GOLDSTEIN: 'Elbows up' was Liberal rhetoric while policy was 'quietly fold' on tariffs

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As it turns out, Prime Minister Mark Carney’s election strategy of publicly talking tough about taking on U.S. President Donald Trump in his tariff/trade war, while practising a far more conciliatory approach behind the scenes, was hiding in plain sight all the time.

Ian Bremmer, president of New York-based Eurasia Group, a political risk analysis firm with close ties to Carney, accurately predicted this strategy in a March 26 column titled, “The end of the transatlantic relationship as we know it.”

Unlike Mexico, which took a more conciliatory approach, he wrote, “Canadian leaders have a political incentive to put up a bigger fight because Trump’s threats toward Canada’s economy and sovereignty have sharply inflamed nationalist sentiment north of the border in the run-up to the April 28 elections. However, I expect Ottawa will quietly fold shortly after the vote to ensure that ongoing relations with the U.S. remain functional.”

This now appears to have been the Liberals’ successful election strategy all along.

Carney initially said “dollar-for-dollar retaliatory tariffs by Canada” against the U.S. “should be a given” during the Liberal leadership race – “elbows up” as the popular saying went.

But after becoming prime minister, Carney said this was unrealistic given that the Canadian economy is “a tenth the size of the U.S.”

According to a Bloomberg News report in the National Post last week, on May 7 – the day after Carney’s cordial meeting with Trump in the White House and nine days after Carney won the election – “Canada … effectively suspended almost all of its retaliatory tariffs on U.S. products,” having “announced a six-month tariff exemption for products used in Canadian manufacturing, processing and food and beverage packaging, and for items related to health care, public safety and national security.

“Automakers got a break, too: companies that manufacture in Canada, such as General Motors Co., are allowed to import some vehicles into Canada tariff free.”

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(The finance department announced these moves in a little-noticed April 15 news release becoming effective, as my Postmedia colleague Brian Lilley reported, when they were published in the Canada Gazette on May 7.)

Tony Stillo, of Oxford Economics, told Bloomberg that based on his firm’s calculations, Canada’s tariff-rate increase on the U.S. is now “nearly zero,” adding, “It’s a very strategic approach from a new prime minister to really say, ‘We’re not going to have a retaliation.'”

That’s very different from Carney’s messaging during the campaign.

Was Bremmer able to predict the Liberals’ strategy in advance because of the close ties between Carney and Eurasia Group?

Gerald Butts, former principal secretary to prime minister Justin Trudeau and an adviser to the Carney campaign, is vice-chairman of the Eurasia Group.

Evan Solomon, the newly-elected Liberal MP for Toronto Centre, is a longtime friend of Carney, who appointed him as Canada’s first minister of artificial intelligence last week. Prior to that, Solomon was publisher of GZERO Media, a Eurasia Group subsidiary.

Carney’s spouse, Diana Fox Carney, joined Eurasia Group in 2021 as a senior advisor on climate and energy policy.

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Conservative MP Michelle Rempel Garner noted these connections in a March 27 substack column where she asked, “Why is a firm closely related with Mark Carney and the Liberals telling the world to expect that Canada will acquiesce to American demands after the election … did Bremmer arrive at his conclusion Canada would ‘have to accept Trump’s terms eventually’ and ‘Ottawa would quietly fold shortly after the vote’ from discussions with any of these people? Should it be taken as the Liberals’ post election plan for tariffs should they form government … it’s a question worth asking.”

“That’s because … it’s not a stretch to imagine that after tricking the Canadian electorate into giving them a fourth term, the Liberals would, in fact, simply capitulate to Trump’s demands,” Rempel Garner said while noting, “Trump’s recent comment that he’d prefer the Liberals to win because it would be better for him.”

Responding to such observations on social media, Bremmer said on X on March 27 that his commentary, “assumes (Pierre) Poilievre wins the election (our base case, but it’s close)” because “he is more ideologically aligned with Trump,” even though polls in late March showed the Liberals ahead of the Conservatives.

There’s nothing surprising about the Liberals pursuing one strategy in public and a different one in private for political gain. And while the economic threat posed by Trump’s tariffs hasn’t gone away, he appears, for now, to be backing off the most severe sanctions aimed at Canada.

That said, Carney’s “elbows up” rhetoric during the campaign appears to have been done mainly for show.

lgoldstein@postmedia.com