As the trade dispute with Donald Trump’s administration continues unpredictably, Canada’s economic prospects are changing quickly, even daily. Writers are not immune from being swept up. “Breaking Free of Neoliberalism,” the 2024 book by Canadian retired civil servant Alex Himelfarb — clerk of the privy council under three prime ministers — was updated and reissued last week as “Breaking Free of Neoliberalism in Trump Times.” That, however, was several days and several new tariffs ago. Below is the update to the update, freely adapted from the book on the stands by the author.
It is probably the conceit of every generation that they are at a turning point in history, that the choices we make will shape the lives of future generations. But Canada, under attack by our neighbour and closest trading partner, does indeed seem to face just such a defining moment. Are we still to be part of a continental economy with all its benefits and costs or are we ready to build a less dependent, more resilient Canada?
Mark Carney was elected with a near majority on the promise of Canada strong. By virtue of his demeanour, smarts and credentials, he looked like the perfect anti-Trump to take on the job. He said out loud what most leaders were reluctant or afraid to admit: that the America we had organized ourselves around no longer exists; the international order had been ruptured and Canada was on the front lines. His bold agenda to drive economic growth less dependent on the U.S. market won Canadians over.
But it has never been entirely clear what elbows up means in practice. At the same time as Carney was making these arguments, his government was trying to get a deal with the Trump administration that would reduce the tariffs and secure our trading relationship. Whether to buy time or curry favour, the government made a series of concessions including compromising the small steps Canada was taking to secure digital sovereignty. Carney also took pains not “to poke the bear,” even offering comfort to Trump’s regime when it kidnapped the Venezuelan president, and when Israel and the U.S. launched the devastating and illegal war on Iran. Canada, of course, got nothing for the trail of concessions.
The prime minister seemed to be balancing two divergent strategies — reduced dependence and further integration, even apparently considering joining Trump’s ill-considered missile defence scheme and musing about “fortress North America.”
The government’s two tracks probably captured the combination of anxiety and patriotism Canadians were feeling. But it meant that Canadians were given little sense of where negotiations or Canada were headed. If rumours and leaks are to be believed we came close to trading off crucial elements of our sovereignty and locking in unsupportable and likely illegal tariffs for a deal that offered only the illusion of economic stability.
Of course, the chaos of the Trump administration ultimately saved us from any bad deal. Carney, in the face of increasingly outrageous demands from Trump negotiators and emboldened by an evident surge of patriotism among Canadians, did what no other world leader had done: he said no to Trump.
Most Canadians celebrated. That is not to say they weren’t worried about the consequences of the tariffs and the possibility of escalation, but they had had enough. No deal was to be trusted — written in pencil, as Carney concluded — nor was a reasonable deal even possible. This was not a trade war, Canadians understood, but an attack on Canadian sovereignty and identity.
No doubt this surge of patriotism — this willingness to imagine a future less reliant on the U.S., despite the risks — was intensified by the front row seat we have to American decline, to plutocracy run rampant. We have watched a few individuals and corporations accumulate so much wealth and power that they can shape and pollute public discourse, subvert public institutions for their own purposes, interfere in elections, steer world affairs, and accumulate yet more wealth and power. We have watched the often-violent stifling of dissent and the horrific abuse of immigrants. Most Canadians, with the exception of a small northern MAGA rump, understand that the Trump regime represents a profound threat to democratic values, to humanity.
When Carney said no, he was thrust, whether he wants it or not, into a global leadership role in a fight that is taking place across much of the world today: against the threat of fascism and in defence of democracy.
Still, many of our corporate leaders (and the premier of Alberta) continue to push for a deal, urging the PM to do whatever it takes to restore our economic relationship with the U.S. — either in denial about who we are dealing with or prepared to sacrifice our sovereignty and values for their bottom line and the illusion of economic stability. All we need to do, they say, is the familiar recipe: drop our climate agenda, cut taxes, cut regulations, scale back the public sector, integrate with and be more like the U.S.
Trump didn’t create our dependency but by weaponizing it he made painfully evident the costs. Our sovereignty had been compromised for decades. We have always known that sharing a bed with an elephant comes with significant risks. When, in the 1980s, we cuddled in more closely, those risks grew. Now that the elephant has gone rogue, the threat is existential. The 1988 free trade election ushered in the Canadian version of the neoliberal counter-revolution of Reagan and Thatcher. That electrifying election asked whether we were willing to risk cultural, economic and democratic sovereignty for access to the American market. We never got the access we hoped for but we clearly compromised our sovereignty.
For the next four decades the priority of government shifted from the protection of its citizens to the pursuit of economic growth. Government’s main job became to create the conditions for the market to do its magic. What that meant practically was that governments were to create business-friendly policies, removing as many barriers to profit as politics allowed — cut taxes, deregulate, privatize.
After NAFTA, our business class adapted their strategies overwhelmingly to the U.S. market, and organized around continental and global supply chains. Governments backed away from industrial policy, and Canada again became a resource hinterland to the United States. In the competition for investment, we allowed digital infrastructure and our cultural space to be dominated by foreign corporations, limiting our access to our own stories, undermining our ability to control and maintain the privacy of our data, and making us vulnerable to malign interference in our politics and our lives.
All of this contributed to record-breaking inequality, undermining solidarity and trust. Canada’s youth face rising tuitions, a precarious labour market and unaffordable housing. Deep conflicts about carbon taxes and pipelines, amplified by the powerful petroleum sector, have cramped our climate plans and threaten our unity. We have too often pursued development by trampling the rights of Indigenous Peoples instead of building partnerships based on respect. We have, for years, been less active in the international partnerships essential to managing global crises.
And now we face an existential crisis. The fight for survival is nothing new for Canada. Canada is an improbable country, bilingual, multicultural, built on French, English and Indigenous foundations, regionally diverse and geographically sprawling, next door to a giant. Pierre Trudeau once described Canada as “an act of defiance against the history of mankind.” Canada’s survival always took political will, and previous generations always rose to the challenge. Canada’s surge of patriotism in response to the Trump assault shows that spirit is alive. Now begins the fight to build a more resilient Canada.
The prime minister has clear sailing for leading a major reset. He has an almost unprecedented degree of public trust. He has his majority. The parliamentary opposition is relatively weak.
The latitude that all governments get during a crisis comes with considerable risks. In crisis, room for debate is often narrowed. We may accept decisions inconceivable in normal times. We may treat democracy as a luxury that can be sacrificed in the name of urgency. Many become reluctant to question the government. Governments, however, are at their best when challenged. This is no time for Canadians to be on the sidelines.
Building an economy less dependent on the U.S. is clearly urgent. But sovereignty is not just about our ability to grow the economy. How would our decisions on retaliation, the projects we choose or the investments we welcome change if we ask how will they contribute not just to GDP growth but to our sovereignty over our energy, water and natural resources, our digital and cultural spaces, our ability to determine our future and carve out our own place in the world?
Will the decisions we make move our economy up the value chain, create union jobs, help us meet our emission targets, keep wealth and intellectual property in Canada? Investments in mergers and acquisitions or foreign investments to pick off Canadian companies or public assets, for example, would erode sovereignty and democracy. As would allowing American tech giants free rein in Canada, especially given the disruptive power of AI.
We need to be wary of “progress traps,” decisions that get us through a tough moment but create even tougher moments down the road. Investing public funds in a major pipeline, for example, would divide the country, lock us into the past, end up as a stranded asset, and take up resources required for building the energy transformation we need but seem to be backing away from.
Canada is not powerless. We have the ninth largest economy in the world, a diverse, educated population, unique natural resources. We are reliable. Decades of neoliberalism may have blinded us to the range of tools we have successfully used to protect our sovereignty. For example, we used to own things together if they were crucial to our sovereignty and security or to the public good even if not privately profitable.
We need to take care of each other through these difficult times, to spend whatever it takes to protect workers, families and firms hurt by Trump’s assault — especially young Canadians, always hardest hit. Research warns that the combination of economic shocks, economic insecurity, and the absence of state protections fuels right-wing populism. Investing in our programs of education and care is essential for our economy and democracy.
We must not waste the unprecedented solidarity Trump has gifted us. This is a time for compassion, ambition, imagination and robust democracy.
Excerpted from “Breaking Free of Neoliberalism in Trump Times: How Canada Can Strengthen our Sovereignty and Address the American Challenge, Inequality and the Climate Crisis” by Alex Himelfarb. Copyright © 2026 Alex Himelfarb. Published by James Lorimer & Company Ltd. Reproduced by arrangement with the Publisher. All rights reserved.
