Photo by: The Office of the Prime Minister
by Joe Calnan
August 2026
Table of Contents
- Introduction
- Canada’s Investment Challenge and the Search for a Safe Harbour
- From Investment Ambition to Execution
- Market Access and the Test of Canadian Resolve
- About the Author
- Canadian Global Affairs Institute
Introduction
In his opening speech at the Canada Investment Summit, Prime Minister Mark Carney outlined a major challenge of our time. He warned of a more dangerous and divided world, where economic, financial, and supply chain integration is being used for geopolitical advantage. Carney was clearly alluding to the actions of U.S. President Donald Trump, but this trend is also evident in efforts by countries such as China and Russia to weaponize critical mineral and energy supply chains. Canada and other smaller powers could be subject to pressure and intimidation by these larger powers.
These trends raise troubling questions about the future of globalism. As security risks rise, countries have reassessed their supply chains through a national security lens. These countries will increasingly prioritize domestic suppliers or trusted security partners for critical supply chains. This means spending on new infrastructure and production for energy, transportation, data, and defence to diversify away from risky partners. If the world is becoming a more dangerous place, state and private investors will need to put a premium on trust and stability.
The Investment Summit is intended to promote Canada as a “safe harbour” for international investors in the “new global economic order.” This vision positions Canada as a central, trustworthy player in a new network of middle powers, with the aim of preserving the efficiency benefits of international trade within a set of stable partners. This is a promising long-term vision of Canada in the 21st century, but faces a few key challenges related to execution, market access, and domestic resolve required to see this through.
Canada’s Investment Challenge and the Search for a Safe Harbour
Canada needs the money. It needs capital to build trade-enabling infrastructure, connecting it to Atlantic and Pacific partners. Canada must also expand its capital stock more broadly: its capital per worker is extremely low compared to the OECD average, resulting in depressed productivity. According to economist Charles St-Arnaud, fixing this problem could require $4-5 trillion of investment over the next decade and above current trends. Compared to this gap, the Investment Summit’s goal of “catalyzing one trillion dollars of investment” might be too passive. Nevertheless, the Summit demonstrates a will to move on both major projects and broader Canadian competitiveness.
The Summit was partially framed around a prospectus of major Canadian projects, and representatives from involved companies descended on Toronto to connect with foreign and domestic investors. Not everyone was satisfied with its structure, however. Some major Canadian project proponents were nervous that they had not been included in the formal Summit. Instead, the pitch for investing in Canada was largely left to politicians.
At several Chatham House Rule events, Canadian private sector leaders and project proponents expressed concerns that political considerations would trump project economics. This is not a new problem. It can be very difficult to draw a line between strategic necessity and political expediency. It is also possible for strategic projects to be uneconomic, and economic projects to be out of line with national strategy. But there is also a tendency to wrap politically expedient projects in the Canadian flag, even though they are neither strategic nor economic. Canada’s structural productivity problem could get worse if this is the main outcome for the major projects side of the Summit.
The Carney government also used the Summit to unveil broader policy shifts intended to attract investment. The Productivity Mega Deduction attracted the greatest attention. This policy will effect a change to Federal corporate income tax rules to allow for immediate expensing of a wide variety of infrastructure investments. Carney also reassured investors on Canada’s fiscal health and interest rates, committing to reducing government operational spending to less than 2% annually by reducing the size of the federal civil service. These measures could boost Canadian investment competitiveness across the board.
From Investment Ambition to Execution
While the Summit’s ambition is admirable, foreign investors raised several concerns in private conversations. One concern is execution. It is one thing to claim that major infrastructure projects are “de-risked” or “de-bottlenecked,” but many of these projects are located in remote parts of Canada with challenging geography or face significant hurdles related to local support and Indigenous consultation. The Trans Mountain pipeline expansion demonstrates how unexpected events, regulatory complexity, and local opposition can quickly undermine a project’s economics. The possibility that certain politically favoured projects will crowd out broader investment is another key execution risk for Canada.
With respect to Indigenous consultation, the Canadian government cannot offer international investors any certainty on timelines and costs. Major projects are constitutionally mandated to undertake meaningful consultation with impacted Indigenous communities. The meaning of “meaningful consultation” and the scope of Indigenous territorial sovereignty are actively being reappraised by Canadian courts following Federal and, in some cases, Provincial legislative implementation of the United Nations Declaration on the Rights of Indigenous Peoples. Efforts to streamline these processes are by no means guaranteed to shorten timelines or reduce the risk of judicial review. For this reason, the Building Canada Act pledge for one-year regulatory review target does not include the time needed for consultation.
Market Access and the Test of Canadian Resolve
The current Canada-U.S. trade war presents another barrier to investment. Canada’s domestic market is small relative to the massive markets of China, the European Union, and the United States. Under the NAFTA/CUSMA status quo, Canada could attract investment by providing access to the United States. If we are in a permanent trade rupture, then Canada may need another pitch for attracting foreign investment in traditional manufacturing industries like autos and steel.
Perhaps the largest challenge concerns international perceptions of Canadian caprice. From 2015 to 2024, Canadian foreign policy was largely oriented toward leadership on climate change, diversity, and social justice. Former Prime Minister Justin Trudeau had a mandate from Canadian voters to move Canada’s economy away from fossil fuels and, after Joe Biden’s election, integrate Canadian clean technology supply chains fully with the United States. At the time, many Canadian commentators thought environmentalism and social justice would be the permanent trajectory of Canadian foreign policy. Trump’s second term is often credited with shaking Canadians out of their complacency. However, it is possible that Canada’s resolve may falter in the face of a more friendly and values-aligned American administration, leaving diversification investors high and dry.
Regardless of Canadians’ views, Prime Minister Carney has been clear that he thinks this rupture between Canada and the United States is permanent. In an interview with the New York Times, Carney outlined several security and defence capabilities for which Canada is likely to reduce its reliance on American suppliers, most notably communication satellites. Former Prime Minister Stephen Harper agrees. In a closing speech for the Summit, Harper succinctly explained the problem with Canada-U.S. relations: “it is clear that the current U.S. administration views our level of economic integration as incompatible with our separate sovereignty. Thus, to maintain that sovereignty, we must pursue diminished reliance upon the United States.” If Canada is to do this successfully, we must demonstrate a real resolve to execute on this new vision for Canada in the 21st century.
About the Author
Joe Calnan is Vice President, Energy and Calgary Operations and a Fellow at the Canadian Global Affairs Institute. He is also Co-Host of CGAI's Energy Security Cubed podcast. His research focuses on the intersection between energy, economics, policy, and politics in relation to Canada's role in international energy systems. He frequently appears in the media to provide expertise on energy security and energy trade issues, including on CBC News, The Globe and Mail, Politico, Global News, CTV News, and the Daily Oil Bulletin. Prior to joining CGAI, Joe held positions in public affairs and energy analysis at Sustainable Development Technology Canada and Canadian Natural Resources Ltd. Joe received a Master's Degree in Public Policy from the University of Calgary with a focus on Canadian energy and natural resources in 2020. He also holds a Bachelor of Arts in Western Society and Culture from Concordia University.
Canadian Global Affairs Institute
The Canadian Global Affairs Institute focuses on the entire range of Canada’s international relations in all its forms including trade investment and international capacity building. Successor to the Canadian Defence and Foreign Affairs Institute (CDFAI, which was established in 2001), the Institute works to inform Canadians about the importance of having a respected and influential voice in those parts of the globe where Canada has significant interests due to trade and investment, origins of Canada’s population, geographic security (and especially security of North America in conjunction with the United States), social development, or the peace and freedom of allied nations. The Institute aims to demonstrate to Canadians the importance of comprehensive foreign, defence and trade policies which both express our values and represent our interests.
The Institute was created to bridge the gap between what Canadians need to know about Canadian international activities and what they do know. Historically Canadians have tended to look abroad out of a search for markets because Canada depends heavily on foreign trade. In the modern post-Cold War world, however, global security and stability have become the bedrocks of global commerce and the free movement of people, goods and ideas across international boundaries. Canada has striven to open the world since the 1930s and was a driving factor behind the adoption of the main structures which underpin globalization such as the International Monetary Fund, the World Bank, the World Trade Organization and emerging free trade networks connecting dozens of international economies. The Canadian Global Affairs Institute recognizes Canada’s contribution to a globalized world and aims to inform Canadians about Canada’s role in that process and the connection between globalization and security.
In all its activities the Institute is a charitable, non-partisan, non-advocacy organization that provides a platform for a variety of viewpoints. It is supported financially by the contributions of individuals, foundations, and corporations. Conclusions or opinions expressed in Institute publications and programs are those of the author(s) and do not necessarily reflect the views of Institute staff, fellows, directors, advisors or any individuals or organizations that provide financial support to, or collaborate with, the Institute.
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