Trump’s trade policy secures Carney’s comeback

Trade is back all around us, and recalling the days of Brexit, is having a phenomenal impact on the politics of countries the world over.

Looking to North America more broadly, the stunning turnaround of the governing Liberal Party’s fortunes following Trump’s election, tariff moves and constant framing of Canada as the “51st state” is now complete.

Having trailed by nearly 20 points in the polls last year, the Liberals -now led by former Bank of England governor Mark Carney- managed to unite the left and centrist waverers in their strident response to President Trump’s provocations. While results of the Canadian election are not yet clear enough to suggest the party have won an overall majority, defeat for the Conservatives and indeed for their leader in his seat is assured.

As Trump rounds on his first 100 days, he can confidently claim that he has already done a fair chunk of what he said he would do -from tariffs to deportations- which will endear him to many of the party faithful, although tax cuts remain yet to be agreed. But caveats abound – at what cost, politically and for the economy both in the US and beyond.

We have already seen vast swings across financial markets, and full economic data following the imposition of Trump’s tariffs is still due to come. The White House can legitimately claim its trade policy approach is bringing scores of countries to the negotiating table, but shipping orders are already starting to plunge while prices rise.

Some of the President’s more ideologically aligned news outlets have reported his approval rating dropping, particularly around handling of the economy, and many Republican members of Congress already have an eye on the 2026 mid-term elections.

The hope is that within a few months, tax cuts will be passed and trade deals done to give them “wins” to campaign on, as well as manufacturing investments which may or may have already been happening. Executive orders kicking off reams of deregulation abound every week. Yet the question is will this be enough to offset more immediately visible impacts from Trump’s trade agenda.

Amazon has announced that it will soon display a number next to the price of each product that shows how much the Trump tariffs are adding, leading the White House to declare it a “hostile act”. And despite insisting that tariffs on China are unsustainable enough to bring them to the negotiating table, Beijing appears to be holding firm in declining to do just that.

Meanwhile, diversification away from US shores appears to be gathering pace as countries accelerate trading relations with other partners near and far. The EU is doubling down on getting deals done with South America, Australia, India and a host of Asian countries who are keen to find alternatives to supplying the Western hemisphere.

Closer to home, the UK is closing in on a trade agreement with India that offers the most meaningful economic opportunities for British business of any of the FTAs in train since Brexit. Next month, a momentous summit between Keir Starmer and the EU will get the ball rolling on a new trade and security partnership.

It is important to stress that Donald Trump is still in the global driving seat, as the fiscal, economic and political strategies of governments across the world react to moves coming out of Washington. The Canadian election results could serve as a cautionary tale about the perils of not reacting strongly enough to President Trump, although “strong man” politics is providing a boost to parties both left and right.

What is clear is that for at least the next few years, the role of trade in driving geopolitics is here to stay. Companies cannot afford to hope that things will just settle down but rather need to actively plan and factor in these considerations to their forecasts.

Yet with every crisis usually comes an opportunity in how firms adapt and respond. External factors give rise to the need for governments to review their domestic agendas. There’s no time like the present for industry to get their messages across to policymakers about what they can do at home to offset actions from abroad. Indeed, the time for corporate advocacy and diplomacy is now.