Prime Minister Mark Carney set out the policy direction for Canada in the emerging new world order in a speech delivered at the World Economic Forum in Davos on January 20th, 2026. The much-acclaimed address provided the Prime Minister’s frank assessment of how his government views the current state of world affairs which he describes as being at a “turning point for Canada and the world”. The full address can be found HERE and provides many insights into the policy directions Canada will be taking going forward – including on trade and economic policy – all of which can be expected to affect Canada’s trade negotiation including the review of the Canada-United States-Mexico Agreement (CUSMA) which will take place this year and is of great importance to our industry.
The following summarizes the relevant highlights of the Prime Minister’s address for our industry followed by several observations on the potential implications for the CUSMA review and ultimately our industry.
Relevant Highlights:
- The “Rules-Based International Order”, on which countries like Canada prospered for decades – is now fading and “the multinational institutions on middle powers have relied -the WTO, the UN, the COP – the very architecture of collective problem solving, are under threat.”
- “We are in the midst of a rupture, not a transition.”
- Although from time to time the strongest powers did “exempt themselves when convenient” from the rules-based order, the “great powers have begun using economic integration as weapons. Tariffs as leverage. Financial infrastructure as coercion. Supply chains as vulnerabilities to be exploited.”
- As a result, many countries are now concluding that they must “develop greater strategic autonomy: in energy, food, critical minerals, in finance and supply chains.”
- For now, great powers can afford to “go it alone” as they have “the market size, military capacity, and leverage to dictate terms”. Middle powers do not. When middle powers “only negotiate bilaterally with a hegemon”, they “negotiate from weakness.” The “accept what’s offered” and “compete with each other to be the most accommodating”. “This is not sovereignty. It’s the performance of sovereignty while accepting subordination.”
- “In a world of great power rivalry, the countries in between have a choice: compete with each other for favour or to combine to create a third path with impact” where “the power of legitimacy, integrity and rules remain strong” where countries choose to wield them together.
- For Canada, the government is both building “strength at home” through tax policies, removal of federal barriers to interprovincial trade, and fast tracking a trillion dollars of investments including in new trade corridors, AND “rapidly diversifying abroad” through:
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- Increasing strategic partnerships with the European Union
- Concluding 12 other trade and security agreements on four continents in six months
- Recently concluding strategic partnerships with China and Qatar
- Entering negotiations for free trade pacts with India, ASEAN, Thailand, Philippines, and Mercosur
- Championing efforts to build a bridge between the Trans-Pacific Partnership and the European Union that would create a new trading block of 1.5 billion people (Canada is a member of the TPP and has a trade agreement with the E.U.)
- And pursuing “variable geometry” to solve global problems – working with “different coalitions for different issues based on common values and interests”.
- Canada has what the world wants – energy, critical minerals, capital, talent – and is a “stable and reliable partner in a world that is anything but. A partner that builds and values relationships for the long term.”
- “The old order is not coming back. We shouldn’t mourn it. Nostalgia is not a strategy.”
- “The powerful have their power. But [the middle powers] have something too – the capacity to stop pretending, to name reality, to build our strength at home and to act together. This is Canada’s path….and it is a path wide open to any country willing to take it with us.”
Observations & Potential Implications for our Industry:
- For the upcoming CUSMA review:
- North American economic integration under nearly four decades North American free trade agreements – which created efficiencies and prosperity for our countries and industry – is now viewed as a “vulnerability” with tariffs and trade policy being weaponized against Canada by the U.S.
- Canada is not prepared to accept whatever demands are made of it by the Trump administration just for the sake of “getting a deal” at any cost.
- Trumps’ policies, statements, threats, and actions over the past year have only served to undermine trust in the United States honouring its’ commitments or obligations in any existing treaty or trade agreements, or in any future agreements which it may sign.
- Trump’s demands to annex Greenland (which would violate both the U.N. & NATO charters to which the U.S. is a signatory), his recent threat to imposing 100% tariffs on the European countries that do not support this demand, and his recent tariff threat against Canada, all serve to strengthen a growing view that any concessions made by Canada to secure a renewed CUSMA would only be good until Trump changed his mind or felt offended. Consequently, the certainty and predictability provided by CUSMA or any other agreements with the United States, may be very temporary.
- It is therefore unlikely that Canada will agree to any significant concession demanded by the U.S. in the negotiations as giving up something of importance to Canada will not get any benefits that Canada can rely on. Consequently, it can be anticipated that changes to the agreement will be those that are either of mutual benefit or provide Trump with an “apparent” win of little real consequence if CUSMA is to be renewed.
- The recent comments by the U.S. Ambassador to Canada that Canada will have to accept “some tariffs” – and to push for the lowest rate (about 10%) – does not bold well for the negotiations (and could mean the eventual return of Canadian counter-tariffs on many of our products if the CUSMA tariff exemptions are not maintained).
- For this reason, Canadians and Canadian industry are coming to recognize that there may no longer be a CUSMA (or tariff free trade) or that the commitments of the United States in any general or sectoral trade agreements may only be as good as the Trump administrations willingness to keep them at any point in time.
- What is also becoming clear is that the most effective effort to secure a mutually beneficial CUSMA and ensure that it is kept by the Trump administration, requires two separate actions. Firstly, U.S. based industry and Americans must exert as much pressure as possible on the Trump administration to maintain and keep CUSMA as tariff-free trade is of mutual benefit to the North American economy. And secondly, Canada must demonstrate our own internal economic strength domestically and internationally through expanded trade agreements and alliances such that Canada is viewed as negotiating from a position of strength rather than from vulnerability as Trump currently portrays us.
- This is exactly what Prime Minister Carney was laying out in his Davos speech – creating the economic strength, both domestically and internationally with allies and trading partners – to provide strength and negotiating room in this emerging world order.
- For the cosmetic and personal care products industry, Cosmetics Alliance continues to work closely with our industry colleagues at both the Personal Care Products Council in the U.S. and CANIPEC in Mexico. Our objective is to secure tariff free access for our member’s products across all three jurisdictions and to secure further regulatory improvements to reduce non-tariff barriers. As is evident, our sector is just a small part of a very large and complicated negotiation that involves many factors well beyond our control – but all three of our associations will continue to be actively engaged in the CUSMA process to both keep our members informed as events develop and to represent the best interests of our industry.
