A woman takes a photo as HMCS Halifax departs Halifax in support of NATO's deterrence measures in eastern Europe on March 19, 2022.Andrew Vaughan/The Canadian Press
Bill Morneau was the Canadian minister of finance from 2015 to 2020.
After travelling to Chicago last month for the Democratic National Convention, I was reminded once again of the importance and difficulty of managing Canada’s relationship with the United States.
As we approach the renewal of the United States-Mexico-Canada Agreement (USMCA) in 2026, we must face an uncomfortable truth: Despite America’s close connections to Canada, our deeply intertwined economies are overshadowed by U.S. priorities that increasingly focus on military and security concerns, areas where Canada’s role is often seen as insufficient.
When Vice-President Kamala Harris speaks about ensuring the U.S. maintains the “strongest and most lethal” military, it’s a stark reminder of the divergent priorities that now define our relationship. Imagine a Canadian leader making a similar pledge – it would be entirely at odds with our national values and realities.
Yet, we must understand why this resonates with U.S. voters. The United States bears the burden of leadership in global security; their sons and daughters go to war, and their military presence is critical to any semblance of order on the planet.
This reality underpins their approach to international relations – making the military an essential element of their global strategy. Canadians need to recognize how these realities affect our own policies – from trade and fiscal strategies to the very organization of our economy.
The Canada-U.S. relationship remains the most comprehensive and mutually beneficial economic partnership globally. However, the depth of our economic interdependence doesn’t always register with Americans, and is often overshadowed by priorities like national security.
Since the renegotiation of NAFTA into the USMCA, the evolution of U.S. trade policy has moved beyond mere market access. Today, it is increasingly centred on bolstering domestic production, securing technological supremacy, and countering geopolitical rivals, particularly China. This marks a significant shift away from the previous emphasis on global trade liberalization and consumer-driven growth.
Canada must ensure its approach keeps pace with this new reality. We cannot afford to remain anchored in approaches that no longer resonate in Washington. This shift demands some tough choices.
First, Canada must commit more resources to defence. Our global role does not match our stature as the U.S.’s closest ally. Despite contributing to international efforts like the Russia-Ukraine conflict, our military contributions remain modest compared to our allies. Even if we meet our very extended timeline for reaching NATO’s 2-per-cent defence spending target, our contributions will still fall short of expectations. Achieving this will require a massive review of government expenditures and programs to free billions annually without undermining critical social spending.
As Finance Minister, I saw firsthand how challenging it was to meet our stated goals while increasing defence expenditures. But the world of 2024 looks fundamentally different from 2015, when I was appointed to the post. The cost of committing to 2 per cent sooner is hard, and procurement realities are challenging. However, when the world changes, we need to change with it.
Second, we must prove ourselves as reliable partners in emerging industries like critical minerals, essential for driving the renewable energy revolution. The U.S. is questioning whether Canada can deliver on this promise efficiently and dependably. Our response must go beyond assurances; we need a regulatory and investment framework that demonstrates our commitment to this partnership.
Third, as the U.S. strives for global technological dominance, we need to re-evaluate our approach to the digital economy. Should we proceed with taxing U.S. tech giants, or is there a more strategic way to align our interests with those of the U.S.?
Fourth, Canada’s strengths – our financial sector and natural resources – are vital to the U.S. economy. However, regulatory and tax policies often undermine their potential. We must ask ourselves whether we are maximizing our comparative advantages.
Finally, it is time for a comprehensive reassessment of our approach to this critical partnership. The world has changed dramatically since Canada last conducted a foreign policy review two decades ago, and so has our relationship with the U.S. Our allies expect Canada to contribute to broader strategic objectives that extend beyond traditional trade and economic concerns. Let’s think hard about what that means.
Reviving the Team Canada approach – the government’s current focus – still holds value, but it must be backed by concrete domestic policies aligned with our allies’ needs. When reminding our American counterparts of the enduring importance of our relationship, words alone will not suffice. Our strategies on trade, defence, and budgeting must evolve to reflect the new global reality – a reality that has shifted significantly since Prime Minister Justin Trudeau first took office nine years ago. The world has changed, and so too must our choices.