SAYING “NO” WON’T BE EASY FOR CANADA – Mark Carney Said No to Donald Trump. Now He Must Contend With the Economic Fallout

For Mark Carney, walking away from trade talks with US President Donald Trump was politically popular. Now Canada’s leader has to contend with a more difficult economic reality.

The new 50% tariffs on $20 billion of Canadian goods will hammer many small- and medium-sized businesses, including family firms, that up to this point have been largely sheltered from the trade war. Jobs data in the world’s 10th-biggest economy suggest important sectors like auto parts and forestry are already hurting.

That means Carney has an urgent task: Reshape the economy to account for a hostile US, harnessing the political goodwill at his back to push through measures that might otherwise lack broad support. The list includes pro-business tax and regulatory reforms, privatizing public assets like airports and spending billions in government money to get Canada’s natural resources to foreign markets faster.

To fund the transition, his plan hinges on convincing deep-pocketed investors that Canada is a place where they can find attractive returns.

A key step comes Monday and Tuesday in Toronto, when Carney’s brainchild, the first-ever Canada Investment Summit, will draw money managers collectively overseeing more than $70 trillion in assets. The prime minister, along with other top officials and business titans, will pitch the likes of Blackstone Inc., Singapore’s Temasek Holdings Pte and Apollo Global Management on putting their money into Canada.

Executives at global funds, as well as Canadian investors and pension plans, will peruse a prospectus featuring more than 160 projects in need of hundreds of billions of dollars of funding, spanning data centers, advanced manufacturing facilities, liquefied natural gas terminals, ports and dozens of mines.

“We have a super-cycle of investment opportunity that I just have not seen in my career,” Toronto-Dominion Bank Chief Executive Officer Raymond Chun said in an interview, adding he couldn’t recall another time a similar group of the world’s leading asset managers met to discuss investing in Canada.

Carney’s ambition is to use government money and private dollars to generate C$1 trillion ($720 billion) of investment over the next five years.

The prime minister acknowledges the challenge. “There are very few people who get up in the morning and think about Canada,” he has said.

To change that — at least for a few days this week — he’s tapping what may be one of the world’s most enviable Rolodexes, built after a career at Goldman Sachs Group Inc., then steering the central banks of Canada and the UK and chairing Brookfield Asset Management Ltd. (He was also chair of Bloomberg Inc.)

He entered politics just last year, harnessing anti-Trump sentiment to lead the Liberal Party to a surprise fourth straight election victory.

Carney inherited an economy with problems that went far beyond the country’s trade fight. Growth in per capita gross domestic product has lagged behind other major economies in recent years, with weak business investment and stubbornly low productivity gains. Some investors had also come to see Canada as an increasingly difficult and unpredictable place to put money, particularly after high-profile resource projects were delayed, rejected or abandoned.

Heather Exner-Pirot, director of natural resources at the Macdonald-Laurier Institute, a think tank, said the country’s “investability reputation was severely harmed” during Justin Trudeau’s decade as prime minister from 2015 to 2025. She recalled New York investors derisively calling the Impact Assessment Act — a 2019 federal law governing reviews of major resource projects — the “Don’t Invest in Canada Act.”

But Carney now has the opportunity “to change some minds,” she said. And recent foreign-investment data does show some green shoots.

The trade war and Trump’s threats to make Canada the 51st state have given Carney the political capital to address some of these longstanding investor bugbears by casting moves such as tax changes and faster project approvals as matters of national sovereignty. His government is pursuing a massive expansion in defense spending, and has created a separate office to streamline major projects.

Ahead of the summit, Carney’s office compiled investment opportunities. The resulting list includes a proposed crude-oil pipeline to Canada’s west coast, the Ksi Lisims LNG export facility in British Columbia and a C$14.5 billion data-center campus in Alberta.

Carney has invoked history to frame his push for new infrastructure as a spiritual sequel to the legacy of Canada’s first prime minister, John A. Macdonald, who held office for about 19 years until his death in 1891. In a public address earlier this week, Carney pointed to how the US put 50% tariffs on Canadian exports in 1890 as a prelude to possible annexation.

“Sound familiar?” the current prime minister quipped.

Macdonald “recognized the threat of an expansionist United States for what it was and raced to unite this land” economically with projects including an east-to-west railroad, Carney said.

“Now we’re developing around that line, north and south,” and “connecting with new partners in Asia and Europe,” he said.

The investment summit could be part of that.

“The event serves as a practical mechanism to reverse a decade of flat business investment,” John Aiken, the director of Canada research at Jefferies Financial Group Inc., said in a report. But it isn’t clear Canada can convert “ambition, capital availability, and policy support into executable projects that generate durable private-sector returns.”

‘Swept Up’

Carney’s popularity is at near-record highs after suspending trade talks with the US in late August, with 60% approval, almost double his opposition rival. That may help rally public support behind some difficult and controversial projects, such as a new crude oil pipeline to the BC coast.

More than a third of the summit prospectus features minerals and mining projects. Troilus Mining Corp. has capital needs of $1.1 billion to develop a gold and copper project in Quebec. A nuclear-fuel services project described as “Canada’s first uranium refining and conversion facility in more than 40 years” is also seeking investors.

“We’ve got so much coordination and enthusiasm across the country,” said Greg McNab, co-chair for the mining practice at law firm Dentons. “It’s hard not to get swept up in it.”

The prime minister is also pursuing new and deeper relationships abroad. As soon as the investment summit wraps, he’s set to fly to France for an expected announcement about a closer trade and security alliance between Canada and the European Union.

Canada’s government now has a distinctively pro-business makeup. Carney installed allies from Goldman and Royal Bank of Canada in top posts and put former bankers and chief executives in charge of parts of Canada’s civil service.

He also appointed Dominic Barton, chair of global mining company Rio Tinto Plc and a former ambassador to China, as the chair of Invest in Canada, a body created to attract foreign direct investment.

The government is exploring allowing private investment in the country’s biggest airports and has discussed the idea with some of its large public pension funds, which manage trillions of dollars collectively. The prospect is already attracting opposition from labor groups, but Carney may have room to maneuver.

No ‘Easy Button’

Relying on bureaucrats and officials to chart the country’s economic course brings its own challenges. Privately, some executives and investors say Canada’s bureaucracy is risk-averse and has little experience connecting Canadian companies with global investors.

Although Carney has moved to streamline project approvals, rolled back some Trudeau-era climate policies and even pushed for a new oil pipeline, energy executives remain wary, recalling rejected projects such as Enbridge Inc.’s northwest oil pipeline and TC Energy Corp. scrapping a C$15.7 billion pipeline to the Atlantic Coast. Canada could help bring investors off the sidelines by backing projects itself, according to TD’s deputy chief economist, Derek Burleton.

Carney and Finance Minister François-Philippe Champagne have repeatedly touted Canada’s room for fiscal flexibility, even as other developed nations have seen their bond markets hit in recent months amid worries about deficits.

That’s allowed the government to roll out C$7.5 billion in support for tariff-hit workers and businesses this month on top of billions in aid last year. Some hope it could also portend a more favorable tax code, with faster write-offs for capital spending and other investor-friendly measures.

But Carney’s government is already projecting C$242 billion in federal deficits over four years. Market jitters may keep any further expansion of borrowing in check, Burleton warned.

“The bond market vigilantes are starting to punish governments for running high deficits,” he said. “Canada has an advantage on this front, but we need to maintain it and if anything improve it.”

One challenge in getting big projects off the ground is a possible labor shortage. Immigration restrictions have resulted in Canada’s population growth falling to zero in the past year. Getting enough skilled workers to build ports, roads and complex energy facilities in remote and frigid parts of the world’s second-largest country won’t be an easy task.

Canada has plenty of factors working in its favor, but ultimately many of the projects being discussed will take a decade or more to come to fruition, even if all goes to plan. And one of the country’s economic realities will always remain its proximity to the US market. Severing those ties completely is unrealistic.

“There isn’t any easy button one can push, there’s no real switch,” Burleton said. “We would have done it by now.”