On 20 January 2026 at the World Economic Forum in Davos, Canadian Prime Minister Mark Carney gave an unusually frank assessment of the state of the international system. Carney argued that the rules-based international order was undergoing a fundamental rupture, exposing middle powers to considerable uncertainty. His remarks were a challenge to countries like Canada to rethink the very assumptions that underpin their economic prosperity, national security, and international standing.
For Canada, the stakes were particularly high. Its prosperity and security had long depended on an exceptionally close relationship with the US. The benefits of continental integration had, in turn, created structural dependencies that were increasingly hard to reconcile with the concept of strategic autonomy. Trump’s policies have highlighted these vulnerabilities, and Carney’s response is indicative of a new Canadian geopolitical reality.
Geography and the Inevitability of Interdependence
Geography is the key factor in Canada’s strategic relationship with the US. Sharing the world’s longest international land border (approximately 8,900 km), the two countries are linked by transportation routes, energy infrastructure, industrial output, and a deep level of commercial integration.
Stay ahead of the geopolitical week.
MD Briefing delivers expert analysis across five global fronts — the Indo-Pacific, energy, geoeconomics, European security, and the Middle East — every Monday morning. Free.
Naturally, this proximity also affects national security. The establishment of NORAD in 1957, formalized by a bilateral agreement in 1958, institutionalized continental defense cooperation, with the recognition that national borders cannot easily confine a threat approaching North America. The Arctic is of growing importance due to a changing environment, strategic competition, and the emergence of new maritime routes. This all reinforces the notion of a shared security geography.
Economic integration has likewise developed in response to geographic realities. The Canadian manufacturing base is very much linked to the US market. The practical benefits of proximity are evident in cross-border electricity transmission, pipelines, and supply chains.
Geography, of course, doesn’t equate to political inevitability. Canada can’t escape its continental position, but the extent to which its economic and security interests are tied to decisions made in Washington is as much a function of history as of geography.
Historical Roots of Canada’s Dependence
Canada’s current economic relationship with the US has evolved through several stages of integration. The Canada-United States Free Trade Agreement, which entered into force in 1989, was a major step towards commercial liberalization. The North American Free Trade Agreement (NAFTA) entered into force in 1994 and was replaced by the Canada-United States-Mexico Agreement (CUSMA) in 2020.
These arrangements enhanced continental competitiveness in the key sectors of automotive, agri-food, energy, and manufacturing. They also encouraged Canadian companies to structure their investments and supply chains around access to the US market.
The remaining asymmetry is still quite significant. Over 70% of Canadian merchandise exports have traditionally been to the US, and Canadian producers are therefore very vulnerable to any changes in US trade policy.
As The Economist pointed out in its October 2026 assessment of Canada’s economic woes, the problem of dependence is exacerbated by enduring productivity weaknesses, relatively low levels of business investment, and persistent barriers to internal trade.
These were vulnerabilities that existed before Trump’s return to office. They are a case in point of how an economically beneficial relationship can slowly become a strategic liability when insufficient attention is paid to diversification and domestic competitiveness.
Trump and the Erosion of Strategic Certainty
Donald Trump’s return to the White House has shaken the assumptions that had previously underpinned Canadian-American relations. Tariffs, trade disputes, and repeated statements questioning Canadian sovereignty have added a degree of political uncertainty to a relationship otherwise characterized by extensive institutional cooperation.
The significance of this goes far beyond any individual trade measure. Economic interdependence becomes a strategic liability when one party can impose costs on the other to a far greater degree. Canada’s situation is a case in point: it is so heavily reliant on the US as a market for its exports.
It’s still a mutually important relationship. American industries also depend on Canadian energy, minerals, manufactured parts, and access to the integrated supply chains. Disrupting these links would therefore impose costs on both countries, although their capacity to absorb those costs differs considerably.
Trump’s policies have not in any way eliminated the economic logic of continental integration. What they have done is expose the political risks of assuming that, simply because you are geographically close and have long-standing alliances, you are going to be treated in a predictable manner.
The issue is not just about reacting to one US administration. Canada’s strategic challenge is to rethink how we can protect our national interests in a world where economic integration no longer guarantees political stability.
Carney’s Search for Strategic Autonomy
Carney’s response is a mix of domestic economic reform and a push to diversify Canada’s international partnerships. The conceptual framework was laid out in his Davos speech, where he argued that middle powers should build up their own capabilities and work together more rather than assume that existing institutions will continue to look after their interests.
The economic dimension is critical. The OECD’s assessment of Canada points to weak productivity, inadequate investment in innovation, and enduring interprovincial impediments as factors undermining competitiveness. If those problems are not solved, then diplomatic diversification will remain a political objective that is not underpinned by the requisite economic capacity.
The sheer scale of the challenge is apparent in the StatsCan 2025 trade data. The US share of Canadian merchandise exports dropped from 75.9% in 2024 to 71.7% in 2025.
Strategic autonomy requires more than just more trading partners. It requires stronger domestic industries, better infrastructure, greater technological capability, and credible defense contributions. It also requires that we maintain productive cooperation with Washington. For Canada, diversification is not necessarily disengagement; it is an attempt to reduce our vulnerability within a continuing continental relationship.
Turkey and the Limits of Middle-Power Diplomacy
Carney’s visit to Turkey in October 2026 is a modern example of this new approach. On 22 October, he and President Recep Tayyip Erdoğan announced a strategic partnership backed by a three-year action plan covering trade, defense, energy, and political cooperation. The initiative includes forthcoming free trade negotiations, expanded defense industry cooperation, and opportunities in liquefied natural gas (LNG), nuclear, and critical minerals.
Türkiye’s position within NATO and its geographical reach across Europe, the Black Sea, and the Middle East means the relationship is of considerable strategic importance. The two countries do not necessarily share the same regional priorities or approaches to governance. The relationship is also a case in point of the difficulty of balancing diplomatic pragmatism with the principles set out in Carney’s Davos speech.
More fundamentally, agreements and negotiating frameworks are not in themselves the equivalent of established commercial relationships or of any real increase in strategic independence. Their value will be down to implementation and tangible outcomes.
Geography Is Permanent, Dependence Is Not
Canada’s emerging geopolitical stance should not be read as a rejection of the US. Geography, economic integration, and continental security considerations make such a rupture neither straightforward nor desirable.
What is changing is the assumption that these connections will, by themselves, guarantee stability. Trump has laid bare the vulnerabilities that have accumulated over decades, and Carney’s approach is an attempt to reposition Canada in an increasingly uncertain international environment.
Whether this will ultimately become a genuine strategic shift will come down less to the words said than to Canada’s ability to grow its economy, broaden its range of partnerships, and maintain a workable relationship with Washington. The fundamental challenge is not geographical separation but achieving greater freedom of strategic choice.
Canada can’t escape its geography. It must, however, re-evaluate the dependencies it has created because of that geography.
