Debt, Defense, and Defiance: The Illusion of Canadian Independence

By Anibal Pouros

In a defiant and nationally resonant speech following his swearing-in as Canada’s 24th Prime Minister on March 14, 2025, Mark Carney emphatically declared, “Canada will never, ever in any way, shape or form, be part of the United States.” The remark was a pointed rebuke to U.S. President Donald Trump’s inflammatory comments about potentially annexing Canada and followed a series of aggressive trade policies enacted by Washington. Carney’s rhetoric struck a patriotic chord with Canadians wary of growing American influence. However, despite the bold statement, an analysis of Canada’s economic and military dependencies suggests that the sovereignty Carney so passionately asserts is more symbolic than strategic.

Carney’s Rejection of American Encroachment

Carney’s repudiation of Trump’s rhetoric came during a period of intensifying bilateral tensions. Following Trump’s imposition of a 25% tariff on Canadian goods—notably automobiles, aluminum, and dairy—the Canadian public was growing anxious over what many saw as economic bullying. Trump further stoked controversy by publicly entertaining the idea of Canada joining the United States as its 51st state. Carney, a former central banker with experience managing global crises, used his first address to strike a nationalist tone. “We are very fundamentally a different country,” he declared. “Our institutions, our values, our people—they make us who we are.” This rhetoric not only fortified his electoral base but helped the Liberals secure a fourth consecutive term in the April 28 federal election.

But Carney’s confidence belies deep structural realities. Canada’s economic architecture is tightly intertwined with the United States, and its military posture remains profoundly dependent on American support. These two areas—fiscal policy and national defense—expose critical vulnerabilities that challenge the notion of absolute sovereignty.

Economic Interdependence: U.S. Holds the Purse Strings

Canada’s federal gross debt reached approximately $2.3 trillion in 2025, more than doubling since 2015. While Canadian institutional and private investors hold a sizable share, a significant portion is also held by foreign creditors, with American entities playing an outsized role. Although specific data on U.S. holdings are not always fully disclosed, financial analysts estimate that U.S. institutions—including hedge funds, pension funds, and banks—own a substantial slice of Canadian debt securities. This foreign-held debt gives the U.S. indirect influence over Canadian fiscal policy, particularly in times of economic distress.

In 2024, Canada enjoyed a $145 billion trade surplus with the U.S., exporting $557 billion in goods while importing $412 billion. On the surface, this suggests a favourable trade balance. But in practice, it underscores Canada’s heavy dependence on American markets. Approximately 75% of all Canadian exports go to the United States, leaving Canada vulnerable to U.S. policy shifts and consumer behavior. Trump’s tariffs, which some analysts suggest are designed to rebalance this perceived inequity, have reignited calls within Canada to diversify trade. Carney’s administration has proposed a $10 billion trade diversification fund aimed at expanding market access in Asia and Europe.

Nonetheless, reducing reliance on the U.S. is easier said than done. Decades of bilateral integration, supply chain entrenchment, and proximity advantages mean Canadian firms are structurally tied to U.S. demand. As Carney increases deficit spending for infrastructure and defense, critics warn that Canada may be forced to seek further external financing—much of which could again come from American sources. This growing debt load only deepens Canada’s economic entanglement with its southern neighbour.

Defensive Shortfalls: Canada’s Military Under U.S. Umbrella

On the security front, the gap between nationalist sentiment and operational capability is stark. Canada’s defense spending, while increased in recent years, still lags far behind its NATO commitments. At 1.3% of GDP in 2024, Canada remains well below the alliance’s 2% threshold. Carney has pledged to meet this target by 2030, with incremental increases totalling $18 billion over the next five years. Priority areas include Arctic surveillance, cyber security, and naval upgrades.

Despite these efforts, Canada remains reliant on the United States to secure its airspace and maritime boundaries. The North American Aerospace Defense Command (NORAD), jointly managed by the U.S. and Canada, provides aerospace warning, control, and maritime warning for the continent. But in practice, NORAD is overwhelmingly American in its personnel, funding, and technological assets. Canada simply does not have the capabilities to monitor or defend its borders alone—especially in the increasingly contested Arctic.

The Canadian Armed Forces (CAF) comprise fewer than 70,000 active-duty personnel and are stretched across peacekeeping missions, disaster response, and domestic operations. Its naval fleet, including the aging Halifax-class frigates, and its limited fleet of fighter aircraft place Canada well behind global middle powers in terms of military readiness. Even with proposed investments in Over-the-Horizon Radar and joint Arctic operations with Australia, Canada will remain dependent on U.S. military infrastructure for the foreseeable future.

Trump has further complicated matters by signalling a re-evaluation of U.S. commitments to NATO and NORAD unless allies like Canada "pay their fair share." If American support wanes or becomes contingent on policy concessions, Carney’s government may find its options constrained, forcing alignment with U.S. strategic interests.

Sovereignty in Question: Symbol or Substance?

Carney’s dramatic claim that Canada is “not for sale” is an assertion of national pride, yet it skirts the underlying geopolitical and financial dynamics that limit true autonomy. While no formal annexation is on the table, the instruments of influence wielded by the United States—debt ownership, market access, and defense support—function as levers of control. Even without political union, the U.S. exercises de facto influence over key aspects of Canadian governance.

To counteract this, Carney has launched diplomatic initiatives to deepen ties with France, the United Kingdom, and Japan, signalling a pivot toward multilateralism and away from North American hegemony. Yet such realignment efforts will take years to mature and require significant investment. Domestic support for these moves may also waver if trade disruptions or fiscal pressures mount.

Conclusion: The Price of Independence

Mark Carney’s inaugural address struck a patriotic chord at a time when Canadian sovereignty felt under siege. But the structural dependencies in Canada’s economic and military frameworks cast a long shadow over his defiance. To translate his rhetoric into lasting policy, Carney will need to implement a robust diversification strategy while navigating domestic pressures and unpredictable U.S. politics. Canada may never be “for sale,” but its independence, in practice, remains entangled with the fortunes of the nation to its south.

Anibal Pouros is the Editor In Chief Of Vertias Expositae.

You can reach him at editor@veritasexpositae.com