Canadas

Toronto, Canada: As Canadian Prime Minister Mark Carney races to make the country less dependent on the United States, attract billions in new investment and get major projects built faster, his economic overhaul is running into resistance from a group that says it wants many of the same things: organised labour.

The latest clash, over the right to strike, comes after months of mounting pressure on Ottawa from Washington, DC.

US President Donald Trump, since taking up a second term in office last year, has imposed steep tariffs on Canadian goods and weakened trade agreements – perilous moves as Canada has historically sent close to 80 percent of its exports to its southern neighbour. He has repeatedly piled on with the tariff threats to make Canada the 51st US state.

Canada has responded with retaliatory tariffs, while a broader movement to “Buy Canadian” has taken hold. The hockey-inspired “elbows up” — meaning a readiness to defend against an opponent — has become a national rallying cry.

With trade talks stalled since August, Carney has moved with urgency to shore up the economy and invite new investments. Last month, he announced Bill C-39, known as the Building Canada Strong Act, promising to bring “speed, certainty and predictability” to investors.

Along with measures to speed up approvals for major projects, the bill would also give Ottawa clearer powers to intervene in legal strikes and lockouts in federally regulated workplaces — a provision that has put Carney on a collision course with unions.

Canada’s largest unions have come together against the changes. The largest, the Canadian Union of Public Employees (CUPE), had its national executive go as far as voting to defy the bill’s proposed limits on the right to strike if it passes Parliament without amendments.

CUPE National President Mark Hancock credited Carney’s handling of Trump and said the union’s 800,000 members, who work everywhere from hospitals to schools to municipal services, want to be part of “Team Canada”.

“But at what cost?” he said in an interview with Al Jazeera.

A fight over the right to strike

The controversy centres on Section 107 of the Canada Labour Code, which already gives the Labour Minister broad powers to step into disputes if needed to maintain “industrial peace”, end work stoppages and force the two sides into a binding arbitration.

Beginning in 2024, Ottawa used the provision eight times to intervene in disputes involving airlines, Canada’s two largest railways, three major ports and Canada Post and again during the Air Canada dispute in 2025 when flight attendants went on strike.

Unions have challenged the use of that law in court and had hoped the proposed C-39 would restrict, if not repeal, that clause while businesses wanted it strengthened.

The bill does neither. Instead, it introduces two conditions that the government would have to fulfil first before turning to Section 107.

Before stepping in, the government would have to appoint a special mediator, wait for a public report and consider whether a work stoppage is hurting the “national interest”.

Once a strike or lockout is underway, the minister could direct the Canada Industrial Relations Board to get operations running again and impose a binding process, such as arbitration.

The government says those steps put clearer guardrails around a power that already exists, and Carney has said the bill “absolutely reinforces the right to strike”, according to the Canadian Broadcasting Corporation.

Unions have rejected this defence, pointing out that the meaning of “national interest” would ultimately be decided by the minister. They also argue that the prospect of government intervention is bound to change what happens at the bargaining table.

“The political lesson that employers will draw from it is simple,” Larry Savage, a professor of labour studies at Brock University, told Al Jazeera. “Hold out long enough, emphasise the economic damage, and then Ottawa will remove the union’s leverage for you.”

Disruption, Savage said, is precisely what gives a strike its power. “Every effective strike is disruptive,” he said.

Unions say they have already seen employers expect Ottawa to intervene.

Teamsters Canada alleges the Canadian National Railway (CN) and the Canadian Pacific Kansas City (CPKC) railroad companies were counting on Ottawa to step in when they locked out thousands of workers in 2024. Section 107 was invoked within hours.

“Companies have gotten used to the idea that if there is a labour dispute, they can just wait for the government to intervene,” Christopher Monette, Teamsters Canada’s director of public affairs, told Al Jazeera.

CUPE said it saw a similar dynamic at Air Canada in August 2025. Hancock said bargaining stalled after more than 10,000 Air Canada flight attendants voted overwhelmingly to strike because the airline was “expecting the government of Canada to step in and end the strike” — an account Air Canada disputed.

Less than 12 hours after workers walked out, Ottawa invoked Section 107. Air Canada CEO Michael Rousseau later told BNN Bloomberg the airline had expected the provision to be enforced and did not expect a strike.

“That was why they didn’t have a strategy on how to deal with the strike,” Hancock said.

Building Canada faster

The fight over the right to strike is also part of a much bigger argument taking shape around Carney’s economic agenda: Who gets a say in how Canada should change, and how quickly, in the name of making itself less vulnerable to the US?

Critics accuse Carney of using the economic threat from the US to push through changes that go well beyond responding to Trump’s trade war.

New Democratic Party leader Avi Lewis has accused him of using the “fear and disorientation around the trade war to push through a series of unpopular measures that he did not run on, has no mandate for and would never get away with under normal circumstances”.

That tension was on display in Toronto just a week before C-39 was introduced. Inside Canada’s first national investment summit, hundreds of global investors met with government officials and executives as Carney pitched a country ready to build.

Outside, hundreds of protesters marched through downtown towards the summit’s opening gala under the banner “The Many vs The Money”. The rally brought together labour, Indigenous, environmental and migrant-rights groups, with signs and speeches taking aim at everything from fossil fuel and military projects to AI and the use of public money to attract private investment.

For unions, C-39 has sharpened that debate, pitting the government’s promise of greater certainty for investors against workers’ ability to exert pressure through strikes.

But Jim Stanford, an economist and director of the Vancouver-based Centre for Future Work, questions how much of an economic threat strikes actually pose.

While work stoppages can be costly for individual companies, Stanford said, “It is very, very rare that you would see a noticeable and sustained impact on GDP, employment or incomes.”

Production and transportation are often delayed rather than permanently lost, he added, with businesses catching up once work resumes.

Stanford also questioned the idea that strikes are driving away investment, noting that more than 95 percent of collective bargaining ends without a work stoppage and saying there is “no empirical evidence whatsoever” that strikes have reduced investment.

“This is more of the government giving some icing on the cake for business. It’s not that this has to happen or else our investment won’t work,” he said.

There is also an economic cost to weakening the right to strike, Stanford argued. Workers need bargaining power to win higher wages, which can support consumer spending, productivity and worker retention.

“It may seem like labour peace is a good thing, but if it means that a worker’s share of the pie shrinks, then this actually hurts the economy.”

For labour leaders, that’s where Carney’s economic push goes too far.

“Canada’s unions are part of Team Canada. We have our elbows up,” Canadian Labour Congress President Bea Bruske said in a statement. “But we can’t have our elbows up against Trump with our hands tied at the bargaining table.”

Savage said the government’s “Team Canada” rhetoric risks treating workers’ bargaining power as a national liability.

“I don’t think Canada becomes stronger by telling workers in ports or railways or airlines that their rights have to be surrendered whenever employers invoke competitiveness or the national interest,” he said.

Abbotsford, British Columbia – Every second day, 28,000 litres of raw milk leave Casey Pruim’s farm in Abbotsford in western Canada, entering a distribution system built on the assumption that the milk and the products made from it will have somewhere to go.

While most is consumed in Canada, some had been sold across the border to the United States.

Those sales have largely come to a standstill since US President Donald Trump’s 50 percent tariff on $20bn in Canadian goods, including dairy products, came into effect on August 22.

Pruim, who is also chair of the British Columbia Dairy Association representing about 400 dairy farmers across the province, told Al Jazeera that Canadian farmers do not individually decide which products are exported.

Instead, producers such as Pruim –  whose farm has 330 cows milked three times a day  –  sell into the provincial milk-marketing system, which distributes milk to processors according to demand, including for products exported to the US.

If a processor loses US demand, it may require less milk, with the impact then spread across the provincial pool.

Dylan Kruger, director of public affairs at BC Dairy, told Al Jazeera “there is still considerable uncertainty around the impact of the US tariffs”.

He said it was too early to know how the industry would be impacted or whether milk no longer sold to the US could be sold elsewhere, mitigating financial losses.

But the tariffs and wider trade tensions have already introduced uncertainty and instability for businesses.

“If the processor who’s exporting some of his product to the United States can no longer sell into that market because he’s now priced out of the market with a 50 percent tariff, that’s how it would impact the dairy farm,” Pruim said.

Pruim said if processor demand is squeezed, farmers would be forced to dump the milk. In the worst-case scenario, the herd has to be cut.

“Cows aren’t like a tap; you can’t just turn them on or off,” he said.

His warning captures dairy’s particular vulnerability in a tariff war: Milk is highly perishable, collected on a tight schedule and dependent on processors whose demand can change much faster than farmers can adjust production.

“These tariffs are completely unwarranted,” David Wiens, president of the Dairy Farmers of Canada, told Canada’s CBC News, adding that they would affect “the supply chain, not only in Canada but in the US as well”.

Supply-management system

Dairy trade between Canada and the US has largely operated under a free trade agreement between the US, Mexico and Canada, known as CUSMA in Canada.

Canada manages the supply of dairy, poultry and eggs through a national agricultural policy known as supply management. The system uses production quotas and import controls, including tariffs, to provide farmers with more stable and predictable prices while maintaining domestic supply.

Critics describe the system as protectionist and as a government-backed cartel.

Washington argues that Canada’s supply-management system restricts US dairy exports. Trump posted on Truth Social that “Canada had been ripping off the United States of America for years” and accused it of imposing “ridiculously high tariffs” that made life impossible for US farmers.

Canadian producers reject that argument, saying the existing trade agreement already gives US imports substantial tariff-free access that is not fully utilised.

Canada’s dairy trade deficit with the US has grown significantly since CUSMA came into force on July 1, 2020, according to the Dairy Processors Association of Canada.

In 2020, Canada exported 241.3 million Canadian dollars ($173m) in dairy products to the US and imported 647.4 million Canadian dollars ($462.7m) worth of dairy and dairy products. In 2025, Canadian dairy exports had risen to 308.7 million Canadian dollars ($220.7m) while dairy imports from the US had more than doubled to 1.355 billion Canadian dollars ($968.5m), accounting for 13.8 percent of total value of US dairy exports, according to the association.

Bryan Yu, chief economist at Central 1 credit union, said the immediate shock of losing a major market could be difficult for Canadian producers to absorb because replacement buyers cannot be found quickly.

“There is going to be pain in the near term for a lot of our producers,” Yu told Al Jazeera.

“You really can’t quickly adjust to a 50 percent tariff, because it’s uncharted waters for a lot of industries … and ultimately it shuts [Canadian producers] out, because a lot of them don’t have the margins that they can play with,” he said.

Yu said Canadian consumers might absorb some of the additional supply while exporters search for new markets and higher-value products, but neither adjustment is instantaneous.

“There are global markets as well, especially when you talk about chilled, chilled beef, chilled products and really it’s a question of whether … other types of markets that could be available.”

Canada has also imposed retaliatory tariffs, which came into effect on September 8 and cover $20bn worth of US products.

Dairy products are among the targeted goods. The list includes a 50 percent tariff on milk, cream and whey products and a 25 percent tariff on many cheeses imported from the US.

Canadian Prime Minister Mark Carney has framed Ottawa’s response as both retaliation and an attempt to build greater economic resilience.

Announcing the collapse of the latest negotiations, he said Canada would match Washington’s new tariffs “dollar for dollar” to protect workers, farmers, families and businesses.

But retaliatory measures carry risks of their own.

“Canada’s new retaliatory tariffs will help some industries but hurt most and weaken economic growth across the country by raising costs for producers and consumers,” Oxford Economics said in a report.

For now, geography remains important for perishable goods like dairy products that once moved quickly across the US border and cannot be redirected overnight to a distant market without new buyers, logistics and regulatory approvals.

Ottawa’s Trade Commissioner Service is advising affected companies to check their CUSMA compliance, explore available relief and contact trade commissioners about potential new markets.

Yu predicted that the US and Canada could reach a tariff deal in the following months but said the interim period could bring “higher prices, weaker economic activity and deeper mistrust”.

For Pruim, the uncertainty is as destabilising as the tariff threat itself.

“I think, like [for] any Canadian, it’s disappointing to have these trade talks collapse again and just the uncertainty around it.”

In address to European parliament, Canadian Prime Minister Mark Carney listed areas where he wants to boost cooperation.

Canadian Prime Minister Mark Carney has welcomed the prospect of his country becoming the European Union’s first associate member, saying such an alliance is aimed to be a “beacon for democracies” and not to “dominate others”.

Speaking in the European Parliament in Strasbourg, Carney said Canada “welcomes” von der Leyen’s ambition to make the country an associate member.

“We are not fair-weather allies. We do not pursue zero-sum deals. We hold common values for which we have always fought, and in whose defence we must always remain vigilant,” Carney said to applause from European lawmakers.

“Canada and Europe are each strong. Europe and Canada are stronger together.”

“I am not proposing a third bloc in order to become a great-power rival – only with better manners,” he continued. “We do not seek power to dominate others. On the contrary, we are pursuing resilience so that no one can control our open markets, impair our sovereignty, threaten our territorial integrity, or undermine our freedoms, our democracies, our rule of law.”

Carney listed a slew of areas where he wanted to ramp up cooperation.

“Canada and Europe should secure our strategic autonomy through deep cooperation in the full range of strategic capabilities, including critical minerals, defence industrial capacity, AI and compute, energy security, space and payments.”

He also said the EU and Canada should move towards “seamless digital trade” and allow young people from both sides to work and study on either side of the Atlantic.

The EU and Canada have been facing stiff rivalry and pressure from Trump’s administration on trade, among other matters, and from an increasingly assertive China.

Trump threatened late on Wednesday to take action against the EU if it moves forward with von der Leyen’s proposal of associate membership for Canada.

“If they do that, if I think it’s at all a hostile act, I will put very serious tariffs or stop trading with Europe on many things,” Trump told reporters, calling the proposal “laughable”.

“If it’s a good intention, that’s fine. If it’s a bad intention, we’ll put very heavy tariffs on Europe,” he added.

The European Commission (EC) said von der Leyen’s proposal – which is yet to be fleshed out and will need to be approved by EU member states to go forward – was not a hostile act.

“As our President (von der Leyen) made clear yesterday, the proposed strengthening of our partnership with Canada is not against anyone else, but for our common strength,” said Olof Gill, an EC spokesperson.