How Prime Minister Mark Carney’s Early Economic Policies Are Shaping Canada’s Future
Author(s): Scott Douglas Jacobsen
Publication (Outlet/Website): A Further Inquiry
Publication Date (yyyy/mm/dd): 2025/06/05
Jeff Le is a policy expert and commentator on Canadian governance. Le highlights the economic challenges and cautious optimism in early 2025 under Prime Minister Mark Carney. He notes consumer confidence, trade tensions with the U.S., and a recalibrated cabinet focused on innovation, housing, and economic growth. Carney’s pragmatic approach, strengthened by bipartisan U.S. support and legal wins on tariffs, is balanced by bold reforms and complex trade and climate dynamics. Le emphasizes the importance of reducing interprovincial barriers, increasing supply chain resilience, and engaging First Nations in infrastructure projects to sustain investor confidence and national development.
Scott Douglas Jacobsen: Which early indicators reflect the initial economic impact of Prime Minister Mark Carney’s government?
Jeff Le: Among the most important indicators is consumer confidence. Canadians at the start of 2025 showed concerns over a stagnant economy and a deepening trade crisis with the United States. While there is still caution from consumers, circumstances have improved especially after the Prime Minister’s successful visit to Washington where he was able to maintain a strong stance against the White House and Trump administration. With that said, consumers understand that uncertainty could lead to a higher cost of living with potential inflation increases, as evidenced by the 2025 first quarter of the Bank of Canada’s Canadian Survey of Consumer Expectations.
Jacobsen: How does Carney’s stance against the U.S. tariffs compare to past Canadian approaches?
Le: The Prime Minister’s stance is less the policy difference when it comes to its handling of the United States and trade negotiations with the Trump administration. The Prime Minister’s Ivy League background and banking experience fit more of President Trump’s preferences compared to Mr. Trudeau where their relationship was fractious from the start in 2017, only worsening from there. How President Trump treated the Prime Minister during his Washington visit was starkly different, instead of calling Canada the 51st state.
Another benefit that Mr. Carney has on trade and tariffs has been the United States courts. Canada’s tariffs have been challenged in lawsuits with the Trump administration facing two different setbacks – the U.S. Court of International Trade ruling that the tariffs had exceeded presidential authority under the International Emergency Economic Powers Act. While the White House earned some respite with some reinstated tariffs, it appears that the court later this month could issue a longer-term pause.
Mr. Carney also benefits from some bipartisan support from Congress. On a recent bilateral delegation led by U.S. Senators Shaheen (D-NH) and Cramer (R-ND), the delegation highlighted the need to strengthen the Canadian-American partnership. Mr. Cramer has close ties to President Trump and his support of easing of tensions could go a long way. What also could help is growing resistance in both the U.S. House and Senate for authorizing tariffs through Congress.
The U.S. courts and the legislative branches may help reduce risk for the Prime Minister.
Jacobsen: What policy tool is the newly strengthened Industry Ministry prioritizing?
Le: Having a powerhouse in Innovation, Science and Economic Development like Minister Joly highlights stronger focus on key industries. Her effort on shoring up Canadian metals, such as aluminum and steel, for Canadian national infrastructure and defense projects. She has also highlighted the value of timber and rare earth metals and the connection with jobs and production.
One policy tool that is being used is a focus on Canadian supply chain, prioritizing Buy Canada in procurement. In other countries, such efforts do have challenges, including potential slowdowns in production, reforms in procurement, and a challenge in centralizing certain vendors, which could add more overreliance and vendor lock. This has been the case in the United States and has posed challenges in overcoming incumbents in contracting.
Certifications may also pose a problem for procurement and waivers, or a legal change may be required. There is risk, but if the Government can reduce interprovincial trade barriers, this payoff could exceed the implementation challenges and add more resilience.
Jacobsen: What are the government’s benchmarks for reducing interprovincial trade barriers?
Le: One important benchmark for the Government will be whether the federal government and provincial governments can pass legislation to reduce barriers and eliminate its various exemptions. The Prime Minister had called for legislation to be finalized by July 1, which is expected to be well-received in Parliament. Interprovincial trade barriers are more challenging, as this will challenge market incumbents, but any nation-building projects must allow for more economic integration. Steps from five provinces, from Nova Scotia to Quebec, highlight the seriousness of economic decline and action taken from President Trump’s threats. Quebec’s efforts, most notable, given their heavier regulations and data flows challenges, shows that the politics has been seen as timely for action. The MOUs that provinces have been working on also have helped, as seen on Ontario’s recent agreement with Albert and Edward Island.
Building a Canada Strong approach, as outlined in the Speech from the Throne, centers an increase in economic activity and a reduction in inflationary elements, with major project streamlining. The emphasis on costs to Canadian families, especially on housing, is a powerful example of how the Government is focused on tangible, albeit very ambitious benchmarks for success in driving supply up and costs down. If the Government is successful in reducing the $200 billion in interprovincial trade barriers costs, the combination of savings plus the reduction in federal budget spending could lead to deeper technology and innovation investments that could help a stagnant economy grow.
A key challenge – can Canada deliver on streamlining major projects, such as widespread infrastructure improvements, such as roads through the Slave Geological Province to expand prospective mineral extraction. Additional pipeline projects, including those in the Ontario Ring of Fire could help these efforts, but there is a challenge in balancing climate commitments. It is a stretch that the Prime Minister would be willing to get rid of gas emissions standards and oil caps or get rid of the industrial carbon tax.
He has also asked the premiers to offer suggestions for big “nation-building” projects they would like to see built, with the goal of identifying several that can be fast-tracked. Pipelines, critical minerals projects and trade corridors are at the top of the premiers’ lists.
One area of potential threat beyond the complexities of climate are Ottawa’s relationship with First Nations that could also be strained without active negotiations and inclusion in discussions.
Jacobsen: How are foreign investors reacting to Carney’s early leadership?
Le: The challenge is less about foreign investment but rather home-grown investments, as soon in Canadian venture capital investments. Industry policies could help aid these challenges.
On the foreign investments side, there is cautious optimism assuming Canadian-American trade can work out a deal. The Canadian natural resource question will be a key one – how the Prime Minister can unlock the minerals playbook without climate backlash and as the Trump administration also looks to deregulate. One key question will be how the Prime Minister and Canada achieve their priorities at the upcoming G7 meeting in Alberta. Depending on the joint communique, this could buoy global markets, expand investor confident, and help bolster Canadian investment. It will be the start of their plans to make Canada the strongest economy in the G7, which could include the increased defense and military spending by 2030.
Jacobsen: What does the composition of Carney’s cabinet suggest about continuity and reform?
Le: The Prime Minister’s Cabinet reflects his pragmatism. As a first-time elected official, the May Cabinet has a stronger mix of experience but seeing immigration, energy, and housing with first-time ministers is an important effort at a break from unpopular Trudeau government shortcomings and an opportunity to energize the economic agenda. The boldness at housing and energy serve as key litmus tests for success. Experienced hands in Joly, Freeland, and LeBlanc serve as the economic and Canada Strong tip of the spear. Another question which has not received as much attention will be how artificial intelligence and digital innovation is accelerated under Minister Solomon.
Jacobsen: Thank you for the opportunity and your time, Jeff.
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