In brief
Prime Minister Mark Carney confirmed in a New York Times interview that Canada assessed potential US military action over the past year as part of risk management.
Following the collapse of negotiations in August 2026, Washington and Ottawa imposed reciprocal 50% tariffs on $20 billion of goods, affecting a trade relationship where 72% of Canada's $556 billion in 2025 goods exports went to the US.
Canada is reducing reliance on American systems by reviewing alternatives to F-35 fighter jets, limiting use of Starlink satellites, and seeking associate EU membership.
Tensions follow remarks by Donald Trump since January 2025 proposing Canada become a 51st state, which former Prime Minister Justin Trudeau rejected as an effort to acquire Canadian energy and minerals.
- July 2025Washington threatens 35% duties until Canada drops its digital services tax
- August 2026Bilateral trade talks collapse and both countries enact 50% reciprocal tariffs
- September 2026Mark Carney reveals contingency evaluations regarding potential US military action
Assessment of military risk
Canadian Prime Minister Mark Carney confirmed that his administration examined the potential scenario of United States military action against Canada over the past year. In an interview with The New York Times, Carney described a US military attack as an extreme tail risk, characterizing it as an event with an exceptionally low probability but severe consequences. The contingency assessment followed repeated public statements by US President Donald Trump suggesting that Canada should be annexed as the 51st American state. Although Trump subsequently stated that he would use economic pressure rather than military force to compel closer integration, Canadian defence planners assessed the scenario under risk management procedures. Carney declined to provide operational details of the defence evaluations but maintained that exploring worst-case scenarios remains a basic duty of executive office.
“I think you have a responsibility in these roles to look at extreme tail risk. That's just risk management. That's not a base case, but it would be irresponsible not to.”
Escalation of trade measures
Disagreements between Ottawa and Washington escalated across multiple trade fronts following Trump's return to office in 2025. The US administration initially imposed a 25% tariff on Canadian imports over cross-border fentanyl controls, followed by global 25% tariffs on steel and aluminium in March 2025 that affected Canada as the primary foreign supplier. In July 2025, Washington threatened to elevate duties to 35% until Ottawa agreed to withdraw its digital services tax. Formal trade negotiations continued for over a year before collapsing in August 2026, leading Trump to enact 50% tariffs on $20 billion of Canadian goods, which Ottawa matched with equal retaliatory measures. The economic exposure is substantial for Canada, which sent 72% of its $556 billion in goods exports to the United States in 2025.
- Steel and aluminium tariffs (March 2025)
- 25 %
- Threatened digital tax duty (July 2025)
- 35 %
- Tit-for-tat trade tariffs (August 2026)
- 50 %
Data from the article text
Strategic decoupling and technology diversification
To counter vulnerability to American policy shifts, the Canadian government began systematically reducing its reliance on American technology and procurement systems. Carney outlined concrete steps to diversify suppliers, which include reviewing alternatives to Lockheed Martin F-35 fighter aircraft and phasing down reliance on Elon Musk's Starlink satellite network. Ottawa has simultaneously pursued deeper economic connections with China while keeping defence collaboration separate, alongside exploratory negotiations to secure associate member status with the European Union. Trump warned that any formal pact between Canada and Brussels would result in heavy tariffs on European imports to the United States. Carney affirmed that establishing alternative trading channels strengthens Canadian security while keeping the broader alliance functional.
“There's certain things, once you've seen them, you can't unsee them.”
Diplomatic dialogue and domestic response
Despite the breakdown in trade negotiations and contingency planning for military scenarios, Carney confirmed that high-level contact with the United States remains active. The Canadian prime minister noted that he has spoken frequently with Trump by telephone, including several discussions following the August 2026 trade breakdown. Anxiety over US intentions has persisted in Ottawa since early 2025, when former Prime Minister Justin Trudeau rejected annexation talk at a Toronto business summit, stating that Washington eyed Canadian energy and critical minerals. Former White House adviser Steve Bannon also publicly advised Canadians to take Trump's statements seriously due to US Arctic interests and Canadian defence limitations. Ottawa continues to navigate this relationship by combining regular direct dialogue with long-term technological and commercial diversification.