Canada’s defiance of US a wake-up call for middle powers

Summary

Trade talks between the US and Canada collapsed, prompting Canadian Prime Minister Mark Carney to announce strong countermeasures against Washington. Carney criticised US credibility, saying Washington 'sometimes signs with a pencil', and revived his Davos proposal urging middle powers to unite against superpower coercion. Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said Canada has stopped tolerating the US because Washington has introduced an expanded 'poison pill clause' restricting its free trade agreements with other countries.

US interests diverge markedly from Canada's, putting Canadian external trade deals at risk. Without diversifying trade, the Canadian government's economic growth goals would be difficult to achieve, especially as Canada is creating jobs faster than the US and has more options for international cooperation, he said. Li Haidong, a professor at the Institute of International Relations at China Foreign Affairs University, said the concept of 'middle powers' has deep roots in Canada, with the modern idea advanced by Canadian diplomat Lester B.

Pearson. Carney's updated vision emphasises that middle powers need independence and collective self-reliance. Canada has become a 'real-world test case' of resisting coercion, and its resistance will have a demonstration effect on other countries.

Voices in Europe are already calling for a tougher stance, and a summit of the five Nordic countries with Canada in March was seen as a joint effort. Song Wei, a professor at the School of International Relations at Beijing Foreign Studies University, said middle powers facing economic coercion should reduce single-market dependence, safeguard supply chain security, uphold multilateralism, build partnership networks, enhance development resilience and strategic autonomy, and maintain policy credibility to attract long-term capital. US tariff pressure has accelerated Carney's 'middle power' narrative and strengthened Canada's resolve to resist.

Commentary

On the surface, Canada's countermeasures against US tariff coercion look like a bilateral trade dispute, but they signal a breakdown in the global rules-based trading order. For New Zealand, a small open economy that has long relied on that order, business owners should be alert: the US is using trade agreements as a tool of unilateral pressure, which could raise compliance costs and disrupt existing supply chains. New Zealand primary producers, including Fonterra dairy and Zespri kiwifruit, have enjoyed relatively stable market access in the US, Europe and China.

If tariff barriers spread, export margins will be squeezed. Yet there is also opportunity in the crisis. Carney's call for middle powers to unite echoes New Zealand's traditional diplomatic positioning – from Pearson to Ardern, New Zealand has championed multilateralism and collective self-reliance among smaller nations.

Canada has already advanced free trade agreements with the UK and Ukraine, while the five Nordic countries have stepped up coordination. New Zealand SMEs should watch for tariff-reduction opportunities from these emerging partnerships, particularly improved access for dairy, meat and forestry products in Canada and the EU. Supply chain diversification can also learn from Canada's experience: reduce over-reliance on a single market such as the US, and use regional frameworks like CPTPP and RCEP to tap into Southeast Asia and Latin America.

Canada's faster job creation than the US shows that resource-based economies can grow through external partnerships. If New Zealand businesses can build differentiated advantages in organic dairy and high-value horticulture, they may find a new position in a fragmenting global trade landscape. NZ SMEs are advised to assess immediately how US tariff policy affects their export contracts and input procurement, and to monitor whether the New Zealand government will join the middle-power coalition to secure a more stable export environment.

Keywords: middle powers, Canada, United States, Carney, trade war, tariffs, countermeasures, poison pill clause, multilateralism, economic coercion

Source: Global Times