By the end of last October, Justin Trudeau could smile at the world. One big part of his foreign-policy platform was rekindling the big relationships that mattered to Canada's economy: with the United States and Mexico, and with China.
He had turned Stephen Harper's chilly relationship with Barack Obama to bromance. Mr. Trudeau buried Mexico's seven-year-old visa grievance when he met President Enrique Pena Nieto at a Three Amigos summit in Ottawa. He was received with a warm welcome in China, and agreed to exploratory talks on free trade. And on Oct. 30, after a late psychodrama of Wallonian reluctance, he signed a free-trade agreement with the European Union.
A week later, Mr. Trudeau was walloped with a blast of uncertainty named Donald Trump.
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There can be little doubt now that Mr. Trump's arrival has rocked Mr. Trudeau's approach to the world. On Tuesday, the Prime Minister reshaped his cabinet to deal with it: Stéphane Dion was replaced as foreign affairs minister by Chrystia Freeland, who moves from the trade portfolio. But in a sense, Ms. Freeland is now the uber-trade-minister. Trade and jobs are the centre of Mr. Trudeau's foreign policy, because they are the centre of Mr. Trump's.
"One of the things that we've seen from president-elect Trump is that he very much takes a trade and job lens to his engagements with the world in international diplomacy," Mr. Trudeau told reporters after the shuffle.
Suddenly, it's a new world. There are new priorities. There's Mr. Trump's America-first talk of tearing up the North American free-trade agreement and imposing steep border tariffs, and the devastating impact that could potentially have on Canada's economy. Nothing is bigger for a Canadian prime minister.
But Mr. Trudeau's shuffle also signalled another priority, in the world's second-largest economy, China, by moving his immigration minister, John McCallum, to be ambassador in Beijing, with a direct line to the Prime Minister's Office. That's doubly important amid fears of a protectionist United States. But it won't be as simple as sending a political appointee to draft a free-trade agreement. Mr. Trudeau's team has seen China's leaders can be tough. And with Mr. Trump sparking new U.S. tensions with China, it could hard to please one without offending the other.
Things have changed. Liberal foreign policy has stressed multilateralism and re-engaging with the world, from Africa to Iran to Russia. Now, Canada's economic interests mean Mr. Trudeau's foreign policy must deal, first and foremost, with a G2 world of Donald Trump's America and a rising, assertive China. It's cajoling Mr. Trump's U.S. behemoth, but also courting a prickly Asian power, China, while both jockey as rivals. Mr. Trudeau's foreign policy imperative is navigating between a rock and a hard place.
The arrival of Mr. Trump is immediate and all-consuming.
Mr. Trudeau's team has reached out to business leaders and across party lines for help, and got it from Derek Burney, a former Canadian ambassador to the United States and chief of staff to Conservative prime minister Brian Mulroney, and especially Mr. Mulroney himself. Mr. Mulroney has personal contacts with Mr. Trump, and a friendship with his incoming secretary of commerce, Wilbur Ross, and has given advice both to the PMO and Canada's ambassador in Washington, David MacNaughton. Mr. Trudeau's entourage wants it to be an all-hands operation. The stakes are high.
On Jan. 3, Mr. MacNaughton and Mr. Trudeau's two senior aides, Katie Telford and Gerald Butts, went to the 666 Fifth Ave. offices of Mr. Trump's son-in-law, Jared Kushner, for more than five hours of talks with him and Mr. Trump's strategic adviser, Stephen Bannon. They came away thinking that that Mr. Trump's campaign rhetoric, about China's unfair trade practices and how trade agreements like NAFTA had taken jobs, was no bluster. It's the Trump administration's starting point.
Mr. Trudeau's key advisers decided there's no point passing judgment; it had to be dealt with pragmatically, to protect Canadian interests. "Our goal isn't to save world trade," one aide said.
Just what Mr. Trump's trade rhetoric means, and what it means to Canada, isn't so clear, however. Mr. Trump tweeted warnings to companies, such as General Motors, that if it moved a plant to Mexico and tried to sell the vehicles back into the United States, it would face a big border tax. But is that only for companies that move factories? For all plants in Mexico or China? Or for all goods entering the United States – such as vehicles from a Ford plant in Ontario?
Mr. Trump's advisers have focused on countries with whom the United States has a major trade deficit. Economist Peter Navarro, head of Mr. Trump's new trade council, wrote a book called Death By China. Mr. Trump railed about Mexico. Neither mentioned Canada. Do NAFTA complaints about Mexico leave Canada out?
"We shouldn't see ourselves as a northern Mexico. Because we're not," Mr. Burney said in an interview. "I don't see a lot of American companies flooding into Canada, the way they are into Mexico and China."
Ottawa has to work to ensure the Trump administration doesn't see Canada that way, and must talk to the 33 states for whom Canada is the biggest export customer, Mr. Burney said. And it has to avoid sanctimony. "They elected him. We didn't," Mr. Burney said. "We have to deal with them. We have to make the most of it."
That means signalling co-operation, and quickly preparing "an agenda of common interests" in areas such as infrastructure, trade, and security.
Much of Mr. Burney's prescription is part of the Trudeau government's strategy. In public, Mr. MacNaughton has spoken about Canada's willingness to talk about NAFTA. In private, with Mr. Bannon and Mr. Kushner, they talked about Canada being a top customer for U.S. states. They apparently surprised Mr. Trump's team when they noted the United States has a trade surplus with Canada, not a deficit as with Mexico. They came away thinking Mr. Trump's advisers grasped the importance of the intertwined Canada-U.S. auto business.
But there is still enormous potential for Canadian trade to be sideswiped by measures, such as border taxes, aimed elsewhere. Even if Mr. Trump's administration is willing to make a Canadian exception, it's difficult to craft an arrangement that would hit Mexico, a NAFTA partner, without affecting Canada.
Developing a common agenda, as Mr. Burney suggests, is key to Ottawa's approach. Infrastructure is one area: Mr. Ross and Mr. Navarro, two key trade players on Mr. Trump's team, wrote a paper last year on the need for major infrastructure investments to drive the economy, which in some ways echoed Mr. Trudeau's central campaign theme. And despite the apparent ideological gulf, Mr. Trump's team is said to see some similarity in campaign themes – the notion that the middle class is getting screwed.
"For our government, the most important question is the middle class and working for the middle class," new Foreign Affairs Minister Chrystia Freeland said after she was appointed Tuesday. "I think president-elect Donald Trump also spoke of Americans for whom the economy wasn't working."
Ms. Freeland, it's worth noting, also called that the "central argument" of her 2012 book, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. It's an irony that Ms. Freeland's ability to walk in the billionaires' world, one she covered for years as a journalist, is one of the reasons she was made Foreign Affairs Minister. Mr. Trump has named CEOs and tycoons to his team; Ms. Freeland, according to a Liberal government figure, has deep contacts in that world, to people like Blackstone Group CEO Stephen Schwarzman, chair of Mr. Trump's Strategic and Policy Forum.
Ms. Freeland's new mandate is far more vast and varied than her trade portfolio, but Mr. Trump's America is at the top. She is seen as a more sophisticated deal-maker than Mr. Dion, and credited with closing the Canada-European Union trade deal, initiated by Mr. Harper.
"I think what she really did was she brought the centre-left on board in Europe," said Jason Langrish, executive director of the Canada Europe Roundtable for Business. Left-leaning parties in Germany and elsewhere felt qualms with an agreement seen as a stalking horse for a bigger trade deal with the United States.
"She helped sort of push their opposition to trade aside and make them understand that this was an agreement between Canada and Europe, two progressive entities," Mr. Langrish said. "She was good at taking that embedded discomfort with trade and minimizing that, and maximizing what Canada and Europe had in common to this key constituency."
Now, it's Ms. Freeland's overriding task to leverage common ground – security ties, infrastructure, middle-class politics – to influence the Trump administration.
It's clearly not her only task. The Foreign Affairs Minister can't ignore global hot spots such as Syria or neglect the campaign for a UN Security Council seat. But priorities have changed. Mr. Trudeau planned to renew Canadian multilateralism, and re-establish diplomatic channels with countries frozen out by Mr. Harper, such as Iran or Russia. Ms. Freeland's appointment demonstrates a reset with Russia isn't top priority.
She remains barred from Russia under tit-for-tat sanctions imposed after Russia's annexation of Crimea in 2014, when Ms. Freeland was an opposition MP. She was apparently fingered by Moscow for her Ukrainian heritage and ties, and her 2014 appearance in central Kiev to applaud the country's pro-Western revolution. Her appointment this week was hailed in a headline on Ukraine's state-run Ukrinform website: "Our woman in the Canadian government."
She has also been an ardent critic of Russian President Vladimir Putin. She spent four years in Russia as a Financial Times correspondent, and has called Mr. Putin "dangerous" and a kleptocrat.
Diplomats on both sides of the Canada-Russia relationship say Mr. Dion was the main proponent of re-engagement efforts, while Ms. Freeland, in her trade portfolio, resisted.
The Russia impact may be overblown. Old Russia hands say they expect Russia to see her appointment as an inconvenience, not a deliberate signal. But her appointment still shows Canada's big economic relationships matter more.
It is not only about Donald Trump's America. The president-elect's potential threat to the exports to the U.S. that equalled 16.4 per cent of GDP in 2015 has raised the importance of trade ties elsewhere. Mr. Trudeau's cabinet shuffle symbolized that, too.
The Prime Minister had hoped to announce Mr. Dion would take a major ambassador's post in Europe, a symbol of the desire to reap the fruits of the EU free-trade deal.
The appointment of John McCallum, a sitting immigration minister, as ambassador to Beijing, was an even bigger signal – it ranks the Canada-China relationship as important. Mr. Trudeau's predecessor, Mr. Harper, had tried to recruit a high-profile political appointee, offering the post to former trade minister David Emerson. When Mr. Trudeau appointed a close associate, Mr. MacNaughton, to Washington, Chinese ambassador Luo Zhaohui told Mr. Trudeau's principal secretary, Gerald Butts, that China now expected the same thing. With Mr. McCallum, China has it.
Ms. Freeland's appointment also puts a China-trade enthusiast in charge of diplomacy. Mr. Dion, who doesn't easily bend principle or cede to group plans, was wary.
"Dion understood that the Chinese were tough, that the human rights situation was very difficult, that they were always operating with their own interests in mind," said one person privy to some of the debate. "I think the Prime Minister also understands that, but he feels that it's possible to have a good relationship and that there will be ways to raise our concerns and also promote our interests."
There's also a feeling that it's economic necessity.
Trade with China won't quickly replace trade with the United States if something dramatic happens there, said Dominic Barton, the Asia-business guru who is managing director of global consulting giant McKinsey & Co. But Mr. Barton, a Canadian who heads the Trudeau government's advisory council on economic growth – and was first choice for the Beijing ambassador's job – argues the potential can't be ignored.
"These are the two biggest economies of the world. We've got to get deep in there," he said. "So we need both."
"Given how their economy is transforming into much more of a consumption and investment-driven economy, the rapidly-growing middle-class, and the size of it – those trends are just completely in our favour, or our interest," he said.
But sending Mr. McCallum to Beijing won't suddenly open all doors in Beijing. Access to top Chinese leaders is scarce even for well-connected envoys.
The Chinese want a free-trade deal with Canada, but until September, just before the visit of Premier Li Keqiang, they refused to discuss four key areas – environment, labour standards, state-owned enterprises or procurement. Exploratory talks might indicate if the Chinese will really give, and allow safeguards. Australia struck a free-trade agreement that eliminated coal tariffs – but Australian coal producers complained Beijing then adopted new environment and quality regulations that hurt sales.
Mr. Trudeau's team has already seen Chinese officials can be hard-nosed – one source said they grasped that when Chinese foreign minister Wang Yi visited Ottawa and berated a Canadian reporter for "arrogance" when she asked about China's jailing of Canadian missionary Kevin Garratt.
When Mr. Trudeau went to China in late August, Beijing touted a new "golden era" in Canada-China relations. But the Chinese were also surprised Mr. Trudeau insisted Mr. Garratt's case was critical; they didn't expect a golden era to come with such irritation or criticism. One veteran China hand said the warming will be refrozen if a high-profile human-rights case forces Mr. Trudeau to criticize Beijing.
That's probably especially true in 2017. Chinese president Xi Jinping is seeking to consolidate control as most of the standing committee of the Politburo is slated to be replaced. He's likely to deepen the crackdown on criticism. And he'll want to look tough when confronted from abroad.
That seems likely to fuel tensions between China and the United States, which are already crackling because Mr. Trump questioned the United States' one-China policy, warned of its expansionism, and threatened trade measures.
Uncertainty over Mr. Trump's agenda will drive Chinese attention to other parts of the world – and Canada might benefit if it is willing to swallow criticisms. But Beijing will also increasingly demand to be treated with the deference once reserved for Washington. Warming ties with China could prove prickly in Washington. Will the Americans object to Canada-China trade talks? Will Canada send frigates to U.S. naval exercises in the South China Sea?
China has already begun to sketch its response to Mr. Trump, which involves placating, skirting and directly challenging the United States and its incoming leader.
Placating may be simplest: This week Chinese e-commerce billionaire Jack Ma flew to New York to meet with Mr. Trump, promising his powerful Alibaba companies would support a million U.S. jobs over the next half-decade. China-watchers saw it as an olive branch from Beijing. "What did I say about China finding a way to bribe [Trump]? This is the start," Anne Stevenson-Yang, a prominent China researcher, wrote on Twitter.
And China has accelerated its bid to skirt and challenge Washington, an ambitious effort to elevate itself at U.S. expense.
Next week, Xi Jinping will become the first Chinese president to attend the World Economic Forum at Davos, to cast himself as globalization's new champion. China's aspiration to seize that title from the United States is both defensive – to protects its own gains from global trade – and opportunistic.
In Mr. Trump's isolationist rhetoric, China has spied a chance to leap ahead. China's UN ambassador, Ma Zhaoxu, billed Mr. Xi's trip to Switzerland, where he'll also meet leaders of the United Nations, World Health Organization and International Olympic Committee, as a chance to show China as "one of the leaders of the international community."
"The world today is at a turning point in history," Mr. Ma told state media.
It might seem that way in Mr. Trudeau's world, too. The country's economic health depends on cajoling the newly unpredictable superpower to the south into doing Canada no harm. Its economic future depends on courting a prickly, difficult rival power. Mr. Trudeau's task is figuring out how to court two key trade partners that are engaging in increasingly naked rivalry for global power.
In 2017, that imperative is at the centre of Justin Trudeau's world.