Skip to content

Canada's Business and Tech Newsroom

  • Professional Subscription
  • Partnerships & Advertising
  • Licensing & Syndication
Log In Subscribe
Welcome,
  • My Account
  • Log Out
  • Business
  • Tech
  • National
  • The Big Read
  • Briefings
  • Commentary
Search
Log In Subscribe
Welcome,
  • My Account
  • Log Out
Commentary

Carmichael: Geopolitics is now a major macroeconomic risk

Canada is back. Back again. Maybe for real this time. 

Foreign Affairs Minister Mélanie Joly reset Canada’s international policy for a messier world this week, delivering a speech in Toronto that could be read as an acknowledgement that influence abroad has become more difficult than sewing a maple leaf on one’s backpack. 

“Now more than ever, soft and hard power are important,” Joly told an audience assembled by the Economic Club of Canada, a significant statement from a government that has so far been fine with missing its NATO commitment to spend two per cent of gross domestic product on defence for the duration of its eight years in power. 

Commentary

Carmichael: Geopolitics is now a major macroeconomic risk

It’s time for a foreign policy based less on nostalgia and more on realpolitik

By Kevin Carmichael
Chinese J-15 fighter jets on the deck of the Liaoning aircraft carrier during military drills in the South China Sea in January 2017. Photo: STR/AFP via Getty Images
Nov 1, 2023
A A
A Small A Medium A Large
Share

Gift

Share

Canada is back. Back again. Maybe for real this time. 

Foreign Affairs Minister Mélanie Joly reset Canada’s international policy for a messier world this week, delivering a speech in Toronto that could be read as an acknowledgement that influence abroad has become more difficult than sewing a maple leaf on one’s backpack. 

“Now more than ever, soft and hard power are important,” Joly told an audience assembled by the Economic Club of Canada, a significant statement from a government that has so far been fine with missing its NATO commitment to spend two per cent of gross domestic product on defence for the duration of its eight years in power. 

For some, that is stating the obvious. But it represents a considerable distance of travel since Justin Trudeau said this in his victory speech on Oct. 20, 2015: “I want to say this to this country’s friends all around the world. Many of you have worried that Canada has lost its compassionate and constructive voice in the world over the past 10 years. Well, I have a simple message for you: On behalf of 35 million Canadians, we’re back!”

It was a statement that captured not only Trudeau’s naiveté about what it took to be a player in the world, but also a generation of Canadians who grew up in a world in which their country had been on the winning side of the Cold War and free trade would lead China to embrace democracy. History was over, or so it was said. Joly began her speech with remarks on the Israel-Hamas war, which she said had so far resulted in the confirmed deaths of seven Canadians and had left 400 others trapped in Gaza. Another reminder that history wasn’t over, it was only on pause. 

That pause led to complacency. So far, Trudeau has taken a beating in the international arena. His attempt to negotiate a free-trade agreement with China proved overly optimistic, as the two countries are now closer to enemies than friends. 

Talk of diversifying trade relationships was undermined by the decision to focus on little besides renegotiating the North American Free Trade Agreement between May 2017 and October 2018. 

Related Articles

Carmichael: If this is the new normal, our monetary policy needs a rethink

By Kevin Carmichael
Bank of Canada governor Tiff Macklem in front of a Canadian flag.

Carmichael: Tiff Macklem is tired of being a political punching bag

By Kevin Carmichael

Humiliation arrived in 2020 when Canada lost its bid for a temporary seat on the UN Security Council to Norway and Ireland. And then, last month, Trudeau informed the House of Commons that authorities had evidence that Indian agents might have been involved with the murder of a Canadian citizen on Canadian soil, sparking an international incident.  

Bad luck? Sure, to some extent. Few were talking about China taking such an authoritarian turn a decade ago, and Indian Prime Minister Narendra Modi was widely seen in the West as an economic reformer, and not so much as the Asian strongman that he’s become. And no one saw Donald Trump coming. 

Yet here we are. Geopolitics is now a major macroeconomic risk, so much so that multinational companies such as Microsoft and Hitachi are hiring former diplomats and international-relations experts as advisers, and Goldman Sachs last week unveiled the Goldman Sachs Global Institute to offer advice on geopolitical and technological change. Joly’s choice of venue—the Economic Club of Canada—also underscored that diplomats and executives need to learn from one another. 

Maybe the chaos from wars in Europe, Africa and the Middle East and a Great Power showdown between China and the U.S. would have been less chaotic if Trudeau had started with a foreign policy based less on nostalgia and more on realpolitik. Second best will be adjusting in (relative) real time, rather than accepting the delays that have come to characterize this government’s approach to decision-making—the Indo-Pacific Strategy released in November 2022 after years of discussion being one example. 

Minister of Foreign Affairs Melanie Joly in Ottawa, in October 2023. Photo: The Canadian Press/Adrian Wyld

Joly’s speech appears to be the end of whatever dalliance Ottawa had with making “friendshoring” official policy. Deputy Prime Minister Chrystia Freeland seized on the idea last year as a response to Chinese and Russian aggression, advocating for democratic countries to base trade agreements and supply chains on values, rather than comparative advantage alone. 

If only life were so simple. Canada’s troubles with India, often characterized as the world’s largest democracy, show the limitations of dividing a world shaped by decades of hyper-globalization into good guys and bad guys. Such a policy also would limit Canada’s options by putting it squarely in the U.S.’s orbit. Economic gravity might do that, anyway, but that’s all the more reason for policy to push for optionality. 

“We must resist the temptation to divide the world into rigid ideological camps,” Joly said in both English and French, suggesting it was a point she was unwilling to risk losing to translation. “The world cannot be restricted to democracies versus autocracies,” she continued. “Forcing the majority of the world to fit into any one category would be naive, shortsighted and counterproductive.”

It would also be naive to take the Trudeau government at its word, based on its track record. Joly said Defence Minister Bill Blair will soon have more to say on how Canada will ensure it can project hard power in the Pacific—where allies such as Japan and South Korea will be looking for help protecting trade routes and Taiwan’s place as the leading maker of advanced computer chips, among other things—and safeguard the Arctic, and especially the Northwest Passage. She said Canada would continue to support Ukraine’s fight against Russia, and be there to help it rebuild after the war is over. And in a nod to the Middle East, Joly reiterated Canada’s appointment of a new ambassador to Saudi Arabia in May, ending a five-year chill related to Canada’s criticism of the kingdom’s record on human rights. 

Gift the full article

So, we’ll know for sure that Canada is back when Freeland, who is also the finance minister, releases her fall fiscal update. Hard power is expensive, and Canada’s post-COVID debt has become more difficult to finance because of higher interest rates. Trudeau will demonstrate the kind of country he wants Canada to be by the choices he makes. 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.

#commentary #economy

Sponsored Content

How to shift your workforce from AI experimentation to adoption

By Jessica Aftimus Rosa

The real-world economic offshoots of sovereign AI

By Deborah Aarts
Illustration of a plane flying above a mailbox

Increasing healthcare access across Canada

By Deborah Aarts
Paid promotional content

Loading...

Thanks for sharing!

You have shared 5 articles this month and reached the maximum amount of shares available.

Close
This account has reached its share limit.

If you would like to purchase a sharing license please contact The Logic support at [email protected].

Close
Want to share this article?

Upgrade to all-access now

Close
Gift the full article!

You have gifted 0 article(s) this month and have 5 remaining.

Copy link and gift
Copy Link
Email to a friend
Send Email
Gift on Social Media

Recipients will be able to read the full text of the article after submitting their email address. They will not have access to other articles or subscriber benefits.

Photo: STR/AFP via Getty Images

Minister of Foreign Affairs Melanie Joly in Ottawa, in October 2023.

Most Popular This Week

A shot looking down the length of a tunnel with conduits along its sides and railroad-style tracks on its floor. There are two workers in the distance wearing hardhats and headlights and walking toward the camera.
The Big Read

Cameco’s high-stakes bid to be Canada’s next nuclear champion

By Joanna Smith
A group shot of people, many wearing branding black winter jackets, posed in front of an armoured vehicle. Several are sitting on the vehicle, in front of its gun turret.
News

MaRS joins forces with accelerator Vimy Forge to help defence startups

By David Reevely
A side shot of Mark Carney walking up a set of stone steps into the Parliament buildings. He's wearing a dark suit. The straps of a case or tote bag are visible in his right hand.
News

How the Liberals plan to keep their promise on one-year project approvals

By David Reevely
A shot of Dinesh Kumar Patnaik speaking to an interview while seated at an office desk. He's wearing a jacket and open-necked shirt and there is a small Indian flag among the objects on the desk.
Exclusive

India seeks tariff rate quotas for crops, recognition of its economic heft as trade talks with Canada near finish line

By Joanna Smith

In-depth, agenda-setting reporting

Great journalism delivered straight to your inbox.

News

Canada’s landmark ESG case heads to a final decision

By Anita Balakrishnan

Briefing

Matthew Proud-led SPAC threatens to pull out of merger with UniUni

By Catherine McIntyre   |   Sep 25, 2026 | 4:06 PM ET

Ottawa awards Mitacs $162M to create AI-focused work placements

By Murad Hemmadi   |   Sep 25, 2026 | 4:02 PM ET

Ontario puts $30M into Vector Institute for AI adoption

By Murad Hemmadi   |   Sep 25, 2026 | 3:43 PM ET

Best business newsletter in Canada

Get up to speed in minutes with insights and analysis on the most important stories of the day, every weekday.

Exclusive events

See the bigger picture with reporters and industry experts in subscriber-exclusive events.

Membership in The Logic Council

Membership provides access to our popular Slack channel, participation in subscriber surveys and invitations to exclusive events with our journalists and special guests.

Recent Popular Stories

News

Trump steps up effort to block Canadian goods from U.S. procurement—but his order leaves a lot untouched

By Joanna Smith   |   Sep 17, 2026
A nighttime shot of Donald Trump holding his hand while speaking. He's wearing a red hat with "USA" emblazoned on the front.
The Big Read

Cameco’s high-stakes bid to be Canada’s next nuclear champion

By Joanna Smith   |   Sep 23, 2026
A shot looking down the length of a tunnel with conduits along its sides and railroad-style tracks on its floor. There are two workers in the distance wearing hardhats and headlights and walking toward the camera.
Analysis

The ‘red line’ in U.S. trade talks that sets Canada apart from other countries

By Joanna Smith   |   Sep 14, 2026
Donald Trump holding up a board bearing the names of countries and tariff rates. He's standing behind a lectern bearing the U.S. presidential seal.
Exclusive

India seeks tariff rate quotas for crops, recognition of its economic heft as trade talks with Canada near finish line

By Joanna Smith   |   Sep 21, 2026
A shot of Dinesh Kumar Patnaik speaking to an interview while seated at an office desk. He's wearing a jacket and open-necked shirt and there is a small Indian flag among the objects on the desk.
Commentary

Carmichael: The Canada Investment Summit did what it needed to do

By Kevin Carmichael   |   Sep 18, 2026
Prime Minister Mark Carney, wearing a dark suit and tie, stands at a wooden podium in a dark room. The silhouettes of audience members are visible in the foreground. In the background, there is a backdrop depicting a cloudy sky and mountains.
News

MaRS joins forces with accelerator Vimy Forge to help defence startups

By David Reevely   |   Sep 22, 2026
A group shot of people, many wearing branding black winter jackets, posed in front of an armoured vehicle. Several are sitting on the vehicle, in front of its gun turret.

Canada's most influential executives and policymakers are reading The Logic

  • CPP Investments
  • Sun Life Financial
  • C100
  • Amazon
  • Telus
  • Mastercard
  • bdc
  • Shopify
  • Rogers
  • RBC
  • General Motors
  • MaRS
  • Government of Canada
  • Uber
  • Loblaw Companies Limited
logic-logo

Canada's Business and Tech Newsroom

100% human-crafted journalism

Newsroom

  • News Tips
  • AI Policy
  • Editorial Disclosures
  • Story Pitches

Company

  • About Us
  • Terms of Service
  • Privacy Statement
  • Corporate Information

Contact

  • Contact Us
  • Advertise
  • FAQs
  • Work at The Logic

© 2026 The Logic Inc. All Rights Reserved.

Trusted by leaders

Error

Account creation failed.

Please email us at [email protected].

Create Account

[wppb-register form_name=”cozmo-registration-form-for-modal”]

I do have an account
Login
or

[wppb-login]

I don’t have an account