Tensions between the United States and Canada escalate! Carney spoke to Trump on phone:

**Source**: Wall Street Insights

**By**: Dong Jing

Reports indicate that Canadian Prime Minister Mark Carney, following a phone call with Donald Trump, reaffirmed that his stance against "economic coercion" at the World Economic Forum (WEF) in Davos was genuine, publicly refuting U.S. Treasury Secretary Janet Yellen’s claim that he had "walked back his remarks". Analysts point out that the public rift between the two sides highlights strained bilateral relations, signaling that the upcoming negotiations for the review of the U.S.-Mexico-Canada Agreement (USMCA) will be fraught with challenges.

Prime Minister Carney stated that during his conversation with Trump, he explicitly reiterated that his call to "combat economic coercion" made at Davos the previous week remained unchanged. With the U.S. set to launch a formal review of the USMCA, this statement has once again tightened Canada-U.S. trade ties at a critical juncture.

According to Xinhua News Agency, Canadian Prime Minister Mark Carney said at the annual meeting of the World Economic Forum in Davos, Switzerland on January 20 that recently, some major powers have been using tariffs as leverage for pressure and financial infrastructure as tools for coercion. As reported by CCTV News, Trump singled out Carney for criticism at Davos, accusing him of being "not grateful enough to the United States" and claiming that "Canada survives because of the United States".

On January 27, media reports quoted Carney as saying that he had a roughly 30-minute phone call with Trump, emphasizing that "what I said in Davos was serious". The discussions covered a broader range of topics, and Canada was the first country to understand and respond to the shifts in U.S. trade policy driven by Trump.

This clarification was aimed at countering the remarks made by U.S. Treasury Secretary Janet Yellen. In an interview with Fox News on Monday, Yellen stated that she had witnessed the call in the Oval Office and claimed that Carney had "very forcefully walked back" his "unfortunate comments" made at Davos.

Although the market reacted relatively calmly to this diplomatic dispute, market strategists warned that Trump’s choice of words matters. Referring to Carney as a "governor" is a sign that the negotiation process may turn unfriendly when the formal review of the USMCA kicks off later this year.

**"I Meant What I Said" – Carney Reaffirms Davos Stance**

As previously reported by Wall Street Insights, Carney delivered a speech at the WEF in Davos, Switzerland last week, calling on smaller nations to unite against economic coercion. While the speech did not name the United States or Trump, it was widely interpreted as a critique of Trump’s policies of leveraging U.S. economic and military might to achieve geopolitical goals, as well as a template for countries to respond to such pressures.

Reports stated that after the 30-minute phone call with Trump, Carney said:

"I said to the President: 'I meant what I said, and I meant what I said in Davos.' These are a broader set of issues, and Canada was the first country to understand the changes in U.S. trade policy that he initiated, and we are responding to them."

There was a clear discrepancy between the U.S. and Canadian accounts of the phone call. Yellen told Fox News on Monday evening that she had been present in the Oval Office during the conversation, and that Carney had "very enthusiastically retracted his inappropriate remarks made at Davos".

However, Carney’s remarks on Tuesday flatly denied this claim. The Canadian Prime Minister’s public rebuttal was intended to clarify his position and signal that Ottawa will not back down under U.S. pressure. This public clash of narratives further underscores the level of tension in bilateral relations.

Analysts believe that this dispute comes at a critical juncture for Canada-U.S. trade relations. The public disagreement over the content of the phone call has cast a cloud of uncertainty over the upcoming USMCA review negotiations.

### Trump’s Threats and Pressure

In a post on his social media platform Truth Social, Trump referred to Carney as a "governor"—an echo of his previous remarks about using economic means to force Canada to become the 51st state of the United States.

David Rosenberg, head of Toronto-based market strategy firm Rosenberg Research, noted that traders have largely brushed off Trump’s threat to impose a 100% tariff on Canadian imports. The Canadian dollar has strengthened, and Canadian stock markets have risen.

But Rosenberg warned that Trump’s tone is significant. Referring to Carney as a "governor" is not a good omen, especially as the U.S. prepares to launch the formal USMCA review later this year. Trade analysts expect the Trump administration to push for further concessions from Canada at that time. Rosenberg said:

"The new round of insults clearly indicates that goodwill is deteriorating. This is an early preview of how the USMCA renegotiation talks may unfold, sending a message that Ottawa should not expect a conciliatory process."

Carney stated that formal negotiations between Canada and the United States over the USMCA review are expected to begin in the coming weeks.

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