New Canadian leader

More in sorrow than in anger, Mark Carney, Canada’s newly elected prime minister, lamented his country’s breakup with the United States. “Our old relationship … is over,” he said early Tuesday morning after his Liberal Party won the federal elections. “The system of open global trade anchored by the United States … is over. These are tragedies, but it’s also our new reality. We are over the shock of the American betrayal, but we should never forget the lessons. We have to look out for ourselves.”

Carney owes his job to President Donald Trump. He has acknowledged that he would not be where he is had Trump not imposed steep tariffs on America’s northern neighbor and repeatedly demanded that Canada become the 51st state. In January, the Liberal Party was down 23 points in the polls, but after Trump set the US-Canada crisis in motion, Conservative front-runner Pierre Poilievre struggled to recalibrate a “Canada First” platform that too much echoed Trump’s own campaign last fall. Poilievre lost even his own seat in Parliament.

Canada is not the only Western country where conservative allies of Trump who once hoped to ride his populist wave to power now find themselves crashing into the rocks. A similar dynamic might unfold on Saturday when Australia holds its national election. Conservative opposition leader Peter Dutton has fallen behind in polls because of popular backlash to Trump’s 25 percent tariff on steel and aluminum. Dutton’s party had been promising to “make Australia great again” and create a US DOGE Service-like initiative. The latest poll from the Sydney-based Lowy Institute finds that only 36 percent of Australians believe the United States can be trusted to act responsibly on the world stage, down from 56 percent last year. This is the lowest reading ever recorded. Even Nigel Farage, in Britain, has lately distanced himself from Trump. For years, the Reform U.K. leader had been a consistent presence at Mar-a-Lago and Trump rallies, but he’s stopped hyping these connections. He has recently criticized Trump for giving “far too much” to Russia in negotiations aimed at ending its war in Ukraine. He compared Trump’s tariffs with former prime minister Liz Truss’s mini-budget, which sunk the pound to a 37-year low and created so much economic turmoil that she was forced from office after only 49 days.

The hard truth is that neither country will “win” a trade war. Tit-for-tat retaliation between Ottawa and Washington will hurt both sides. This is why both the United States and Canada should work to de-escalate, not decouple. The two countries exchange nearly $1 trillion worth of goods a year; each is the other’s largest trading partner. Central bankers don’t tend to make dynamic politicians, but voters have turned to Carney largely because of his experience leading the Bank of Canada through the 2008 financial crisis and then the Bank of England through Brexit in 2016. Back home in Canada, he’s now calling for shared sacrifices to endure difficult years ahead. Carney, a product of Goldman Sachs, is the ultimate creature of Davos, Switzerland, where the World Economic Forum convenes every winter. Both he and Trump know how to talk tough but then sit down to negotiate mutually beneficial deals. Carney is ready to deal with Trump. And Trump, if he wants to rally the free world to counter China, needs to repair America’s friendship with Canada.