Good morning. Most of this week’s news is circling the same centre of gravity: U.S. President Donald Trump’s rising threats over Greenland, NATO’s response, and the tension now making its way to Davos – where Prime Minister Mark Carney speaks tomorrow, followed by Trump on Wednesday.
What will be the biggest or most surprising headline by week’s end? Send me your best guesses: cws@globeandmail.com
Up first
In the news
Trade: EU countries are considering a strong economic response to Trump’s Greenland threats. Canada is considering sending soldiers to Greenland as a show of NATO solidarity with Denmark.
Manufacturing: Ottawa is planning to reserve preferential access to its domestic auto market for foreign automakers who build vehicles in Canada – another potential play to attract Chinese investment.
Sovereignty: Trump’s threats are giving a boost to the Churchill port expansion.
A drone view of Davos, where global leaders will be afforded the chance to "connect the dots and catalyze problem solving across global challenges," according to the forum's website. If ever there was a time to roll up our sleeves and catalyze, this is it.Denis Balibouse/Reuters
In focus
Heated rivalry: A test of the West’s turn to China
1. Descent on Davos: Carney’s address at the Swiss mountain resort lands just a few days after he announced a deal with Beijing to lower tariffs on Chinese-made electric vehicles in return for dropping its taxes on imports of canola and other Canadian products.
The decision to dramatically scale back the EV tariff, a major irritant with China, could help Canada’s longer-term efforts to find new or expanded foreign investment to offset the economic damage caused by Trump’s protectionist tariffs.
But it also means breaking with the United States, by far Canada’s largest and most important trading partner. In 2024, the Biden administration imposed 100-per-cent tariffs on Chinese electric vehicles, which it viewed as heavily subsidized, low-priced imports that could undercut domestic producers. Canada followed suit that August, aligning with Washington to avoid becoming a back door for vehicles shut out of the U.S. market.
China responded by effectively blocking Canadian canola from what had been the industry’s second‑largest market – a massive setback for producers who sent the country $4‑billion worth of the crop in 2024.
Ottawa’s broader calculation – even as Beijing’s tariffs bit hard – was to preserve a working relationship with its largest trading partner. But that Twister pose became harder to hold after the re-election of Trump, who tightened access to the U.S. market while maintaining expectations that allies would line up behind his tough‑on‑China stance.
For countries looking to make up the balance elsewhere, Trump’s Davos address could serve as a warning against moving too far in Beijing’s direction.
Not that we need Trump’s speech to keep Canada’s recent trade moves from falling out of focus. Tomorrow, a few hours before Carney’s speech, Finance Minister François-Philippe Champagne is scheduled to appear on a panel alongside his Japanese counterpart to discuss what “measurable impacts” tariffs are having on global trade.
2. Measurable impacts: Champagne certainly won’t be lacking for data. He might point to indications that Canada is seeing success in diversifying its trade beyond the U.S., and the reasons top economists believe the country will see steadier growth in 2026.
Still, this morning’s quarterly business outlook survey from the Bank of Canada is expected to show many decision-makers looking ahead with trepidation, freezing hiring and investment until demand and trade conditions become clearer.
It’s true that the vast majority of Canada’s exports to the U.S. are covered by the existing free-trade agreement, which has protected the broader economy from the worst of last year’s predictions. (Happy Trumpiversary, by the way! I got you this new world order.) But that deal is up for renegotiation in July, and Trump suggested less than a week ago that it was “irrelevant” to him. That doesn’t sound like he wants to make a deal. Wait, is this the “art” part?
3. Dude: Food. Even with reasons to hope for brighter days ahead, it’s hard to fault Corporate Canada for feeling blue.
A year of tariffs, tariff threats and shifting deadlines – some real, some not – will do that. And the uncertainty doesn’t stop at trade policy: consumers are anxious, too, watching the same headlines and worrying about their job security. The Canadian Survey of Consumer Expectations, also published by the Bank of Canada today, will offer insight into how consumers are feeling about inflation, the labour market and household finances.
And then there’s the price of food, which accounts for nearly 16 per cent of the average Canadian household’s disposable income – about the same share as transportation and exceeded only by shelter among essential expenses.
Statistics Canada’s December inflation report this morning is expected to mirror the previous month’s modest price growth of 2.2 per cent. But food prices are a whole ‘nuther kettle of fish. Food inflation could exceed 5 per cent, with grocery store prices already up 4.7 per cent year over year in November.
Chris Elliott, Restaurants Canada’s chief economist and vice-president of research, told The Globe last week that consumers are weighing a world of factors before making a simple purchase.
“People on the way to work, who normally would pick up a coffee, they’re just not sure, ‘Am I going to have a job in six months?’” Elliott said.
That’s a heavy worry to shoulder for many consumers and businesses - particularly those in the service sector.
The Bank of Canada, which examines a range of measures to see past global and supply-driven price swings, is unlikely to find anything that would prompt a cut to its benchmark lending rate later this month. Governor Tiff Macklem has said the bank has reached the limits of what monetary policy can achieve in a trade war.
Over to you, Mr. Carney.
4. Front and central: In the U.S., focus is on the Federal Reserve for more than its coming rate decision. (Both Canada and the U.S. announce on Jan. 28.)
While Trump addresses Davos on Wednesday, his effort to remove Fed governor Lisa Cook will land in the Supreme Court. Trump moved in late August to dismiss Cook, accusing her of falsifying information on mortgage applications from 2021 – claims she denies, arguing the President lacks cause to remove an independent central banker.
A ruling against Cook could make it easier for the White House to press the Fed for faster rate cuts, a risk underscored after chair Jerome Powell said a Justice Department subpoena tied to past testimony was being used as a pretext to exert political pressure.
- Reaction: Food producers greet Chinese tariff reductions with a cautious welcome
- Rendell: Carney’s EV deal with Beijing is high-wire diplomacy with risks on both sides
- Keller: Why is Mark Carney in Beijing? Blame the weather in Washington
5. At the bell: U.S. fourth-quarter earnings season moves from big banks to small screens this week as investors pin their hopes on sunny corporate outlooks to break through the gloom of that annoying real-life stuff.
Streaming giant Netflix reports results in the middle of its high-stakes battle with Paramount Skydance for Warner Bros. Discovery, in a deal set to shake up the media landscape. Other high-profile companies reporting include Johnson & Johnson and Intel.
Also on our radar
- Today: China GDP, Eurozone CPI
- Tomorrow: A possible U.S. Supreme Court ruling on Trump’s use of the International Emergency Economic Powers Act to impose sweeping tariffs.
- Thursday: Canada’s new housing price indexes
- Friday: Canadian retail sales for November
Charted
The immigration shift
Canada’s three largest metropolitan areas together once attracted the vast majority of new immigrants to Canada, but a combination of eroding affordability and the influx of international students to smaller cities has sent the three cities’ share of new immigrants to a record low.
Quoted
In a country looking for strange new things to get excited about – strip mining, Chinese cars, domestically produced potato chips – imagine how great an Olympics would be now?
A 2038 Canadian Olympic bid could kick start a national rejuvenation project, Cathal Kelly writes.
Morning update
Global shares slid after U.S. President Donald Trump threatened additional tariffs on eight European countries until the United States was allowed to buy Greenland.
TSX futures followed sentiment lower ahead of inflation figures for December, while U.S. markets are closed today for the Martin Luther King Jr. holiday.
Overseas, the pan-European STOXX 600 was down 1.33 per cent in morning trading. Britain’s FTSE 100 dropped 0.57 per cent, Germany’s DAX declined 1.4 per cent and France’s CAC 40 gave back 1.59 per cent.
In Asia, Japan’s Nikkei closed 0.65 per cent lower, while Hong Kong’s Hang Seng fell 1.05 per cent.
The Canadian dollar traded at 72.00 U.S. cents.