Strategic Reflections: The Indo-Pacific Imperative for Canada’s New Government

In March, shortly after becoming Canadian Prime Minister, Mark Carney travelled to London, U.K., to meet with British Prime Minister Keir Starmer and to Paris, France, to meet with French President Emmanuel Macron. The meetings were meant to underline the importance of Canada's economic and security relations with Europe in light of the threats and actions coming from the administration of U.S. President Donald Trump. If the U.S. is no longer a trustworthy ally, then Canada needs to strengthen its relations with "reliable allies." 

What does a ‘rapprochement’ with Europe mean for Canada's relationship with its allies in the Indo-Pacific? Does it mean the end of its Indo-Pacific Strategy? If Canada is going to deal with a belligerent U.S. by trying to negotiate a new trade agreement to maintain access to U.S. markets, and reinforce economic and security co-operation with the European Union and U.K., there is a risk that there will not be enough bandwidth — that is, time, people, and money — to invest in the already neglected Indo-Pacific region, undoing the small gains made in recent years. This would be a mistake on Canada’s part.

The reason for Carney’s primary focus on Europe is that Canada’s relationships with the EU and the U.K. are the ones that can be most helpful to us in dealing with the U.S. because the Europeans find themselves in a situation very similar to Canada’s. While Europe may be less dependent economically on the U.S. than Canada, it faces a bigger security threat than we do because of Russia. 

For the time being, it is difficult for Canada to engage with Japan, South Korea, and the Association of Southeast Asian Nations (ASEAN) countries in opposing the U.S. These Indo-Pacific countries have not decided to reduce their dependence on the U.S. — yet. Their geostrategic challenge, unlike that of Canada and its European partners, is that they need the U.S. to balance against China. As such, they are focusing on securing their relationships with the U.S., which is why they have not retaliated against Trump’s ‘reciprocal’ and auto tariffs. The same security imperative applies to Australia and New Zealand. 

For Canada, this means that our Indo-Pacific partners are currently less of a priority than Europe, especially as we focus on reducing our economic and security dependence on the U.S. However, enhancing our co-operation with European allies should not come at the expense of our relationships with Indo-Pacific partners. 

In a world that is moving quickly toward the establishment of regional spheres of influence dominated by three illiberal great powers (China, Russia, and now the U.S.), Canada and its liberal-democratic allies in Europe, the Indo-Pacific, and Latin America must work together to form a countermovement. 

This countermovement should focus on expanding economic ties among its members to bypass the three great powers, co-ordinating to reduce its members' security dependence on the U.S., and maintaining the international institutions that underpin the international rules-based order. In other words, this countermovement must protect its members' economies and security and offer an alternative to countries in the rest of the world that do not want to become vassals to one of the great powers.

Canada, the EU, and the U.K. are best placed to lead this countermovement or, in other words, create their own sphere of influence. In addition to working to enhance their economic and security ties, they should also co-ordinate to engage with their Indo-Pacific partners. For instance, they could work together to fast-track the EU’s entry into the CPTPP. This could be done relatively easily, given that the EU already has trade agreements with many CPTPP members. Moreover, this group of partners could explore how to make all the trade agreements that Canada, the EU, and the U.K. have with Indo-Pacific countries to make them more interoperable by, for example, facilitating the cumulation of rules of origin.

To convince Indo-Pacific countries to accept reducing their security dependence on the U.S., however, Canada and its European partners will have to bring serious resources to the table. Although Canada, Europe, Japan, South Korea, and other Indo-Pacific allies will want to preserve their security and defence co-operation with the U.S. for as long as possible, they must also start co-operating closely to build their own parallel security alliance with shared and co-ordinated resources because U.S. security guarantees can no longer be counted on. As Philippe Lagassé, an associate professor at Carleton University, described it: "Planning for the worst but hoping for the best."

For Canada, this means making a massive investment in its security and defence. The defence commitments in Canada's Indo-Pacific Strategy are a good start; however, convincing countries like Japan, South Korea, and Australia (and even European allies) that Canada is a serious security partner will require much more resources than meeting the NATO target of two per cent of GDP spending on defence.

Given its geographic location between Europe and the Indo-Pacific, Canada is well positioned to play a leadership role in creating a "free and open" — to use former Japanese Prime Minister Abe Shinzo's concept — sphere of influence for liberal democracies between Europe and the Indo-Pacific to bypass and counteract China, Russia, and the U.S.

As for the question of bandwidth, Canada has no choice but to develop it. Like its liberal-democratic partners in Europe and the Indo-Pacific, the Trump administration's transaction- and power-based approach to the world represents an existential threat to Canada's economy, security, and sovereignty. Therefore, Canada has to go ‘all in’ like there's no tomorrow; its ‘Sputnik moment’ requires a moonshot approach.

The evolution of Canada-Japan relations within Canada’s Indo-Pacific Strategy is a case study of untapped potential and missed opportunities. With shared national interests in preserving an international order based on the rule of law and democracy, the bilateral relationship has made meaningful advances but remains constrained by domestic political turbulence in both countries and unpredictability with the U.S., especially with Donald Trump’s return to the presidency in January. 

Canada’s 2022 Indo-Pacific Strategy correctly identified Japan’s strategic importance for Ottawa’s regional ambitions. Concrete achievements have materialized, including the 2023 Canada-Japan Critical Minerals Cooperation Agreement, which represents a substantive step toward securing supply chains for electric vehicle batteries and advanced technologies. 

Ottawa has also deployed naval vessels to the region, supporting the enforcement of UN sanctions against North Korea under the umbrella of Operation Neon, and has conducted joint sailings and multilateral exercises with partners such as the U.S., Australia, and the Philippines in the East and South China Seas. It also continues to provide contributions to shared security concerns with Japan through Operation Horizon.

Furthermore, Canada’s naval presence in the Indo-Pacific has been anchored by HMCS Vancouver’s participation in multiple joint exercises including KEEN SWORD with Japan and RIMPAC 2024, where it was joined by additional Canadian assets and personnel. This sustained maritime engagement, continuing with HMCS Ottawa’s deployment from November 2024 to February 2025, demonstrates Canada’s commitment to interoperability with Japan and other regional partners through regular joint naval exercises and port visits.

Canada-Japan trade relations have been resilient thanks in part to the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which both are members. According to Export Development Canada, bilateral trade reached C$35 billion in 2023 despite pandemic disruptions and protectionist headwinds. The CPTPP has effectively created institutional architecture for deepened economic integration while providing both countries partial insulation from Trump’s unpredictable trade tactics.

However, these achievements represent a fraction of the potential collaboration. Canada’s approach has been marked by unfortunate delays and inconsistencies. When then-prime minister Justin Trudeau prorogued Parliament in January 2025 amid declining poll numbers, pending bilateral agreements on cybersecurity and intelligence sharing were shelved indefinitely. This parliamentary reset stalled momentum precisely when accelerated implementation was needed most. As a former Canadian diplomat in Tokyo remarked privately, “When Ottawa hit pause, Tokyo questioned our seriousness.”

From Japan’s perspective, Prime Minister Ishiba Shigeru’s precarious political position has similarly constrained bold initiatives. Leading a fractious coalition with approval ratings below 24 per cent, Ishiba has focused overwhelmingly on domestic economic reforms while limiting international commitments that might trigger parliamentary opposition. Consequently, the anticipated expansion of defence technology collaboration under Japan’s 2022 National Security Strategy (NSS) has materialized only minimally.

Both countries have found their diplomatic bandwidth consumed by managing relations with Washington. Trump’s renewed tariffs on Canadian aluminum and steel in February 2025, alongside threats to Japanese automobile exports, have forced Ottawa and Tokyo into reactive postures. Canada’s long-planned expansion of its diplomatic presence in the Indo-Pacific — a centrepiece of its Indo-Pacific Strategy — has been repeatedly deferred as resources are diverted to continental crisis management.

What remains conspicuously absent is a comprehensive Canada-Japan security framework that moves beyond piecemeal co-operation. Australia and Japan signed a Reciprocal Access Agreement in 2022, yet Canadian-Japanese defence cooperation continues through ad hoc arrangements rather than institutionalized channels. This gap exists despite shared concerns about Chinese assertiveness in contested waters and mutual interests in maintaining freedom of navigation.

Energy co-operation represents another missed opportunity. Canada has abundant natural resources that could enhance Japanese energy security amid geopolitical uncertainty, yet regulatory barriers and infrastructure limitations have prevented Canadian liquefied natural gas (LNG) from reaching Japanese markets at scale. The Kitimat LNG project, which could have positioned Canada as a reliable supplier, continues to face delays that Japanese partners find frustrating.

Co-ordination on China policy also remains underdeveloped. While both countries have grown more circumspect regarding Beijing, they rarely synchronize diplomatic responses to regional provocations. When China conducted extended military exercises around Taiwan following U.S. congressional visits in mid-2023, Canadian and Japanese statements diverged notably in tone and substance. This lack of co-ordination undermines the deterrent effect that aligned middle powers might otherwise achieve.

Digital governance is a promising yet underdeveloped area for collaboration. Both countries embrace democratic values in technology regulation, yet have failed to establish joint standards or approaches to data protection that could counter China’s digital authoritarianism. 

Looking forward, a recalibrated Canada-Japan relationship requires the political will to overcome both domestic distractions and the gravitational pull of American unpredictability. Three priorities should guide this renewal:

1. Institutionalizing security co-operation through a formal bilateral framework rather than relying on regional or multilateral mechanisms alone;

2. Accelerating critical minerals and clean energy collaboration with concrete infrastructure investments rather than merely declaratory agreements, and; 

3. Developing synchronized approaches to economic coercion from larger powers, creating practical resilience rather than rhetorical solidarity.

As middle powers navigating an increasingly complex regional architecture, Canada and Japan share fundamental interests in maintaining an international order based on the rule of law. Their relationship contains the building blocks for a significant strategic partnership, but transforming potential into reality requires sustained political attention that has thus far proven elusive amid domestic turbulence and American unpredictability.

The new government in Ottawa will likely review Canadian foreign policy toward Asia and think about how best to adapt former prime minister Justin Trudeau’s 2022 Indo-Pacific Strategy. That policy was intended to reorient Ottawa’s approach to the region and make it more strategic. That has not happened. The motivation for the strategy and its intended outcome has been undermined by a laundry list of parochial policies and unexpected events, especially the diplomatic crisis and fallout with India, which made the policy an ‘Indo-less’ Pacific strategy. It is somewhat apparent that the next government must retool the strategy by fixing Canada’s relationship with India. 

Will that happen? 

It is difficult to predict developments in Canada-India relations. The last few years have been rough. The relationship remains troubled, and efforts to mend ties have been fitful and fated with damaging revelations upending a precarious bilateral balance. Yet, there are two reasons why we may have reached a floor bilaterally. 

First, the international context has changed. The Trump administration’s assault on the international order and global economy and China’s stoic and firm rejoinder will compel countries to seek diplomatic space and breathing room, reinvigorating existing and dormant relationships. This situation gives Canada and India space to possibly reset ties and negotiate a new compact around core interests, which will largely include trade and investment. 

Delhi and Ottawa will have to find ways to work around the U.S.’s global security and economic recalibration. Washington has served as the indispensable strategic partner for both countries, creating and sustaining partnerships based on defence, security, trade, and investment. That arrangement, however, is being renegotiated. 

Delhi and Ottawa also need more market access for specific goods and services as U.S. market access ebbs and becomes less reliable. The two must bolster security arrangements in Asia, Europe, and North America given their doubts about U.S. commitments. Delhi requires capital, energy, and technology to offset a potential decline in U.S. investment, while Ottawa hopes to further diversify its trade partners as pressure intensifies to reorganize Canada’s domestic economy. 

There will continue to be a demand for predictability in investment, technology, and commodities to support India’s growth, creating opportunities and avenues for Canadian capital, energy, and resources. Prospects for a bilateral reset look positive, with trade and investment increasing despite the crisis in the bilateral relationship. The conditions appear conducive to such a reset, the politics notwithstanding. 

Second, Delhi is negotiating a deal to try to avoid the worst of Trump’s tariffs while at the same time hedging against the U.S. by expanding its diplomatic partnerships. In the last few months, the Modi government has revived trade talks with the European Union; deepened ties with leading European partners; slowly opened up to China; reconnected with Russia; engaged more openly in Southeast Asia; renewed connectivity discussions with neighbours; and struck deals with the Gulf states. 

India looks to navigate this churn in the international system by scouring for more partners and inking new agreements to create an environment stable enough for its economic growth and development. Delhi will likely have to manage this shift while remaining wary of China, however, as Beijing looks to cement its centrality in South and Southeast Asia. 

The current scenario creates opportunities for most countries to be diplomatically agile and to solidify and expand their strategic possibilities as they renegotiate workable partnerships with the U.S. and China. India is on that track. Will a new Canadian government follow? 

When Canada launched its Indo-Pacific Strategy in November 2022, it aimed to bolster its diplomatic presence and contribute to the region's security, sustainability, and growth by co-operating with like-minded partners. One of the strategy’s undeniable successes is the exponential growth of Canada’s security partnership with the Philippines. It is vital for the newly elected government in Ottawa to invest more in this relationship to better position it as a fulcrum for Canada’s Indo-Pacific vision.

Operationalizing the Philippines-Canada Defence Partnership 
 

In recent years, the Philippines and Canada have strengthened their interoperability and preparedness co-operation in the maritime domain. In September 2023, the two navies conducted a joint sail activity in the West Philippine Sea. This significantly contributed to the Philippines' efforts to engage like-minded partners in ensuring that its maritime zones remain free, open, and rules-based. Such activities complement Canada's commitment to a free and open Indo-Pacific by collaborating with partners based on Operation Horizon.

In October 2023, Ottawa and Manila signed an agreement that gives the Philippines access to Canada’s satellite-based technology to detect dark vessels — that is, ships that turn off their location transmitter. For the Philippines, this assistance is crucial, especially at a time when China's maritime militia and the China Coast Guard (CCG) have been engaging in coercive and illegal activities in Philippine waters. More importantly, China's use of grey-zone tactics makes it difficult for the Philippines to effectively monitor all activity taking place in its waters; thus, Canada has shown that it has a mature understanding of Manila’s acute security concerns at sea. Since the agreement became operational, the Philippine Coast Guard (PCG) has enhanced its capability to track the activities of the CCG and its paramilitary ships in Philippine waters. 

Demonstrating a willingness to further deepen the bilateral security relationship, Manila and Ottawa signed a Memorandum of Understanding (MoU) for Defense Cooperation in January 2024. In addition to Canada committing to invest more in its security partnership with the Philippines, the MoU provides a roadmap for bilateral defence collaboration in the region and has opened doors for Canada to position itself more effectively in the region’s emerging geopolitical dynamics and to collaborate with other like-minded Indo-Pacific partners. 

In June 2024, Canada joined its first multilateral maritime cooperative activity (MMCA) with the Philippines, Japan, and the United States in the West Philippine Sea. Two months later, it participated in another MMCA with the Philippines, the U.S., and Australia in Philippine waters. In February 2025, Canada joined the Philippines and the U.S. in a joint military exercise in the waters of Northern Luzon. In addition to asserting freedom of navigation and upholding the 2016 Arbitral Award, Canada’s frequent participation in these multilateral maritime activities provides an opportunity for Ottawa to be more strategically involved in operational exercises in critical zones of the Indo-Pacific to enhance co-ordination and interoperability with like-minded partners.

Furthermore, in March, the Philippines and Canada concluded negotiations for the Status of Visiting Forces Agreement (SOVFA). Once signed and ratified, the SOVFA will enable Canada to rapidly deploy its troops to the Philippines for disaster relief and humanitarian assistance — a key element in its Indo-Pacific Strategy. Additionally, the SOVFA will catalyze more robust Canadian participation in various exercises for which it has thus far been an observer, such as the Balikatan Exercise between the Philippines and the U.S. and Exercise ALON between the Philippines, the U.S., and Australia. 

Maximizing the Potential of the Philippines-Canada Defence Partnership
 

In the past two years, Canada has demonstrated its reliability as a capacity-builder and trusted partner. However, bilateral ties must continue to evolve in response to the turbulent realities of regional geopolitics.

First, Canada needs to invest more in cybersecurity co-operation. The Philippines continues to be one of the most targeted nations vis-à-vis China-backed online information campaigns and malign information operations that seek to exploit information flows and create domestic discord against the current Filipino government’s security policies in its maritime zones. With its cybersecurity expertise, Canada is in a favourable position to operationalize its Indo-Pacific Strategy's focus on building cyber-resilience by assisting the Philippines in enhancing its cyber-defence capabilities. If it succeeds, the Philippines-Canada model can be emulated by Ottawa with other Southeast Asian countries that are also increasingly vulnerable to cyberattacks.

Second, Canada must increase the frequency of its bilateral and multilateral maritime activities with the Philippines. However, doing so will depend on whether Ottawa can maintain or even increase its naval presence in the Indo-Pacific. While Canada earlier deployed an additional ship to the Indo-Pacific, there are concerns about whether it will be able to sustain this in the long term, a concern expressed by then-Canadian Chief of Defence Staff General Wayne Eyre in November 2023. Hence, the newly elected Canadian government must prioritize the modernization of the management of its surface ships if it intends to maintain its position in the Indo-Pacific.

Third, Canada will need to improve how it brands its Indo-Pacific Strategy. One of the most common misperceptions about Ottawa's vision is that it is Western-oriented and largely reflective of U.S. interests in the Indo-Pacific. While a strong bilateral foundation rooted in deep people-to-people relations, shared values, and economic ties has allowed Canada and the Philippines to make up for lost time in the security dimension of their relationship, Ottawa would need to make more of an effort to engage with other regional countries that are becoming increasingly wary of the U.S.-China power competition. Therefore, Canada will have to demonstrate its agency in articulating its distinct vision for the Indo-Pacific. Consequently, Ottawa's current trade tensions with Washington may serve as an opportunity for Canada to redefine its image in the Indo-Pacific. Doing so will position Canada more favourably in the region.

Southeast Asia’s interest in Canada has rarely — if ever — been as strong as it is today. Some of that stems from the momentum generated by Canada’s increased presence in the region under Ottawa’s 2022 Indo-Pacific Strategy (IPS). 

Geopolitics, however, play at least as significant a role. Southeast Asia remains highly dependent on the United States; with Washington’s role in flux, the desire to strengthen engagement with Canada — the U.S.’s closest neighbour — has grown. This moment presents a distinct opportunity for Canada to solidify its role as a reliable and relevant partner in Southeast Asia’s evolving strategic landscape. Capitalizing on it will require not only sustaining the momentum of recent years but also recalibrating Canada’s approach to reflect the region’s shifting positions and priorities.

Canada has done several things right since launching the IPS. High-level visits by Canadian leaders and sustained participation in ASEAN‑-led forums have been widely noted, as have the trade and education missions aimed at deepening economic and institutional ties. Targeted initiatives — such as the dark vessel detection collaboration with the Philippines and support for democratization in Myanmar — have generated goodwill and demonstrated Canada’s value as a close and capable partner. These efforts must be sustained if Canada is to reap the benefits of deeper diversification, particularly given its lingering reputation as a fair-weather‑ actor prone to retreat following political shifts in Ottawa.

For a middle-sized country like Canada, favourable external conditions are often as important as policy in enabling meaningful breakthroughs. The U.S.’s inward turn under ‘Trump 2.0’ has generated uncertainty and crisis around the world, which Canada has experienced firsthand. Painful as they are, such moments can also create openings. In this case, they have generated a level of interest in Canada across Southeast Asia that surpasses what years of deliberate outreach have produced. Some of this reflects the hope that Canada, by virtue of its deep ties and proximity to the U.S.‑, can help make sense of Washington’s unpredictable turns. Even if Canada cannot offer clarity on the path ahead, many in the region want it at the table as an interlocutor and sounding board while they navigate the turbulence that Trump 2.0 has unleashed.

Interest in Canada for its own sake has grown as well. The vacuum left by the U.S. inward turn — and anxiety about how it might be filled — has led many in the region to seek alternative partners. Canada, while not a substitute for the U.S., is generally seen as safe, relatively free of geopolitical baggage, and unlikely to impinge on Southeast Asia’s interests in the way some larger powers might. In short, the disruptions triggered by Trump 2.0 have created an unprecedented welcome for Canada to become a more engaged political and economic partner.

Making use of this moment requires not only sustained presence but also a clearer articulation of what Canada brings to the region and a recalibration of some existing approaches. Elements of the IPS closely mirror U.S. language and priorities — especially on security and China — in ways that do not align with the diversity of Southeast Asia’s perspectives. While regional governments are concerned about shifting power balances and Chinese assertiveness, few see value in framing China solely as an adversary. Canada’s concerns with China are legitimate, but its greatest potential in Southeast Asia lies elsewhere: in supporting development, governance, trade, technology, and rules-based co-operation rather than replicating the muscular posture of larger allies. Crucially, this also means stepping beyond the U.S. shadow to ensure Canada is not dismissed as a mere proxy on security issues.

More broadly, Canada’s appeal in Southeast Asia rests in part on shared structural realities. Like many ASEAN member states, Canada must navigate — rather than shape — global power dynamics in ways that preserve the interests of vulnerable states and economies. The pragmatism this calls for offers a firm foundation for mutually beneficial partnerships — more so, at least in Southeast Asia, than the notion of ideological “like-mindedness.” In a region shaped by colonial legacies and great power‑ rivalry, Canada’s profile as a globally relevant, industrialized country that is neither a superpower nor a former colonizer is particularly attractive.

A planned foreign policy review under a new, Mark Carney-led government provides an opportunity for Canada to clarify priorities and address gaps. That includes ensuring the IPS reflects Southeast Asia’s diversity and strategic importance and that institutional capacity exists to follow through on growing interest from the region. Canada’s global engagements have long tilted toward transatlantic ties — an understandable bias given the background of many in the current government. Southeast Asia offers a different kind of strategic value: not only as an engine of growth but also as a partner that aligns with Canada’s long-term diversification and global engagement‑ goals.

The IPS has opened doors. The new Liberal government now has a unique opportunity to make significant gains in its diversification ambitions by walking through them in a deliberate and consistent manner — calibrated to Southeast Asia’s perspectives.

Since the release of Canada’s Indo-Pacific Strategy in 2022, the geo-strategic and geo-economic contexts have changed greatly. While the security risks induced by a more assertive China persist, the dominant theme of 2025 has been the Trump 2.0 administration’s abrupt and unilateral takedown of the global rules-based order, including launching the most comprehensive and multi-dimensional trade war since the 1930s. Canada, given its 77 per cent export dependence on the U.S., faces both the most direct threat to its economic stability in the post-war period and the most serious threat to its sovereignty since the 19th century. 2025 is the year of mega disruption for the world, but especially for Canada. 

In this context, Canada needs an upgraded and bootstrapped version 2.0 of its Indo-Pacific Strategy (IPS). This should include a multilateral campaign to work with non-U.S. allies to save the rules-based order from great powers, a much greater security investment as a source of leverage, and a strategic approach to economic prosperity and economic security. The core group of multilateral allies must begin with Japan, South Korea, and Australia, as well as the European Union and the U.K. (learning from the experience of the Ottawa group in the first Trump administration), with intense co-operation with ASEAN countries, India, Mexico, and other middle powers as well. 

The June G7 meeting will be a critical moment for co-ordination among non-U.S. allies to present a united front – partly co-operative and partly based on principle – in discussions with the U.S. As this year’s G7 Chair, Canada can initiate a stabilization effort to buttress a peaceful, rules-based order that is critical for humanity’s future. To do so, it must leverage the combined strength and unity of the rest of the G7 to limit the unravelling before it is too late. This is extremely tough, and the stakes are high, but it is time for Canada to step out from the shadows and play a strategic role commensurate with its networking power and G7 rank.

Within the Indo-Pacific, Japan and South Korea are the first anchor points for Canada. Japan combines the strategic heft of the fourth economic pole in the global economy (after the U.S., China, and the EU) and the most strategic location in the region, as the host of U.S. power projection in the entire Indo-Pacific. Japan was also chosen by the U.S. as the priority country with which to reach a fast-track comprehensive agreement and is thus the litmus test for the revolutionary Trump 2.0 administration. 

As of early April, Japan was the country most ready to concede and bandwagon with the Trump administration. By early May, the overreaching nature of U.S. demands – spanning trade and long-term auto tariffs, Yen re-evaluation, rapid security reinforcements, and a decoupling from China – created a domestic political backlash in Japan. With Prime Minister Shigeru Ishiba facing a tough Upper House election around July 20, he is unable to capitulate and has publicly committed to removing the extremely painful and humiliating U.S. auto tariffs. It is often said that Japan’s auto industry represents, both directly and indirectly, 10 per cent of the country’s entire GDP. So, Japan faces an impasse and is playing a game of chicken. Opposition leader Yoshihiko Noda has already urged Ishiba to ‘go multilateral’ to build leverage in facing down the U.S. 

Japan offers important lessons for Canada. First, it shows how the Trump 2.0 administration is seeking comprehensive zero-sum wins and is unwilling to negotiate with its partners. In response, Japanese Finance Minister Katsunobu Kato has started talking about the leverage ‘card’ Japan holds within the U.S. bond market –  leverage that played a key role in the U.S.’s April 9 bond market crisis. In other words, it will be impossible for countries like Japan and Canada to reach deals acceptable to their own domestic voters without very credible multilateral leverage, chiefly, the powerful roles they play in the U.S. bond market.

Second, negotiations are comprehensive and include security, currency regimes, and almost every dimension of power. Japan is being forced to start discussing meeting its own security needs without the U.S. and developing a possible nuclear shield. On these issues, Canada must also increase its leverage and autonomy, and an IPS 2.0 must include, as a starting point, a commitment to rapidly reach defence spending of two per cent of GDP. This package should also include a serious demonstration of Canada’s ability to take full control of the Arctic, with networks of censors, submarines on each side of the Northwest Passage, and military bases. The IPS 1.0 was weakened by the fact that new navy deployments were made from a very depleted base. It is now time to invest comprehensively to rebuild the core capacity and attractiveness of the Canadian navy and military as a whole. 

Third, we are now in the age of geopolitics and great power politics. Interdependence has been weaponized by the U.S. (and by China and others). Canada must create a strategic economic council under the prime minister’s office to develop strong ‘cards’ to play in this battle. In an age when artificial intelligence will make huge energy demands, Canada’s first strength is its energy resources. The second is critical minerals, fertilizers, and other core resources. However, Canada needs a strategic plan to rapidly develop lithium capacity at scale, with strategic allies such as South Korea and Japan, and with Canadian public investment.

Fourth, the travels of Japanese ministers and elected officials within the first week of May reflect the comprehensive diplomatic engagement that Canada lacks. While Prime Minister Ishiba travelled to key countries in Southeast Asia (Vietnam, the Philippines), other ministers travelled to Indonesia, his foreign minister visited Europe and the UN, and his trade negotiator and others were dispatched to Washington. The ruling party’s Secretary General, meanwhile, took 15 MPs to Beijing in a large diplomatic dialogue, while two former ministers also travelled to Taiwan. 

To protect itself, Canada needs a comprehensive global strategic engagement like this that can generate leverage and investments in preventing a cycle of conflict.

In sum, the stakes for Canada are now infinitely higher than in 2022, when it unveiled its first IPS. Canada must actively work to build and expand a coalition of partners in the Indo-Pacific and in Europe and beyond, so as to create critical mass leverage for itself and for the global order.

• Series editors: Erin Williams, Senior Program Manager, Ted Fraser, Senior Editor, Vina Nadjibulla, Vice-President Research & Strategy, APF Canada