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Mark Carney: Canada Prepared for "Tail Risk" of US Attack Amid Tensions
- •Mark Carney stated it would be "irresponsible" for Canada not to prepare for potential US military action, though it's not a "base case" scenario.
- •The Canadian government considered this "extreme tail risk" as part of its risk management planning.
- •Carney's comments come amidst growing US-Canada tensions over tariffs, trade, and Donald Trump's past remarks about Canada becoming the 51st US state.
- •Trump previously ruled out military force but spoke of using "economic force" to integrate Canada into the US.
- •Carney emphasized mutual respect and sovereignty in the Canada-US relationship, despite acknowledging a joking exchange with Trump about potential conflict.
Key Questions Answered
Canadian Prime Minister Mark Carney stated that it would be irresponsible for his government not to prepare for extreme tail risks, which included examining the possibility of US military action as a part of basic risk management. However, he emphasized that this scenario is not considered likely or a base case.
Tensions between Ottawa and Washington have escalated due to disputes over trade, tariffs, and US President Donald Trump's repeated remarks suggesting that Canada should become the 51st US state. While Trump ruled out military annexation in January 2025, he has spoken about utilizing economic force to pressure Canada.
Speaking at the Canada Investment Summit in Toronto, Mark Carney affirmed that Canada and the United States will permanently remain neighbours. He argued that their relationship should be grounded in mutual respect and sovereignty, noting that the two countries achieve their best outcomes when functioning as true partners.
