by Sundance
Canada is in a really weird place and I’ve all but given up trying to understand it. At a certain point you just have to accept that Prime Minister Mark Carney is operating on an agenda for that country that is disconnected from all traditional perspectives around national best interest.
For example, the Canadian trade relationship with the single state of Texas, USA, is larger than the total Canadian trade relationship with the European Union, yet Carney is spending an inordinate amount of time chasing a trade deal with the EU that is never going to amount to anything. Seriously, it’s a literal dead-end.
First, there’s not a scintilla of alignment between the USMCA (Canada says CUSMA) and the European Union. There’s two entirely different sets of economic baselines, standards, rules and regulations between trading with the United States and trading with the EU. If Canada wants a trade relationship with the USA, they have to give up trying to structure their economy to align with the EU; both systems are entirely different.
Canada cannot have a comprehensive Free Trade Agreement with the EU that contains structural regulations on the flow of goods that substantively restricts Canadian products from entering the USA. The same issue exists with China.
Now, if Canada wants to separate from the North American trade agreement, then by all means – go for the deal with the EU and/or China. However, as long as Canada wants to retain their USA dependencies and benefits, there’s no mechanism that permits an FTA of substance with Europe or China. Mark Carney cannot have it both ways.
Secondly, do you remember when CTH noted the second quarter GDP for Canada appeared to be entirely manipulated by the movement of Dutch Central Bank gold from Ottawa to London. People laughed at me for noticing the timing and the mysterious (completely unexplained) gain in economic output in the second quarter. Q4 2025 was flat, Q1 2026 was negative, then mysteriously Q2 had a bounce – and, well, now Q3 is showing a return to flatline or negative.
OTTAWA—Canada’s economy cooled in the latest quarter after activity unexpectedly stalled two months running and early data points to a slight contraction in September.
Gross domestic product was essentially unchanged in August from the month before at 2.372 trillion Canadian dollars, the equivalent of US$1.695 trillion, Statistics Canada said on Friday. That was softer than the 0.2% expansion expected by economists following a similarly flat result in July.
The national data agency’s advance data indicates output edged down 0.1% in September.