How Canada’s International Relations Have Changed Over the Past Year

Year in Review

A considerable shift in foreign policy has occurred since Prime Minister Mark Carney came to power, spurred mostly by the trade conflict with the United States and a change of approach to world affairs.

Carney has expressed a desire for closer defence and trade relations with the United States, while at the same time saying he wants to diversify trade away from the Canada’s southern neighbour. His government has since reconciled with India and is seeking closer ties with Beijing.

The pivot away from the United States has not only manifested in Asia. Carney’s first foreign policy moves included trips to France and the United Kingdom as he seeks closer ties with Europe, while also entering a defence agreement with the Europe Union.

Ottawa’s distancing from Washington was also evident when Carney broke with long-standing Canadian policy and unilaterally recognized Palestinian statehood.

While some interests have not aligned, Ottawa has been mostly supportive of Washington on other major issues, such as the U.S. strikes against Iran and, selectively, Trump’s peace efforts regarding Israel-Palestine and Russia-Ukraine.

The Trump Impact

Carney was elected Liberal leader and won the spring election amid anti-U.S. sentiment caused by Trump’s threat of tariffs and repeated talk of wanting Canada to become the 51st U.S. state.

During his election campaign, Carney declared that the “old” relationship with the United States was “over” and that he was better placed than Conservative Leader Pierre Poilievre to negotiate a new economic and security partnership.

Diversifying trade away from the United States through existing trade deals with Europe and Pacific nations, or by building new trade infrastructure, was also a plank of the Liberals’ election platform.

As 2025 comes to a close, more progress has been made in deepening ties with other countries than on resolving the trade conflict with Canada’s largest commercial partner, the United States.

The Canadian government has taken a variety of measures to appease the Trump administration but without success. Ottawa has pledged fresh money and sought to pass new laws to boost border security, in a bid to assuage Trump’s concerns about drug trafficking and illegal immigration.

The Carney government has also made concessions to get back to the negotiating table, including by pledging to rescind the Digital Services Tax impacting U.S. tech giants and by removing most counter-tariffs.

In addition, Carney changed his tone after the election campaign and has been in Trump’s good graces, at least publicly. Trump has not referred to Carney as “governor” like he did with Prime Minister Justin Trudeau.

Carney has maintained a diplomatic approach with Trump throughout the saga, but he did have a few public slip-ups showing frustration with the current stalemate more recently.

In November, Carney said it’s a “privilege to have meetings all around the world, except with one country,” without elaborating, while speaking in front of a business audience in Montreal. Days later, he responded by saying “who cares?” when asked by reporters when he last spoke with Trump.

Trump in late October said he cancelled trade talks with Canada because of Ontario’s anti-tariff TV ad aired in the United States, but he has maintained that his relationship with Carney is good.

“I have a great relationship with Canada. They’re very tough traders, but I have a very good relationship with the prime minister and with Canada,” Trump said on Dec. 7, two days after meeting with Carney on the sidelines of the FIFA World Cup draw in Washington.

The Prime Minister’s Office usually releases readouts of meetings with world leaders, but in this case, none was issued.

The short meeting also involved Mexican President Claudia Sheinbaum, and Trump said it was was focused on trade.

The three countries are ramping up for renegotiation of the United States-Mexico-Canada Agreement (USMCA) on free trade, set for 2026. The deal has allowed Canada and Mexico to broadly dodge the impacts of Trump’s tariffs, except for sectors like metals and cars, which are being specifically targeted.

Pivot to Europe

Carney’s campaign promise to negotiate a deal with Trump has yet to materialize, in contrast to his outreach to other countries. One of his first moves after becoming prime minister in March was to visit Europe.

After being sworn in on March 14, the next day his office announced a trip to France and the United Kingdom to strengthen economic and security partnerships with two of Canada’s “closest” allies.

King Charles III visited Canada in late May in a bid to affirm the country’s ties to the British monarchy amid tensions with the United States. The King even read the speech from the throne to open Parliament, a rare occurrence.

Outside these more symbolic gestures of turning to Canada’s roots as a way to assert sovereignty, Ottawa has highlighted some concrete headway in building closer ties to Europe.

Ottawa announced in early December that it had reached an agreement for Canada’s participation in the EU’s Security Action for Europe (SAFE) program, which materialized after negotiations began in early summer.

The program, part of Europe’s rearmament efforts, provides $244 billion in loans to EU member states to acquire military equipment. Ottawa says joining SAFE will provide the defence industry with new lucrative opportunities.

Canada’s entry fee to join the program has been set at 10 million euros (approximately C$16 million), compared to between 4 billion euros (about C$6.5 billion) and 6.5 billion euros (about C$10.5 billion) for the United Kingdom. This suggests that benefits for Canada could be limited.

The increased focus on defence has been a marked departure from the previous Liberal government. Canada’s defence review of April 2024 did not set a date for reaching the NATO spending guideline of 2 percent of GDP.  Trudeau announced at the NATO summit in Washington in November that year that the target would be reached by 2032.

Carney, for his part, set his sights on reaching the 2 percent target by the end of the current fiscal year shortly after becoming prime minister, in early June, announcing billions in new spending. Later that same month, he supported NATO’s decision to raise the bar to 5 percent of annual GDP by 2035 at the alliance’s June summit.

These defence moves reverberate into foreign policy, whether by raising Canada’s profile and standing among allies amid turbulent times globally, or by increasing the country’s capacity for force projection and participation in international activities.

US Alignment Mostly Remains

The push in recent months from NATO members to increase defence spending was largely influenced by Trump.

Canada has been a laggard in defence spending, remaining one of the few countries still not meeting the 2 percent guideline. Remaining an outlier while Trump was accusing Canada of letting Chinese and Russian ships sail freely through its Arctic would have been a tedious position to hold.

Canada’s stance on world flash points in general has been more aligned with major European countries, but without completely breaking with the United States.

This is true but for one very significant issue: Canada unilaterally recognizing Palestinian statehood in September at the United Nations General Assembly. This was a break from long-standing Canadian policy on the issue to call for a negotiated two-state solution to the Israel-Palestine conflict.

The move was prompted by concerns about humanitarian conditions in the Gaza Strip, as Israel sought to eliminate the Hamas terrorist group, and premised on promises of reform coming from the Palestinian Authority, which rules over the West Bank. Other countries such as France and the United Kingdom also recognized a Palestinian state.

The United States and Israel consider the recognition as a reward for the Hamas terrorist acts of October 2023.

Ottawa may have broke with Washington on that matter but has supported Trump’s peace plan to end the conflict. The plan is also backed by many Arab and Muslim countries typically more hostile to Israel.

Ottawa’s stance on Ukraine has not changed, however, remaining aligned with key European players and mostly supportive of Trump’s efforts to end the war.

The United States designed a new scheme with NATO to have member countries purchase U.S. weapons to supply Ukrainian forces as Trump attempts to reduce the impact of the war on U.S. coffers. Ottawa announced in early December that it would contribute $200 million to that effort.

Pivot to Asia

Carney’s turn eastward as he sought to break away from the United States early in his mandate was not a major break with the previous Liberal government.

Trudeau had pushed for closer relations with China early in his mandate, but the honeymoon came to an abrupt end after Ottawa enforced a U.S. extradition warrant against Huawei executive Meng Wanzhou in December 2018. In apparent response, Beijing arbitrarily detained Canadians Michael Kovrig and Michael Spavor for more than 1,000 days.

This resulted in a pullback of diplomatic exchanges with no high-level contacts for years. Carney has sought to improve ties with China, and his efforts culminated in late October when he met with Chinese leader Xi Jinping in South Korea. This was the first meeting of leaders since 2017.

The Prime Minister’s Office (PMO) called the meeting a “turning point” in the bilateral relationship. Foreign Affairs Minister Anita Anand had visited China weeks earlier and declared that the two countries were in a “strategic partnership.”

The reconciliation comes after increased scrutiny in recent years of Beijing’s interference activities in Canada, including via a public inquiry into foreign interference. Carney said during his election campaign in the spring that China is Canada’s biggest security threat.

The Conservatives have said that declaring a “strategic partnership” with Beijing while calling it Canada’s stop security threat is a contradiction. “Is this another example of the prime minister saying one thing during the election and doing another after?” asked Tory MP and foreign affairs critic Michael Chong in the House of Commons.

Efforts have also been made to improve relations with India, after months of tensions.

Trudeau had accused New Delhi of having a hand in the assassination of a pro-Khalistan activist in B.C. in 2023, plunging the relationship into turmoil. Now as the “law enforcement dialogue” on this issue and others continues between the two countries, relations have been put back on track.

Carney said in November that India can help move supply chains away from China. Free trade talks that had been put on ice in the summer of 2023, before Trudeau made his accusation, were relaunched when Carney met with Indian Prime Minister Narendra Modi in South Africa on Nov. 23.

The two leaders are hoping to double bilateral trade to $70 billion by 2030. By comparison, two-way trade between Canada and the United States was over $1.3 trillion in 2024.

The recalibration of relations with Asia will be formalized in policy as Ottawa is currently reviewing its Indo-Pacific Strategy first released in 2022. Foreign Affairs Minister Anand said in October this year that this is necessary to meet Carney’s goal of doubling non-U.S. exports within a decade.

Anand said Ottawa is pursuing a strategy defined by “pragmatism.”

“We must stress our concerns relating to security and public safety on the one hand, and we must seek to build additional supply chains on the other,” she said after her visit to China.

Other Moves

The $70 billion figure also surfaced when Carney visited the United Arab Emirates before going to South Africa for the G20 Summit in November. This is the amount the UAE pledged to invest in Canada while Carney was in Abu Dhabi making the first visit by a Canadian prime minister since 2023. Free trade negotiations were also launched at the time.

Carney told reporters after meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan on Nov. 21 that he had a “long-meaning, wide-ranging conversation” with him on issues of “global significance” including Sudan. The UAE has been accused by Sudan at the International Court of Justice of having a role in supporting a militia in West Darfur that Khartoum says is responsible for mass killings, an allegation the UAE has rejected.

“We are partners,” said Carney. “The UAE has been an important partner for Canada in helping us to deliver humanitarian aid for Gaza. We are partners with them in helping with Afghanistan.”

Efforts have also been made to deepen bilateral relations with Mexico. Carney visited the country in September and Canada-U.S. Trade Minister Dominic LeBlanc travelled there in December. The two countries have been significantly impacted by the Trump administration’s tariffs and border security stance and face uncertainty regarding the fate of the USMCA.

The Canadian Press contributed to this report.