As Trump destabilizes foreign relationships, Europe forges new ties

“Good fences make good neighbors,” goes the saying — one that seems to encapsulate U.S. President Donald Trump’s threat, made on Saturday, of slapping tariffs of 100% on Canada if the country strikes a trade deal with China.

Canada, for its part, said it has “no intention” of pursuing a free trade agreement with China, Prime Minister Mark Carney said Sunday.  

Trump’s warning comes after he withdrew on Thursday his invitation to Carney for Canada to join his “Board of Peace,” a council originally established to oversee the reconstruction of Gaza.

Such estrangement between Washington and its northern neighbor, however, was probably not what poet Robert Frost meant when he penned the line, often taken out of context.  

Frost goes on to write, “Before I built a wall I’d ask to know / What I was walling in or walling out, / And to whom I was like to give offense.” That context feels relevant as Washington’s relationships with Canada and the European Union grow more strained.

Ties between the European Union and India, by contrast, look sturdier. New Delhi plans to slash tariffs on cars imported from the bloc to 40%, from as high as 110%, according to sources cited by Reuters, with duties set to fall to 10% over time.

Meanwhile, inter-party relations in the U.S. are rocky again. (Though, one has to ask: when were they not?) Democratic senators have warned they will not vote for a government funding package if it includes provisions for the Department of Homeland Security, following outrage over the killing of U.S. citizen Alex Pretti by federal immigration agents.

The standoff raises the risk of a government shutdown, a prospect that could affect U.S. Treasury yields, the dollar and a flight to safe-haven assets.

Those nerves were already visible in early Monday trading. Gold prices broke the $5,000 level during Asia hours, while U.S. futures and Asian markets fell on the confluence of risks globally.

Investors now face a crowded week. Apple, Meta and Microsoft are set to report earnings and the Federal Reserve concludes its rate-setting meeting on Wednesday. How they turn out will set the mood for markets in the short term.

Canada has ‘no intention’ of a deal with China: Carney. The Canadian prime minister said Ottawa respects its obligations under the Canada-U.S.-Mexico trade agreement. Trump on Saturday threatened 100% tariffs on Canada if it “makes a deal with China.”

Europe-U.S. ties are at their ‘lowest moment’ in NATO history. Former European Commission President Jose Manuel Barroso told CNBC on Monday that the transatlantic relationship is in a “rupture phase,” driven more by interests than shared “democratic values.”

India plans to slash tariffs on EU cars. Cars from the…