Canada and India to Restore Relations

Relations between Canada and India have been strained for nearly a year following Canadian police allegations that New Delhi played a role in the June 2023 assassination of a Canadian Sikh activist in British Columbia. The diplomatic dispute, which included expelling top envoys from both countries, led to a significant cooling of ties. However, following a meeting at the G7 summit in June, Prime Minister Mark Carney and Indian Prime Minister Narendra Modi agreed to re-establish a diplomatic presence. This week, the two countries officially acted on that agreement. Foreign Affairs Minister Anita Anand announced that veteran diplomat Christopher Cooter will become Canada's new High Commissioner to India. Cooter has 35 years of diplomatic experience, including a previous posting in New Delhi 25 years ago. Simultaneously, India appointed Dinesh Patnaik, its current envoy to Spain, as its new High Commissioner to Canada. This move is seen as a crucial step toward restoring consular services for Canadians and strengthening a bilateral relationship that is vital for Canada's economy and trade.

Canada Struggles to Secure U.S. Tariff Relief Despite Concessions

Despite efforts to reset trade relations—including Canada rescinding its retaliatory tariffs and scrapping the controversial Digital Services Tax—Canada returned from its latest Washington visit without getting comprehensive tariff relief from the U.S. A Canadian delegation led by Trade Minister Dominic LeBlanc held in-depth negotiations with Commerce Secretary Howard Lutnick, but significant disagreements remain unresolved, especially over critical sectors like steel, aluminum, autos, copper, and softwood lumber. While the delegation made some technical progress, Ottawa now acknowledges that a full rollback of punitive U.S. tariffs may not materialize. Over 85% of Canada-U.S. trade remains tariff-free under USMCA protections, but key sectors remain exposed and politically vulnerable. This outcome positions Canada among the few major trading partners—unlike the EU, UK, Japan, or South Korea—that have yet to reach a deal with the U.S. leadership. Critics argue Prime Minister Carney’s conciliatory pivot is yielding little in immediate terms, while some business leaders and economists appreciate the pragmatism in steering Canada away from escalating retaliatory fares toward a “long game” strategy that emphasizes stability and structural resilience.

In a striking exercise of political messaging and public sentiment, Ontario Premier Doug Ford’s Progressive Conservative Party dropped nearly C$300,000 on custom “Canada is Not for Sale” hats during their recent campaign. The branded caps—produced by a local Ottawa-based firm—became highly sought-after symbols of Canadian sovereignty amid escalating U.S. rhetoric. Priced at around C$23 each, over 600 of these hats were distributed to campaign staff and supporters, generating national media attention. The campaign framing tapped into broader anxieties over Canada’s autonomy and made striking visuals for election marketing. Ford’s populist styling arguably helped consolidate voter support in traditional Conservative strongholds, contributing to the party’s rare achievement—a third majority term in office. The “hat strategy” demonstrates how resonant merchandising, when aligned with cultural or geopolitical anxieties, can shape political narratives as effectively as policy.

Prime Minister Mark Carney made a surprise visit to Kyiv during Ukraine’s Independence Day celebrations, becoming one of the few Western leaders to visit the frontlines, underscoring Canada’s deepening commitment to Ukrainian sovereignty. During the trip, he affirmed a $2 billion military aid package, including a strategic breakdown: $835 million directed toward armoured vehicles, small arms, medical supplies, and spare parts; $680 million earmarked for NATO-prioritized capabilities, including air defence; and $220 million allocated for drone and counter-drone systems, to be co-produced with Canadian and Ukrainian industries under a new Letter of Intent. An additional $100 million supports ammunition sourcing via the Czech Ammunition Initiative. Carney also pledged $31 million for reconstruction, digital resilience, and humanitarian assistance, including programs to counter disinformation. The visit and robust support package signal Canada’s willingness to underscore its role in NATO and put weight behind values-based diplomacy.

Data To Watch

What’s Next for Canada’s Economy? Key Data Releases to Keep an Eye On.

These upcoming indicators could shift market sentiment, alter fiscal strategies, and impact regulatory decisions in real time. Stay ahead with these critical dates:

1. August Labour Force Survey — September 5, 2025

After the shocking job losses in July, all eyes will be on this report. It will confirm whether the labour market's weakness was a one-off event or a new, sustained trend. The result will be a major factor in the Bank of Canada’s decision-making process.

2. August Consumer Price Index — September 16, 2025

The final piece of the puzzle before the Bank of Canada's meeting, this inflation report will show whether the cooling of core inflation seen in July continued into August. If the data shows inflation is still easing, it will strengthen the case for a rate cut. Conversely, a hotter-than-expected number would likely prompt the Bank to hold its rates steady

Final Thoughts

This week’s developments illustrate Canada’s tightrope walk through rising trade tensions and geopolitical shifts. Prime Minister Carney’s efforts to reset ties with Washington—by matching USMCA exemptions while preserving key steel and auto tariffs—reflect a strategic recalibration after stalled talks failed to ease pressure on exporters. In Ontario, a creative blend of populism and marketing signalled broader concerns over sovereignty during the “Canada Is Not for Sale” campaign. Meanwhile, global leadership took precedence as Carney made a surprise visit to Kyiv, reaffirming Canada’s commitment to Ukraine with C$2 billion in military support. Together, these moves highlight a Canada navigating trade winds, domestic narratives, and global values with nuance and determination.