Prime Minister Mark Carney issued a stark warning Friday about growing signs of a global economic slowdown, attributing the mounting uncertainty to escalating U.S. trade measures and retaliatory tariffs from key global partners—including China.
Speaking in Ottawa after convening the federal cabinet committee on Canada-U.S. relations, Carney said early indicators from financial markets and domestic data suggest that both the global and Canadian economies are beginning to feel the strain of the deepening trade war triggered by U.S. President Donald Trump.
“In the last week there have been a lot of developments in terms of U.S. tariffs policy and reactions from others, including China,” Carney said.
“It really marked a tightening in financial conditions and the initial signs of slowing in the global economy—impacts that we are unfortunately starting to see in the Canadian economy, particularly in the labour market.”
Carney paused his federal election campaign for the day to lead a high-level meeting following a tumultuous week in global markets. The move comes as China announced a retaliatory tariff hike to 125 per cent on U.S. goods, a direct response to Trump’s ongoing tariff escalations.
Despite a temporary 90-day pause on Trump’s newly introduced “reciprocal” tariffs for many global partners, Canada remains subject to a 10 per cent baseline tariff, along with 25 per cent duties on steel, aluminum, and auto exports to the United States. Meanwhile, China faces an unprecedented 145 per cent tariff on all its exports to the U.S.
The volatility has begun to rattle investors and economists alike. Yields on long-term U.S. Treasury bonds rose Friday, a traditional signal of rising uncertainty, while gold prices surged, reflecting a flight to safe-haven assets amid market instability.
Carney’s warning also coincided with dismal U.S. consumer sentiment data from the University of Michigan, which showed confidence plunging in April. Still, the White House defended the strategy.
“Americans should trust in Trump,” said White House Press Secretary Karoline Leavitt, adding, “the president is using America’s leverage to our advantage.”
Leavitt also said over 75 countries are now seeking new trade arrangements with the United States before the 90-day pause ends—further fuelling the uncertainty around future economic stability.
Carney, who spoke with President Trump last month, confirmed that both leaders agreed to begin formal negotiations on a new economic and security framework between Canada and the U.S. after the April 28 election.
“We are laying the groundwork for the next government to be ready on day one,” Carney said. “We must stand firm for Canadian workers, protect our economy, and be prepared to negotiate from a position of strength.”
Economic experts continue to caution that Trump’s trade strategy is undermining the very foundation of the Canada-U.S.-Mexico Agreement (CUSMA)—the North American trade pact once heralded as a modernized successor to NAFTA.
The federal government is now focused on coordinating a cross-departmental strategy to mitigate further economic fallout and prepare for fast-moving negotiations in a volatile global landscape.