Economy under Carney still a ‘work in progress’

Opinion

Prime Minister Mark Carney began his term as Canada’s prime minister on March 14, 2025.

His swearing-in ceremony was a turn of fortune for the Liberal party that he now leads — after years of Justin Trudeau at the helm, and after feeding on a steady diet of political vitriol from Conservative Leader Pierre Poilievre, Canadians were eyeing a change in government.

But Carney played the Captain Canada card, leaning into his reputation as a deft economist during his roles as the governor of the Bank of Canada and eventually the Bank of England. Sporting hockey metaphors of “elbows up,” he was given a mandate to energize this country’s sleepy economy, and — simultaneously — to cross swords with U.S. President Donald Trump on our behalf, even as we faced an economic and existential threat from our southern neighbours.

Seven months on, it’s worth taking stock of our situation now.

Among Carney’s promises during the election campaign was a commitment to diversify Canada’s trading partners and thus reduce our reliance on the U.S. market. Certainly there have been some successes.

One of his key achievements as prime minister has been the establishment of a bilateral trade agreement with Indonesia, which was announced just last month. The agreement, which is expected to come into force in 2026, will eliminate or reduce tariff and non-tariff barriers between the two countries. It also marks Canada’s first-ever bilateral trade agreement with an Association of Southeast Asian Nations country.

The deal is expected to increase Canadian exports to Indonesia significantly by 2040, and accordingly act as a blueprint for future such agreements.

Also last month, Carney and Mexican President Claudia Sheinbaum announced a new Comprehensive Strategic Partnership that was designed to deepen ties in trade, security and energy, while helping to focus the two countries on the upcoming review of the Canada-United States-Mexico Agreement in 2026.

With the current CUSMA deal still in place, both Canada and Mexico have been able to (mostly) avoid the same costly economic turmoil that has walloped other U.S. trading partners that have been slapped with tariffs by the Trump administration. Both leaders have committed to strengthening the trilateral agreement, and this partnership is one way to reinforce their joint economic goals before having to begin negotiations with the U.S.

Back in June, Carney announced the New EU-Canada Strategic Partnership of the Future, and stated that he intended to bring the European Union and Canada closer together by building on existing ties and deepening our trade relationship. The EU is already Canada’s second-largest trading partner after the United States, and this agreement builds upon the 2017 Comprehensive Economic and Trade Agreement (CETA), which has largely eliminated customs duties between the two.

There are many benefits to an improved trade relationship with Europe, allowing Canada access to billions in new research funds, and giving Europe better access to Canada’s natural resources.

It’s also no secret that Trump’s continued financial aggression toward Canada has given efforts to remove provincial trade barriers more urgency. And to his credit, Carney has brought provincial premiers to the table through his commitment to knock down federal barriers to interprovincial trade. The One Canadian Economy Act, which will remove trade barriers while expediting nation-building projects, was passed in the House of Commons last June.

As of last month, Carney recommended five nation-building projects for approval to the newly created Major Projects Office, including phase two of LNG Canada’s plan to double liquefied natural gas production in British Columbia and the new Darlington nuclear project that would make Canada the first G7 country to have an operational small modular reactor.

“Combined, these five projects will generate more than $60 billion for the Canadian economy and create tens of thousands of high-paying careers for our workers,” Carney told CBC. “These five projects are just the beginning.”

All of these efforts have the potential to improve and expand Canada’s international trade — in particular, the new agreements in Asia and Europe show great promise. But that promise has yet to be realized.

The best way to characterize the Carney administration’s efforts thus far is as a “work in progress,” the results of which may take years to fully realize.

And Carney’s nation-building projects still face considerable headwinds from Canada’s Indigenous communities, who believe that Canada has ignored their right to “free, prior and informed consent.”

Meanwhile, though Canada has possibly dodged an outright recession this year, Canada’s GDP contracted in the second quarter of 2025 and our economy continues to experience stress from U.S. tariffs, along with sluggish growth. Though we are not in widespread financial trouble, Canada faces challenges in the housing market and rising national debt levels.

So where are we now on our roller-coaster ride of economic dread? It’s a fair question, given Carney’s meeting at the White House yesterday.

There was no “deal” announced by the Trump administration or Carney and his entourage, and seemingly no end in sight to the tariffs on steel and lumber that have been imposed upon Canada. The Carney administration was quick to tamp down any expectations of a deal before his tête-à-tête with Trump, but collectively we’re left wondering what Carney got from the meeting.

Well, Carney did draw praise from the U.S. president as a “world-class leader” and a “tough negotiator.” But as Poilievre put it yesterday, “still no deal, still no victory.”

It’s worth reminding ourselves Canadians supported Carney well enough to give his Liberals another shot at leading the nation, and to act on his tough talk against the U.S. It should be no surprise that Carney is under tremendous pressure from Canadians to show some results.

We have to wonder just how long Canadian patience can be tested.