Canada ‘will stand up to a bully’, says Mark Carney

He is currently one of five candidates in the running to succeed Prime Minister Justin Trudeau – and has so far secured the largest support base among Liberal MPs, external.

The leadership race will conclude on 9 March.

The winner will replace Trudeau – who announced his intention to resign in January after nine years in office – both as prime minister and party leader.

Canada is then required to hold a federal election to elect a new government on or before 20 October, with the Liberal party currently trailing their Conservative rivals in the polls.

In response to the tariff announcement, Carney told Newsnight that “President Trump probably thinks Canada will cave in”.

“But we are going to stand up to a bully, we’re not going to back down,” he said.

“We’re united and we will retaliate.”

The former Bank of England governor said the tariffs are “going to damage the US’s reputation around the world”.

“They’re going to hit growth. They’re going to move up inflation. They’re going to raise interest rates,” he said.

He added that it’s the “second time” in less than a decade that the US has “in effect, ripped up a trade agreement with its closest trading partner”.

In 2020, towards the end of Donald Trump’s first term, the US-Mexico-Canada Agreement (UCMCA) came into effect – effectively an update to Nafta, the agreement between the three countries which had been in place since the 1990s.

Economists have suggested the newly imposed tariffs could have a devastating immediate impact on Canada’s economy – while also leading to higher prices for Americans.

Tariffs are a central part of Trump’s economic vision. He sees them as a way of growing the US economy, protecting jobs and raising tax revenue.

Outgoing Prime Minister Trudeau has said Canada’s response will be “forceful” and “immediate” to the new tariffs.

Trump said on Friday that Canadian oil would be hit with lower tariffs of 10%, which would take effect later, on 18 February.

The president also said he planned to impose tariffs on the European Union in the future, saying the bloc had not treated the US well.