Ottawa: The global order that defined the post‑Cold War era is finished. The World Trade Organization no longer restrains economic coercion. The European experiment, once held up as a model of post‑sovereign integration, now buckles under the weight of political fragmentation and strategic incoherence. What began as a globalist project to liberalize trade and embed democratic values has instead enabled the rise of the Chinese Communist Party’s model of state capitalism—while systematically eroding the economic sovereignty of middle powers. In 2025, Canada confronted the full consequences of that legacy. Tariffs, coercion, and foreign interference replaced predictability, reciprocity, and trust. Economic independence, strategic clarity, and national resilience are no longer optional, but a wake-up call to seize our sovereignty back.
POLITICAL DISRUPTION AT HOME: A PARTY, A RESIGNATION, A RESET
The year began with a domestic upheaval that shattered the political status quo. Justin Trudeau’s resignation, triggered by Chrystia Freeland’s abrupt exit, exposed deep fractures in the Liberal establishment. It was not just personal fatigue or policy disputes—it was a revolt against a worldview increasingly detached from reality. Mark Carney’s ascent to the leadership was swift and, in the eyes of many, a corrective. His credentials as a central banker and global financial figure lent him credibility. But they also brought expectations—and baggage.
Carney did not arrive with a blank slate. During his tenure as Governor of the Bank of England, he was instrumental in making London an offshore clearing hub for renminbi transactions. Marketed as pragmatic diplomacy, the move supported Beijing’s long-term ambition to internationalize the Chinese currency and challenge the U.S. dollar as the world’s reserve. The calculus at the time; that deeper financial integration would lead to strategic convergence—has since been shattered.
More recently, Carney’s connections to Brookfield Asset Management brought new scrutiny. In 2024, the firm helped organize a US$276 million loan package aimed at propping up distressed real estate assets in Shanghai, just as China’s property sector teetered on collapse. While standard within global capital markets, the timing and optics were troubling. For some, it appeared that Western capital under elite stewardship with special access to Xi Jinping continued to absorb China’s risk, while Brookfields investment in faltering Shanghai real estate while now propped up make both the PM and Canada answering to calls surrounding how objective our new strategic partnership could be?
AMERICA REVERTS AND CANADA IS FORCED TO RETHINK
The true test came not from Beijing, but from Washington. Early in 2025, the United States imposed sweeping tariffs on Canadian goods under the rarely invoked International Emergency Economic Powers Act (IEEPA). The justification—framed as national security—sidestepped conventional diplomacy and targeted core Canadian exports. Ottawa responded with its now-infamous Elbows Up campaign, a domestic push for economic resilience and reindustrialization. Yet, despite widespread political pressure, Canada chose to drop its counter-tariffs—not out of weakness, but as a strategic calculation to avoid inflaming tensions ahead of the scheduled USMCA review.
That review, now imminent, will be decisive. Canada must enter with a clear strategy be prepared to give ground on procedural irritants, but hold firm on structural sovereignty. Most importantly, both Canada and Mexico must insist on full enforcement of Section 26.1 of USMCA, which aligns trade policy with U.S. anti-forced labour laws under the Uyghur Forced Labor Prevention Act (UFLPA). This is non-negotiable. Any continental supply chain dependent on sanctioned Chinese firms or exploitative labour not only violates treaty obligations—it corrodes the ethical foundation of North American trade itself. In the new US national security document it is clear that the US has adopted a regional and hemispheric where once solid alliances are not transactional without full security guarantees to allies who don’t accept the US’s world view of what it is to be a democracy and to stand up for freedom and human rights.
Canada’s appointment of Dominic LeBlanc as Minister of One Canadian Economy marked a domestic awakening. Internal trade reform, infrastructure acceleration, and energy policy were no longer fiscal issues—they were sovereignty imperatives. The pending Supreme Court ruling on IEEPA may offer temporary legal clarity. But even a favorable decision cannot substitute for structural preparedness. Canada must assume that the age of stable, rules-based bilateral trade is over—and prepare accordingly.
As I wrote earlier this year, “Trade built on trust is now governed by threat. It’s not rules we’re negotiating anymore—it’s resilience.” Apparently the Prime Minister has pulled a page from President Trump’s book itself by providing the PMO and Ministers with more power to get the job done which to achieve must bypass the civil service or as many might observe, Canada’s DEEP STATE.
CHINA: ENGAGEMENT OR ENTRAPMENT?
The APEC Summit in 2025 marked the first formal meeting between a Canadian prime minister and Xi Jinping in years. Carney described it as a “turning point.” Critics saw something else—a dangerous echo of past assumptions.
For Charles Burton and other observers, the tone of Carney’s engagement was deeply problematic. His conciliatory language, in their view, not only undercut strategic clarity but sent ambiguous signals to both Beijing and Canada’s Chinese diaspora. Diaspora communities already live at the intersection of loyalty politics, state interference, and civic suspicion. When national leaders blur strategic lines, they increase vulnerability—not just at the geopolitical level, but within our own domestic social fabric.
Canada’s ongoing trade war with China—featuring tit-for-tat tariffs on agriculture, energy, and manufacturing inputs—is not merely economic. It is structural. China sees Canada as a raw materials appendage—valuable only when compliant. Strategic engagement must therefore be grounded in reciprocity and caution, not diplomatic theatre.
Carney’s track record, both at the Bank of England and Brookfield, rightly raises concerns. When finance and statecraft are no longer separable, perception becomes reality. And in this reality, Canada’s financial and political elite must be seen to serve Canadian sovereignty, not external risk markets.
INDIA: ALIGNMENT WITH STRATEGIC VALUES
In contrast, Canada’s revived engagement with India offers not just commercial potential but strategic alignment. After years of diplomatic frostiness, Ottawa and New Delhi have reopened Comprehensive Economic Partnership Agreement (CEPA) talks. The ambition is high—double bilateral trade by 2030—and the political intent is finally aligned.
India’s economic trajectory, combined with its democratic framework and shared Indo-Pacific interests, makes it a natural counterbalance to China and a credible diversification partner. As Baxendale argued earlier this year, “India isn’t just a market hedge—it’s a values-based bet on a parallel future.”
Canada must treat this relationship not as optional but as foundational. The Indo-Pacific is no longer abstract. It is where trade, security, and sovereignty now intersect.
WEAPONIZED DIASPORA AND FOREIGN INTERFERENCE
Alongside these state-level realignments, 2025 exposed Canada’s growing vulnerability to diaspora politicization and foreign interference. Intelligence briefings, parliamentary inquiries, and public controversy revealed how both China and other actors have sought to manipulate diaspora communities for geopolitical influence.
This is not a crisis of multiculturalism—it is a test of institutional resilience. Canada must draw clear lines between civic participation and coercive leverage. As I have warned, failing to do so risks “turning the very openness we cherish into the very tool that undermines us.” In Sam Cooper’s Wilful Blindness a perennial bestseller he outlines countless cases of CCP infiltration and influence that has undermined Canada’s ability to act independently for more than two decades.
Loyalty should not be a political trap. But it must never be assumed immune from manipulation—especially when ambiguity comes from the top.
CONTINENTALISM: DEAD OR DORMANT?
The long-touted vision of a North American trade and security compact is, at best, suspended. The idea of a formal continental alliance has been undercut by U.S. unpredictability and economic nationalism. What remains is cooperation by necessity—in supply chains, in energy, in intelligence but no deeper institutional trust.
Canada must continue engaging Mexico and the U.S. wherever practical. But the fantasy of a trilateral bloc governed by common rules must be replaced by realism. The center no longer holds. And sovereignty, once ceded for integration, must now be reasserted for survival. However, I have renewed hope that Mark Carney may seize this as his golden opportunity and work with Washington on their well-founded concerns that Canada has become a world hub for organized crime, espionage and global financing of cartels as well as illicit state sponsored operations.
2025: A RECKONING, NOT A DISRUPTION
This was not a year of diplomatic hiccups or political noise. It was the collapse of a system—and the revealing of a strategic void.
CANADA NOW FACES A CLEAR CHOICE
Continue hedging, deferring, and integrating into frameworks built to serve others. Or rebuild from first principles—grounded in sovereign trade policy, resilient domestic institutions, military and defense investment and build it with democratically aligned partners who share more than just commercial goals. It will mean building on the values that build this nation last century while integrating fairness and diversity aligned with the new national priorities.
The tools are already in our hands: legislative authority, energy wealth, technological capacity, and democratic legitimacy. What remains is the courage to use them without apology.
This can still be Canada’s century as long as our new Prime Minister chooses the right partners and hence the right path, there is no reason that Canada along with India can’t achieve their respective goals.
2026 will not offer comfort. But it offers clarity and a second chance. Illusions are easily shattered but sound practical politics will lead to the success we all dream of.
Dean Baxendale is Publisher, CEO of the China Democracy Fund and co-author of the upcoming book, Canada Under Siege.
