Irish Minister for European Affairs and former Minister for the Environment. 

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The Makkah alliance faces its first test: Will Pakistan fight for Saudi Arabia?

“What stands in the way becomes the way,” Marcus Aurelius writes in Meditations. Nearly two millennia later, the idea captures Pakistan’s strategic dilemma with remarkable precision. Islamabad must convince Saudi Arabia that its defence commitment carries real weight without being drawn into another Middle Eastern war or rupturing its relationship with Tehran. That obstacle may itself have become Pakistan’s most useful instrument: strategic ambiguity, writes Dimitra Staikou.

On 10 September 2026, following Houthi attacks against Saudi targets, Pakistani Foreign Ministry spokesman Sajjad Haider Khan said there was no discussion of an immediate military response under the new defence agreement. Yet only a day earlier, Defence Minister Khawaja Asif had warned that continued aggression against Saudi Arabia could make the pact operational.

The contradiction may be more calculated than accidental. On 13 September, Prime Minister Shehbaz Sharif expressed Pakistan’s complete solidarity with Mohammed bin Salman. Two days later, fresh missile and drone attacks against Saudi targets brought the question of collective defence closer to reality. Pakistan is trying to reassure Riyadh that it will not stand alone while avoiding any clear definition of when political solidarity becomes military involvement. At the same time, Islamabad is keeping channels with Tehran open and leaving Saudi Arabia’s adversaries uncertain about where Pakistan’s real red line lies. But September’s events suggest that the space for such ambiguity is narrowing. The central question is no longer whether Pakistan and Saudi Arabia are security partners, but how far Islamabad is actually prepared to go when deterrence is tested.

That question has become more urgent because the relationship has changed institutionally. On 7 August 2026, Saudi Arabia, Pakistan and Türkiye signed the Makkah Joint Defence Agreement, declaring that an armed attack against any one of the three would be regarded as an attack against all. On 31 August, their foreign and defence ministers and military chiefs met in Istanbul to begin institutionalising the arrangement, agreeing to establish a permanent secretariat in Saudi Arabia and deepen joint defence-industry cooperation, technology development and production. This is therefore more than another declaration of political solidarity. The Makkah Alliance is beginning to acquire the machinery designed to make collective deterrence credible.

The military relationship between Pakistan and Saudi Arabia itself stretches back decades. Pakistani officers have trained Saudi forces, Pakistani troops have periodically been deployed in the Kingdom, and Riyadh has reciprocated with economic and political support. Yet the most important episode for understanding the limits of this relationship came in 2015. When Saudi Arabia assembled its coalition for the intervention in Yemen, Riyadh sought Pakistani military support. On 10 April, Pakistan’s parliament unanimously backed neutrality, effectively rejecting direct participation while pledging to defend Saudi Arabia if its territorial integrity were threatened. The distinction was crucial: Islamabad was prepared to defend the Kingdom, but not automatically to participate in its wars. In 2026, that very red line is being tested.

The Riyadh-Islamabad rapprochement does not mean that Saudi Arabia is abandoning the United States. It does, however, demonstrate that the Kingdom no longer wants its security to depend exclusively on Washington. The limited US response following the attacks on the Abqaiq and Khurais oil facilities in 2019, followed by Washington’s 2021 decision to end support for offensive operations in Yemen, had already exposed the limits of American protection. That uncertainty resurfaced this September. Mohammed bin Salman sought military assistance from Donald Trump against the Houthis, but the US president declined to authorise direct American strikes, with Washington instead offering intelligence-sharing and targeting support. On 12 September, Trump said Iran was probably responsible for the attack on Saudi Arabia’s East-West Pipeline and described Mohammed bin Salman as a “good friend”. The United States remains an indispensable Saudi partner, but not always a willing combatant. Pakistan gains importance in precisely this space: not as a replacement for America, but as an additional regional pillar of Saudi security.

If the American position explains why Riyadh is seeking more strategic options, China points towards the direction in which the wider security system may be moving. Beijing is one of Islamabad’s most important strategic and military partners, while simultaneously developing an increasingly close relationship with Saudi Arabia. In April 2026, Xi Jinping told Mohammed bin Salman that China wanted to deepen “mutual strategic trust” with the Kingdom. On 2 September, Xi argued that regional states should work towards “a new security architecture for the Middle East” and hold their future in their own hands. His remarks were not about the Makkah Agreement and should not be interpreted as Chinese endorsement of it. They do, however, reflect a broader shift: a Riyadh seeking greater strategic autonomy, an Islamabad deeply connected to Beijing, and a China seeking a greater role in shaping the regional order. The issue is not a secret trilateral alliance, but the potential convergence of Saudi capital, Pakistani military power and Chinese technological and strategic support.

There is also an unavoidable nuclear dimension. Pakistan is a nuclear-armed state outside the Nuclear Non-Proliferation Treaty; Saudi Arabia is not a nuclear weapons state. Nothing publicly released about the Makkah Agreement establishes a Pakistani nuclear guarantee to Riyadh, and there is no evidence that Islamabad intends to deploy nuclear weapons on Saudi territory. Yet that absence of clarity is itself strategically significant. Pakistan’s nuclear capability sits behind a collective-defence commitment whose public language does not specify where conventional deterrence ends and strategic deterrence begins. For Iran, Israel, Washington and European capitals, the question is therefore not whether Saudi Arabia has suddenly acquired a Pakistani nuclear umbrella — it has not — but whether potential adversaries may now have to calculate against that possibility in an extreme crisis. Deterrence often depends as much on uncertainty as on declared doctrine.

For Europe, this shift is anything but distant. On 9 September, France expressed full solidarity with Riyadh following the Houthi attacks. In Berlin, Foreign Minister Johann Wadephul assured his Saudi counterpart Faisal bin Farhan of Germany’s solidarity, while on 11 September the German Foreign Office warned that growing Houthi pressure around Bab al-Mandab could restrict oil and LNG supplies, with consequences for global markets. In Brussels, Kaja Kallas had already put “freedom of navigation” in the Red Sea on the European agenda, asking publicly what more Europe could do. These concerns are tangible: energy security, maritime trade routes and regional stability are becoming intertwined in the same crisis. The attacks of 15 September have made the danger even clearer, with renewed strikes against Saudi targets adding to pressure on energy markets and further threatening the routes connecting the Gulf, the Red Sea and Europe.

There is another reason Europe cannot treat the Makkah Alliance as a distant development: Türkiye. Ankara is simultaneously a party to the new collective-defence architecture and a member of NATO. That does not mean the Makkah Agreement automatically engages NATO obligations, nor that the two systems are inherently incompatible. But it does create questions that European allies should address before, rather than during, a major crisis. What happens if Türkiye is asked to participate in collective action under the Makkah Agreement? How would Ankara manage parallel commitments if escalation involved Iran or another regional actor? And how much strategic consultation should occur within NATO before such a scenario materialises?

Brussels cannot afford to wait for the agreement to be activated for the first time before deciding how to respond. Europe needs deeper dialogue with Riyadh and Islamabad on non-proliferation and missile technologies, stronger protection for navigation in the Red Sea and a clear discussion within NATO about Ankara’s new defence commitments. It does not need to treat the emerging security architecture as hostile. But it does need to understand what happens when that architecture moves from declarations to action.

The real test of the Makkah Alliance will come when Riyadh asks Islamabad to demonstrate what it means for an attack on one to be treated as an attack on all. At that moment, the strategic ambiguity that today gives Pakistan room to manoeuvre may become the problem itself. And the question — whether Pakistan is genuinely prepared to fight for Saudi Arabia — will no longer concern Riyadh and Islamabad alone. The answer could reshape the security balance from the Persian Gulf and the Red Sea all the way to Europe.

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