Canada-India Reset: When Trump's Tariffs Create Unlikely Allies

Just two years ago, Canada and India were expelling each other's diplomats in a bitter diplomatic feud. Today, they're signing a $1.9 billion uranium deal and planning to quintuple their trade. What changed? Donald Trump's tariff threats, it seems, have a way of creating unexpected bedfellows.

The Trump Effect on Middle Power Diplomacy

Canadian Prime Minister Mark Carney's visit to India from February 27 to March 2 produced eight agreements spanning everything from nuclear energy to space cooperation. The centerpiece: an ambitious goal to boost bilateral trade from the current $10 billion to $50 billion by 2030.

The most significant deal involves Saskatchewan-based Cameco supplying uranium to India's Department of Atomic Energy—a long-term partnership aimed at supporting India's clean energy transition and energy security. But this isn't just about atoms and economics. It's about survival in an increasingly fragmented world order.

Carney's January warning at Davos now seems prophetic: "Middle powers must act together, because if we're not at the table, we're on the menu." With Trump wielding tariffs like a weapon against both countries—Canada faces threats to its energy exports, while India already endures a 25% tariff on its discounted Russian oil purchases—the logic of partnership becomes compelling.

From Diplomatic Deep Freeze to Strategic Thaw

The road to this reset wasn't smooth. Relations plummeted in 2023 when then-Prime Minister Justin Trudeau accused "agents of the Indian government" of involvement in the murder of Canadian Sikh national Hardeep Singh Nijjar. India vehemently denied the allegations, but the damage was done. Both countries expelled diplomats, and bilateral ties hit their lowest point in decades.

The Khalistan issue—the decades-old Sikh separatist movement seeking an independent homeland carved from India's Punjab state—remains a persistent irritant. The 1985 Air India bombing, which killed 329 people aboard a flight originating in Montreal, cast a long shadow over Canada-India relations. Canadian authorities faced criticism both for failing to prevent the attack and for bungling the subsequent investigation.

Carney's approach differed markedly from Trudeau's. While Trudeau's 2018 India visit included stops in Punjab and was seen as politically tone-deaf, Carney confined his engagements to Mumbai and New Delhi, focusing strictly on business. No Punjab visit, no political grandstanding—just deals.

The Geopolitical Chess Game

Beyond the headlines, these agreements reveal sophisticated strategic calculations. The new Strategic Energy Partnership sees Canada supplying LPG and LNG to India—convenient timing as both countries seek alternatives to their current energy dependencies. Canada needs new markets as Trump threatens to cut fuel sourcing, while India seeks to diversify beyond Russian oil that's attracting Washington's ire.

The critical minerals cooperation pact is equally telling. As the world scrambles for alternatives to China's rare earth dominance, Canada's resources and India's manufacturing capabilities offer mutual benefits. Their agreement to integrate AI into space and aerospace technologies signals ambitions in future-critical sectors.

Defense cooperation is expanding too, with joint training programs, a Maritime Security Partnership, and institutionalized defense dialogue. This reflects shared concerns about regional security challenges, particularly China's growing assertiveness in the Indo-Pacific.

The Unfinished Business

Yet shadows remain. Even as Carney met Modi in New Delhi, fresh allegations emerged in Canadian media about an Indian consulate official in Vancouver allegedly providing information about Nijjar to his killers. India categorically denied involvement in "transnational violence or organized crime," but such reports underscore how quickly progress could unravel.

The newly reconstituted Canada-India CEOs Forum and the Finance Ministers' Economic and Financial Dialogue represent attempts to create institutional momentum that might survive political turbulence. The focus on instant payments, cross-border remittances, and merchant payments could boost practical cooperation in ways that benefit both countries' businesses and diaspora communities.

The answer may determine whether we're witnessing a genuine realignment of global partnerships or merely a tactical pause in deeper structural conflicts.