The Canadian PM is one of the few world leaders to stand up to the US president. Former colleagues say they are not surprised
Mark Carney stood before a walnut-veneered lectern, his face drawn tight, as he announced that talks with Canada’s biggest trading partner had collapsed. “Last spring, I warned that America is trying to break us so that they can own us,” he said. “And I promised: that will never, ever happen. We are keeping that promise.”
For years, the former central bank governor had worked hard to calm markets. Now, he was asking Canadians to accept uncertainty and confrontation.
Near the end of the press conference last Saturday, a reporter made reference to the sombre, combative tone of the speech: “Why does it feel like today Mark Carney is going to war?”
The prime minister paused.
“We were attacked. You’re at war when you get attacked,” he said. “We got attacked.”
The unlikely transformation of an economist and central banker with no prior electoral experience into a powerful global politician has bucked precedent and expectations. But Carney has settled into the role he warned was necessary for the country, that of a wartime leader standing up to an erratic and vindictive adversary who seems hellbent on subjugating Canada.
After trade negotiations with the US broke down, the two sides traded recriminations and made good on threats to impose new tariffs on each other. In his latest act of petty antagonism, Trump signed an executive order on Thursday directing the US federal government to rename Lake Ontario as “Lake America”.
But Carney, in walking away from the proposed deal, did what few other leaders have done: dared Trump and the US to test his nation’s resolve.
“We cannot accept what they have offered, and we will not give what they have asked,” he said.
‘He was pretty doggedly determined’
For those who have worked with the demanding – and, at times, temperamental – central banker, such a calculated refusal to accede to a bad deal comes as little surprise.
Carney was raised in Canada’s western prairies, and his story – of an outsider gradually working his way into, and eventually reshaping, powerful institutions – offers clues to a man unwilling to accept the terms set by others.
“He was pretty doggedly determined,” said one person who worked alongside Carney when he was serving as UN special envoy for climate action in 2021.
When trying to convince banks to sign up to climate pledges, Carney could turn on the charm. “He was pretty diplomatic, when dealing with people that he knows he’s got to influence,” his former colleague said.
But it has been no shock to see Carney standing up to Trump on the world stage. “It doesn’t surprise me … and I think it’s because of that determination and that unwillingness to back down.”
Carney was not always so sure-footed. When he was handpicked as governor of the Bank of England in 2013 by the then UK chancellor, George Osborne, Carney’s hard-driving approach was not a natural fit with the venerable institution in London’s Square Mile. When he arrived, it still had pink-uniformed, top hatted guards at the entrance.
The traits acquired during his days at Goldman Sachs have continued into his tenure as prime minister. He remains an early riser, a dedicated runner and demands that ministers know their files front to back, according to those who work with him. Media have also reported that staff are expected to dress in formal business attire and documents are to be written using British spelling – to the frustration of Canadian linguists.
While Carney’s career in a string of powerful institutions reflects a sharp, analytical mind, his tenure at the Bank of England telegraphed that the wonkish economist was also willing to become political when necessary.
When Carney overhauled the Bank’s communications strategy, introducing “forward guidance” to show its thinking about future interest rates, it was not immediately embraced as a success.
The senior Labour MP Pat McFadden – now a cabinet minister – accused the Bank under Carney of baffling investors and the public with mixed messages about the future of interest rates.
In October 2015, with the referendum looming on whether Britain should leave the European Union, Carney used a speech at Oxford University to underline the benefits to the UK of the “economic and financial openness” that came with membership.
With the eurozone debt crisis a recent memory, Carney also highlighted the increased risk of financial instability that membership of the EU implied; but Brexiters seized on his positive comments as an unwarranted intervention in a highly politicised topic.
The row deepened when Carney suggested Brexit might plunge the UK into recession. Bernard Jenkin, the Conservative director of the leave campaign wrote to the governor, urging him to butt out.
Carney’s reply displayed the same relish for a fight that has been evident in his handling of Trump. “Dear Mr Jenkin,” his letter began, “I am responding to your letter to dispel immediately the numerous and substantial misconceptions it contained.” He went on to accuse the veteran MP of “a fundamental misunderstanding of central bank independence as enshrined in statute”.
In the event, there was no Brexit recession, something many economists attributed partly to the Bank’s robust response, including rapid interest rate cuts and quantitative easing (the emergency bond-buying scheme used during the global financial crisis).
Charles Randell spent five years on the board of the Prudential Regulation Authority, which Carney chaired after becoming Bank of England governor. “I’m sure if you ring around enough people who worked with him at the Bank, you’ll find people who will say that he had his shortcomings,” Randall said. “But with time to reflect on my experience … he’s one of the most impressive people I’ve ever worked with.”
Randell, who was then the chair of the Financial Conduct Authority, said that even behind the scenes, Carney was a “very serious person, very analytical, very driven” and “very careful about how he communicates”.
“On the morning after the Brexit vote in 2016 … he went in front of the cameras to reassure financial markets that the Bank was ready to deal with any of the consequences of that decision,” he said. “It was a masterpiece in strategic messaging.”
‘Compliance will not buy safety’
Joseph Steinberg, a professor of economics at the University of Toronto, said that while during the Brexit debate, Carney “did not shy away from trying to tell kind of the hard economic truths”, he had not spoken much about the economics of the current US trade war.
“In public, he is leaning pretty heavily on the sovereignty angle. It is clear that he privately is probably thinking about the cold, hard economics of an incredibly tenuous situation.”
Carney’s decision to retaliate against the US has caused some economists, including Steinberg, to point out that Canada will take a far more painful blow than the US.
For the first time in his career Carney is fully beholden to a wary public, a reality that underscores the clashing of two personalities: the technocrat who understands the economics, and the politician who must contend with the political costs of compromise.
“At the moment, Canadians are likely to be extraordinarily intolerant of making any kind of concessions to the US whatsoever, even if they are in our economic best interest,” he said.
In January, Carney warned people at Davos that “compliance will not buy safety” in a world increasingly dominated by hegemonic powers. While it never mentioned Trump, his speech was seen as a thinly veiled critique of the US president’s aim to abandon longstanding alliances and reshape the world to his advantage.
One of Carney’s prescriptions – forging deep relations with like-minded “middle powers” and restructuring to lessen reliance on former allies – has already taken shape in Canada, at a speed and degree to which the pollster David Coletto described as a “wartime-footing government without a war”.
“It’s a government organised around an external threat that’s willing to suspend its own party’s orthodoxies, centralise power to move fast, and measure itself in outcomes rather than values,” he wrote.
Carney abandoned many of the policies of his predecessor Justin Trudeau, including his carbon and electric vehicle mandates. He has also fast-tracked large projects, including an oil pipeline, and invested tens of billions more into defence.
“The public has hardly blinked,” Coletto said in an interview. “Mark Carney’s approval rating has just sustained itself through this entire period.”
“When [Carney] first became prime minister, I was sceptical that a central banker would be able to respond to public opinion because that is the opposite of their job,” he said. “But I’ve been surprised with his nuanced read of the country. He’s been adept at being not just politically effective but in holding his support together through a trying time. This suggests there’s little value in underestimating his political instincts.”
Polling shows that Carney remains the leader Canadians trust most to steer the country through economic uncertainty. But the prime minister has also embraced a role that would once have seemed almost incongruous: asking a country vastly smaller and less powerful than its neighbour to stand its ground.
He said in his recent address: “Canadians don’t submit to the weather – we thrive in it. We don’t wait to see which way the wind is blowing. Or surrender ourselves to the waves to be storm-tossed by events.
“We set our own course. We make our own weather. In Canada, we are masters in our own home, from coast to coast to coast.”
