Good morning. Prime Minister Mark Carney’s phone call this week with U.S. President Donald Trump set the stage for a crucial cabinet summit and a budget reckoning in October. That’s in focus today, along with a look at what investors are watching ahead of this month’s Bank of Canada decision.
Up first
In the news
Airlines: Calgary-based WestJet Airlines has ordered 67 Boeing planes, making its largest aircraft purchase as it plots a long-term plan for growth.
Mining: Teck Resources Ltd. is overhauling a major Chilean operation and cutting ties with its chief operating officer after years of operational problems at the mine.
Labour: Conservative Leader Pierre Poilievre is calling on the federal government to shut down the Temporary Foreign Worker program, linking it to the rising youth unemployment rate.
On our radar
- Earnings include Lululemon Athletica Inc., Broadcom Inc., and Transcontinental Inc.
- Statistics Canada reports international trade data for July.
Prime Minister Mark Carney speaks to media yesterday about his plans heading into the fall. Peace signs up?Chris Young/The Canadian Press
In focus
Searching for evidence of progress from pragmatism
Mark Carney said yesterday that he had spoken with Donald Trump two days earlier – a call his office had not revealed – as he walked into a cabinet meeting dominated by questions of how to manage the U.S. President.
The Prime Minister described the exchange as “good,” touching on trade, geopolitics and labour, and said the priority remains securing agreements on steel, aluminum, autos and forest products, the industries hit hardest by Trump’s tariffs.
Carney also said Michael Sabia, whom the Prime Minister appointed clerk of the Privy Council in June, is in Washington for talks with U.S. trade officials. Sabia, who was in D.C. at the end of last month, represents a relatively new face for counterparts in the Trump administration, who have grown used to dealing with Intergovernmental Affairs Minister Dominic LeBlanc and ambassador Kirsten Hillman – the pair Carney has relied on since his election to steer Canada through the tariff fight.
- Carney says he spoke with Trump in ‘good’ conversation on trade, geopolitics
- Cabinet meeting to focus on infrastructure, trade and crime, ahead of Parliament resuming
Moves, countermoves and un-countermoves
The cabinet meeting, held in Toronto, is meant largely to prepare for next year’s review of the United States-Mexico-Canada Agreement while also finding ways to blunt the impact of Trump’s tariffs. Ministers are also weighing how to speed up infrastructure through a new major projects office, expand defence industries and deliver on housing promises – priorities that all depend on how much breathing room Canada can secure in Washington.
Carney has pared back some countermeasures to reopen talks, though duties remain on steel, aluminum and autos. LeBlanc’s latest session with Commerce Secretary Howard Lutnick produced no breakthrough, and Ottawa has paired tariff moves with other gestures such as shelving the digital services tax and highlighting higher defence and border spending. Despite months of effort, the results have been thin. We have grown accustomed, as a nation, to hearing about “constructive” talks.
Ontario Premier Doug Ford warned this week that Canada is “backing down too easily” in negotiations with Trump, while Conservative Leader Pierre Poilievre accused the Prime Minister of abandoning the “elbows up” posture he promised on the campaign trail.
Bracing for Budget Day
Perhaps that’s because he needs them down to hold his calculator. Carney campaigned on restraint – asking ministers to cut 15 per cent from programs over three years – yet has already added tens of billions in defence spending, promising NATO allies Canada would reach 3.5 per cent of GDP by 2035. The budget, due next month, will show whether those promises can co-exist.
At the opening of yesterday’s meetings, Carney said the fall budget will mix austerity with new investment, arguing that discipline is needed after a decade of runaway federal spending.
Carney has also promised to “catalyze” private investment, Globe columnist Campbell Clark notes. But the infrastructure initiatives his government is preparing are expected to lean heavily on public money – a sequencing that raises questions about how quickly the government can shift the burden from taxpayers to capital markets.
The budget should make the government’s trade-offs more explicit. Scotiabank economist Rebekah Young recently told The Globe that tariff revenue will likely be lower than outlined in the Liberal platform and spending will be higher, but a clear picture won’t be known until the budget is released.
“We have very little to go on,” she said. “We are left piecing together a very complex picture right now.”
Carney repeated yesterday that progress is being made with Trump, though he offered no guarantees. With USMCA negotiations looming and the budget forcing more clarity, his government is trying to prove that pragmatism can deliver more than fire and fury. The test continues with Sabia in Washington, following a phone call that Ottawa acknowledged only two days later – a reminder, perhaps, of how much Canada must work to secure even brief moments with its most important partner.
- Carney’s cabinet is 100 days into its term. Here’s how it’s changed Canada
- How Michael Sabia can make Ottawa move fast and build things
Charted
Defying gravity
Canada’s main stock index touched a record high of 28,733.74 yesterday, led by consumer staples and materials. Investors are eyeing this week’s economic releases, with tomorrow’s unemployment report likely to influence the Bank of Canada’s stand on cuts later this month.
Bookmarked
On our reading list
At the pharmacy: Manulife is steering Wegovy and Mounjaro patients to Shoppers, about a year after cancelling a similar “preferred provider” arrangement.
On the move: The IndyCar series has announced it’s moving from Toronto to Markham, Ont., in 2026.
In hindsight: A 25-year-old formula that dictates how grain moves across Western Canada is drawing criticism.
Morning update
Global markets were mixed after data indicated a weakening U.S. labour market, which has reinforced expectations of a Federal Reserve rate cut this month.
Wall Street futures were in positive territory, and TSX futures pointed higher after another record close for Canada’s main stock market yesterday.
Overseas, the pan-European STOXX 600 was up 0.52 per cent in morning trading. Britain’s FTSE 100 gained 0.2 per cent, Germany’s DAX rose 0.72 per cent and France’s CAC 40 gave back 0.18 per cent.
In Asia, Japan’s Nikkei closed 1.53 per cent higher, while Hong Kong’s Hang Seng slid 1.12 per cent.
The Canadian dollar traded at 72.32 U.S. cents.