‘Canada will never ever be part of America’

Good morning and welcome back to the working week. Here’s what is on the agenda for today:

• Canada gets a new prime minister

• Ukraine-US peace talks

• An upsurge of violence in Syria

• And how a coffee snob fell in love with a cheap brew

Canada’s ruling Liberal party has chosen Mark Carney, the former Bank of England and Bank of Canada governor, as its new leader and the country’s next prime minister.

Carney defeated former finance minister Chrystia Freeland to replace Justin Trudeau, who stepped down as leader in January after months of party infighting and poor polling.

In his victory speech, Carney slammed Donald Trump’s “unjustified tariffs” on Canadian imports and the US threats to make Canada the US’s 51st state.

“There’s someone who’s trying to weaken our economy: Donald Trump,” Carney said. “He’s attacking Canadian families, workers and businesses and we cannot let him succeed,” he added. “America is not part of Canada and Canada will never ever be part of America in any way, shape or form.”

The incoming prime minister vowed to maintain retaliatory tariffs on its southern neighbour “until the Americans show us respect” and said Canada must find new trading relationships with “reliable partners” after Trump threatened to impose 25 per cent tariffs on Canadian imports before postponing their introduction.

Carney will immediately replace Trudeau and is expected to call an election soon. Trump’s attacks on Canada have upended politics in that country and reinvigorated the Liberal party, which had been facing a near-certain election defeat. Polls show that the gap between the ruling Liberal party and the opposition Conservatives, led by Pierre Poilievre, have narrowed in recent weeks as sovereignty has replaced more familiar issues such as cost of living and housing on the campaign trail.

A former Goldman Sachs banker, Carney was Bank of Canada governor during the financial crisis and BoE governor throughout Brexit. He recently resigned as chair of Brookfield Asset Management. He has also been chair of the board of Bloomberg and UN special envoy on climate action and finance.

Here’s what else we’re watching today:

• Markets: Global stock indices are down as investors worry about the health of the US economy. S&P futures are indicating a loss of more than 1 per cent for the US benchmark when trading begins in New York following last week’s 3.1 per cent loss.

• Ukraine: Officials from the US and Ukraine will travel to Saudi Arabia ahead of negotiations, starting tomorrow, to end the war with Russia. Here’s what Kyiv is hoping to get from the talks.

• Trade: China’s retaliatory tariffs on $22bn worth of US goods kick in, while Indian and EU officials discuss a proposed free trade agreement in Brussels.

• Company result: Database software maker Oracle releases third-quarter earnings after the close of the market.

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Five more top stories

1. Trump has declined to rule out either a recession or higher inflation while dismissing the concerns of business over tariffs, after a tumultuous week in which he watered down elements of his aggressive trade agenda. The US president insisted industry had “plenty of clarity” and lashed out at “soundbite[s]” from companies expressing confusion over his plans.

• Go deeper: The US economy is heading for recession, writes Tej Parikh in yesterday’s edition of the Free Lunch newsletter. Sign up for the newsletter if you’re a premium subscriber, or upgrade your subscription.

2. Germany could take on just under €2tn in debt over the next decade without running the risk of damaging growth, according to a Financial Times analysis of a Eurozone economists poll that supports likely incoming chancellor Friedrich Merz’s fiscal bazooka. “Germany has a large fiscal capacity,” said Marcello Messori, a professor at the European University Institute in Florence. Here’s more on Germany’s fiscal headroom.

3. Ford will inject up to €4.4bn of new capital to keep its debt-ridden German subsidiary afloat as the US group warned of more “tough decisions” ahead as it tries to revive its flagging car business in Europe. John Lawler, vice-chair of the US carmaker, said it would not pull out of its European business but called on Brussels and Germany to do more to accelerate the transition to electric vehicles. Read the full interview.

4. Some of the world’s largest banks and fintechs are rushing to launch their own stablecoins, aiming to grab a slice of a cross-border payments market they expect will be redrawn by cryptocurrencies. Last month, Bank of America signalled it was open to issuing its own coin. Here are the other established payment services providers targeting the business.

5. Hundreds of people have been killed in Syria after clashes between pro-government and pro-Assad forces in recent days. The violence has become the greatest threat to the country’s stability since former president Bashar al-Assad was ousted in December. Here’s more from Malaika Kanaaneh Tapper and Sarah Dadouch in Beirut.

Visual story

Criss-crossed by about 1,500 large vessels at any one time, the Baltic Sea is a crowded maritime route and a trade corridor for both Europe and Russia. But its network of critical infrastructure, including communication and power cables, has made it an attractive target for what appears to be a recent rise in “hybrid warfare”. Now, a spate of suspected sabotage incidents has put Nato on high alert, and exposed the vulnerability of Europe’s undersea infrastructure.

We’re also reading . . . 

• Global economy: Financial stress is forcing reform and recovery in many overlooked countries, writes Ruchir Sharma.

• M&A: The mood was muted among dealmakers gathering last week in New Orleans for an annual industry event. Where was the Trump M&A bump?

• Trump and investors: The stability and returns of US asset markets have been based on the stability and dominance of the country itself, writes Rana Foroohar. What if Trump upends that?

• Office lunches: As business districts refill with workers, new takeaway meals now marry the virtues of self-care, business-like optimisation and a tasty treat.

Chart of the day

US start-ups are raising more cash than at any point since 2021, thanks to investor bullishness about artificial intelligence, but the venture capital market has tilted sharply towards funding a handful of huge private tech companies.

Take a break from the news . . . 

Elroy Rosenberg’s “career” as a speciality barista took him to Paris and New York. The one-time coffee snob shares how he fell in love with cheap bodega coffee.