By Jeremy Kinsman

July 9, 2025

Since the dawn of this century, the “international community” of developed countries, now democracies, that have dominated world affairs for centuries have seen that economic and political domination challenged by the rise of new rivals. Countries like China, Brazil, South Africa, and India do not support the democracy-led international community’s values on a whole range of files, disputes, conflicts and crises.

The world is fractionalizing into two distinct orders. Where does that leave Canada?

Michael Ignatieff has warned of the possibility of a reconstruction of a 19th century arrangement of “spheres of influence,” mainly under three super-nationalist powers, Putin’s Russia in Eurasia, Xi’s China in Asia, and Trump’s US in North America. This construct would essentially end the US role in leading a rules-based international order, or in intervening in defence of others abroad (whether Donald Trump’s recent recommitment of the US to the terms of NATO’s Article 5 mitigates against that construct remains to be seen).

All other developments, realignments and realities that come about as a result of these shifts being equal, Canada must be clear it is not going to accept docile inclusion in some sort of US “sphere.”

Is such a notion on Trump’s mind? Trump’s former National Security Adviser told Fareed Zakaria that Trump’s mind is like “an archipelago of a million dots.” He can’t connect them into a coherent plan beyond transactional deals, and nor can anyone else.

His MAGA movement stands for whatever he decides. But it is upending geopolitical, economic, and even ideological relationships and realities. Trump associates openly support ultra-right illiberal political parties opposing the leadership of European democracies.

There is therefore a kind of notion of an isolationist, nationalist, and yet expansionist America that propels Trump and his movement, and it is adversarial to Canadian sovereignty, to say the least.

The threat to use “economic force” to annex Canada galvanized Mark Carney’s astonishing political victory in Canada. His performance in politely but firmly defying Trump’s annexation threat, combined with his reputation as a competent economic leader and builder, has boosted Carney’s reputation and profile with other democracies, where principled leadership in the face of Trump’s aggressions on tariffs and seeming desertion of Ukraine against Russia, has seemed somewhat scant.

Carney memorably told Trump in the Oval Office, that as a real estate veteran, he could appreciate that Canada’s “owners” had affirmed in the recent election that the country was not for sale. “Never say never,” Trump cautioned. Carney’s reply, “Never, never, never, never, never,” was lost to US media it seems, in the hubbub, but the position was clear. Is it viable?

Weeks later, in a seemingly congenial encounter at the G7 in Alberta that Carney chaired (which Trump attended for a day before flying back to Washington to bomb Iran), the two leaders agreed to try to settle all bilateral issues by July 21st. Meanwhile, Carney goosed up Canada’s military spending commitment very considerably, enabling Canada to join a NATO consensus to reach 5% by 2035, facilitating a quarrel-free NATO Summit in The Hague a week later, orchestrated to give Trump a “win,” and retain US commitment to NATO. It did seem like Carney was trying hard to reduce friction with the US.

Yet, on June 29, Trump called off the negotiations with Canada, citing Canada’s law, passed in the waning days of the Trudeau Government, to impose a 3% tax, about to come due, on the billions of dollars earned by US showcase corporations in Canada via cross-border digital sales of services: Uber, Amazon, Google, etc.

In short order, Carney rescinded the tax. Almost immediately, the White House celebrated that Carney had “caved” and Trump had got another “win”. In Canada, those who doubted that Carney could stand the heat worried aloud.

The “DST” issue has been under discussion in the OECD for a decade. Its resolution for international tax purposes is important. The UK, France, and Italy decided each to institute national digital tax regimes on their own.

We have to connect to like-minded partners and be a protagonist in the redemption of multilateral protections for the world’s climate, commerce, and efforts to deter conflict. ‘Elbows up’ is not just a domestic nostrum.

The US objected, but the only Trumpian explosion was against Canada. Why? Because he could. Maybe international admiration for Carney “standing up to him” was getting up his Presidential nose. More likely is the fact that in the US treasure-house, these Big Tech service industries are leading the world (though China’s are creeping up). And, in Trump’s mind, for purposes of “rights,” Canada is part of a notional US-owned North American market.

Some things count to the US more than others. Historically, in film distribution, publishing, even music, it had been very hard to establish a distinct Canadian market for rights to import and distribute copyrighted work, a real handicap to the financial viability of Canadian cultural industries.

In 1988, Minister of Communications Flora MacDonald introduced a modest bill to enable Canadian film distributors to compete for the right to handle foreign films (not US films wholly financed by the US studio distributor). Ronald Reagan went ballistic, and the NAFTA negotiations hung by a thread until Canada watered down the bill. People surmised it was because Reagan was a creature of the film industry.

It was really because the film industry was a crown jewel of American soft power and identity — represented in Washington at the time and for decades before and afterward by formidable former LBJ Press Secretary Jack Valenti, the most powerful DC lobbyist of his era as head of the Motion Picture Association of America. As evidenced in the front rows at Trump’s second inauguration,the US tech behemoths targeted by the DST hold similar influence today.

Carney knew that. He had, no doubt, expected to deal the DST out in negotiations. It’s a complex subject and it wasn’t a great legislative fix. Its time will come.

I have heard the word “Finlandization” apply to this moment. Between 1939 and 1944, Finland fought valiantly against Soviet invasion, ending in 1944 with Finland ceding about 8% of its territory. In 1948, Finland signed a treaty with the USSR that recognized Finland’s sovereignty as long as Helsinki stayed neutral in the oncoming Cold War and did not challenge the USSR position in geopolitics.

It lasted until the USSR broke apart in 1991. Finland is today a stalwart NATO member and a robust adversary of Russia in the Ukraine war. During the intervening years, Finland ran an activist UN and international policy focused on humanitarian issues, development, and conflict prevention. Former President Martti Ahtisaari won the Nobel Prize for conflict mediation. (He also spearheaded the UN Convention against International corrupt practices — which, not surprisingly, the US has recently abandoned).

Austria followed a similar path after it was given back its sovereignty by WW2 occupation powers in 1955, on the condition of its staying out of great power politics. Austria also ran an active UN apolitical program, especially under controversial Secretary General Kurt Waldheim, and succeeded in luring several UN agencies to Vienna.

“Finlandization,” however worthy it was for the Finns, is not enough now for Canada. We have to connect to like-minded partners and be a protagonist in the redemption of multilateral protections for the world’s climate, commerce, and efforts to deter conflict. “Elbows Up” is not just a domestic nostrum.

We need project partnerships to dilute our dependence on an unpredictable US, and we need to deal with India and China on objective, rules-based terms.

We need to stand up for what is right. Open a consulate in Nuuk, Greenland as a useful demonstration of solidarity. Partner with the Nordic-Baltic 9 in building protected Arctic corridors. Press for infrastructure projects with the EU and others. Build our offshore asset portfolio.

The US won’t be what it was to Canadians. The old world order is behind us. We should make sure that our position in North America including Mexico is beneficial, and our active presence in the changing world is up to our ideals and expectations.

Policy Contributing Writer Jeremy Kinsman served as Canada’s ambassador to Russia, high commissioner to the UK, ambassador to Italy and ambassador to the European Union. He also served as minister at the Canadian embassy in Washington. He is a Distinguished Fellow of the Canadian International Council.