Prime Minister Mark Carney is receiving international accolades for his Davos speech in which he said what many have argued for years about the U.S.-led post war ‘rules based’ order. Commentators from around the world praised him for his blunt response to Trump’s bullying and his willingness to clarify that many countries have followed an appeasement strategy in dealing with the United States. Canadian media have promoted these favourable international comments to argue that we have a leader who behaves like a real adult in the room.

Canadian media have also given uncritical praise for Carney’s domestic agenda and, particularly, his vision of making Canada an energy superpower, based on expanding oil and gas exports while dramatically increasing Canada’s mining sector to provide the rare earth minerals many economists predict the global economy will need in the coming years. While boosters see this  as an innovative break from the past, in reality, this is a strategy based largely on the familiar ‘export led growth’ solution to Canada’s economic challenges.

It is also consistent with the further implementation of the neoliberal trade agenda, as evidenced by Carney’s advocacy of the Canadian Trade Agreement and his commitment to negotiate more international trade agreements.This agenda has already done much damage to Canada’s economy and society.

While there has been considerable discussion about creating a ‘made in Canada’ response to Trump’s arbitrary trade war, much of what is being proposed by organizations such as the Business Council of Canada frames the challenge essentially as one of adopting economic policies that will make Canada more internationally competitive, coupled with recycling the same old agenda of free trade, smaller government, deregulation and lower taxes.

Consistent with this approach, Carney continues to negotiate new neoliberal trade agreements at precisely the same time that the Federal Government is saying we need to take more control over our economy. Yet these agreements actually reduce the government’s capacity to adopt policies that challenge the neoliberal agenda. Framing the response to Trump’s tariffs as primarily a trade issue significantly narrows the scope of the response Canada needs to address the underlying problems created by this agenda over four decades.

There is little evidence that Carney recognizes the extent to which our public programs and services have already been decimated by downsizing, privatization and business models that define—and dramatically narrow—the role of governments.

Since the 1989 free trade agreement with the U.S., the federal government has sold off dozens of crown corporations (Air Canada, Canadian National Railway, Petro-Canada, Canada Development Corporation, Connaught Laboratories, Canadair, Canadian Patents and Development Ltd., Telsat Canada and more).  While corporations got to buy them at fire sale prices, the major reason they were privatized was ideological. Successive federal governments sold them because they had adopted the neoliberal ideology which assumed that anything that could be done by the market, no matter how well or poorly, should be handled by the private sector, not government.

As a result, the role of the federal government in the economy has contracted dramatically over the past four decades. Provinces have enacted similar policies through extensive privatization, program cuts and adopting fiscal austerity.

Rather than outlining plans to rebuild key public programs and services—a clear route to increasing employment and Canadianizing the economy—Carney is promoting the old ‘hewers of wood and drawers of water’ agenda by investing in infrastructure to support the export of raw resources, most of which are not even processed in Canada. It is the “staples trap” described by Harold Innes and Mel Watkins.  And while Carney has implemented measures to shelter parts of Canada’s manufacturing sector, these do not include any new publicly owned enterprises. Rather they are primarily focused on sheltering companies threatened by Trump’s tariffs. The major exception has been a significant increase in defence spending, as Canada seeks to meet his long term goal of spending  five per cent of GDP on the military.

Given Carney’s aversion to tax increases, this military budget is likely to be paid for by further reductions in federal transfers to the provinces, exacerbating federal-provincial tensions. Carney is also reducing the federal government’s capacity to provide services to Canadians. In its fall 2025 budget the federal government announced plans to cut 40,000 positions by the 2028-29 fiscal year.

On the environmental file, Carney has been a disappointment. His decision to abolish the consumer carbon tax sent a chilling message  about global warming. The tax had the positive effect of shifting consumption towards lower carbon products and played a significant role in reducing Canada’s emissions.  His advocacy of expanding oil and gas exports signals continued reliance on fossil fuels and reflects his desire to maintain the support of the(largely foreign-owned) industry. Similarly, his strategy of attracting foreign capital to build new mines belies his claims to be shifting to a more Canada-focused approach to economic development.

Canada’s response to Trump should not be another version of the export led growth agenda based on a leaner, more competitive economy that privileges foreign and domestic investors. Instead, it must focus on building (or rebuilding) our public infrastructure and services while reducing our vulnerability to international market forces, the opposite of what trade agreements are designed to do.

Part of this response means expanding publicly owned and controlled programs to meet the pressing needs of Canadians. The list of inadequate—or missing—public programs and services is well-known: child care, public transit, primary health care, nursing homes and home care, properly funded education, domestic pharmaceutical production and many others. Most of these are labour intensive, meaning they have the added benefit of offering good jobs. They are a much better way to invest public dollars than building more pipelines and related infrastructure to accommodate foreign oil, gas and mining interests.

It is interesting to contemplate how many quality child care places the federal government could have created with the $34.5 billion it spent on the Trans Mountain Pipeline to give predominately foreign oil companies access to international markets, or how this money could have been used to expand National Pharmacare Plan or the Canadian Dental Care Plan. The opportunity cost of this misallocation of resources is huge.

Canadians were not given the choice about where to spend this money. This is evidence of a major democratic deficit in Canada. Decisions involving large amounts of public money slide through the legislative process with minimal controversy if their beneficiaries are corporations, while media and business attack proposals for new or improved public services as unaffordable. We need to make a strong case that the ‘care economy’ should be the cornerstone of our response to Trump.

There is also an argument for a shift in the kinds of goods and services we produce in the economy. The market is simply not meeting many of the basic needs of Canadians. The way it distributes what it produces is highly unequal, privileging those with money and excluding those without. Moreover, many products have little social value and are often harmful. We don’t need more casinos, vaping stores, liquor outlets, payday loan stores or monster sized SUVs. We do need more child care places, nursing homes and improved public transit, to cite only a few of the numerous areas where the social needs of Canadians are not being met adequately. The state must shift the resources misallocated by the market towards goods and services that improve quality of life and reflect more egalitarian values and priorities.

If we are serious about Canadianizing the economy, we need to in-source many of the programs and services that have been carved out of the public sector through decades of privatization. These contracted out programs and services do not provide ‘savings’ for the public. Rather, they enable investors—often foreign—to profit by underpaying their workers and short-changing the public by providing inferior products.

The CUSMA (NAFTA’s replacement) and other trade agreements are based on neoliberal assumptions. They privilege investors while tying the hands of governments. Federal, provincial and territorial governments have incorporated their extensive obligations  into their domestic policies and legislation. Purchasing departments, for example, must confirm that the way they acquire goods and services conforms with our trade agreement obligations, precluding the use of purchasing tools for other objectives. Government contracting practices have decimated the non-profit sector through onerous competitive tendering requirements, enabling multinational companies to squeeze out publicly funded community services.

These constraints reflect major changes to government purchasing since 1989. They have a ‘chilling effect’ on policy development and constitute significant barriers that preclude governments pursuing other options. Any serious effort to Canadianize our economy must untie these policy handcuffs.

Non-renewal of the CUSMA would not automatically eliminate the constraints it has imposed on Canadian governments. Canadianizing the economy requires repealing the extensive list of laws and policies governments have implemented over the past four decades to meet their trade agreement obligations, including cancelling many of the neoliberal requirements in the Canadian Trade Agreement. But Carney has shown no interest in getting rid of these constraints on policymaking, as they fit comfortably with his policy agenda.

Clearly, we need to advocate policies that respond effectively to Trump’s erratic and hostile trade demands. We also need measures to shelter workers who are being victimized by his policies—and to halt the further erosion of our manufacturing sector, a key part of Trump’s agenda of insourcing production to the U.S. at the expense of Canadian jobs.

But our vision should be broader. It must recognize that an effective response goes beyond simply countering his tariffs to include a fundamentally different approach to the purpose and role of government in our economy. It means removing the neoliberal handcuffs and bringing government back into the picture.

Originally published in Canadian Centre for Policy Alternatives under a Creative Commons License