Good morning. The central banker who built his name managing global crises now faces the task of guiding Canada through a fractured economy and an uncertain world order. We have more on the election of Mark Carney and the parade of economic challenges marching toward him below. In the news Manufacturing: U.S. President Donald Trump’s administration will move to reduce the impact of his automotive tariffs today by alleviating some duties imposed on foreign parts in domestically manufactured cars. Crime: Police have made an arrest in the shooting at a facility owned by the sister company of waste giant GFL. Finance: The Alberta Securities Commission has found that a ‘finfluencer’ broke securities laws. Investment: For all the talk of the need for a “Canada First” strategy on investment in infrastructure, Andrew Willis writes, the country’s biggest utilities and pension plans continue to put their money into U.S. expansion. In the know McCarthy Tetrault executive leaves after DEI program cancelled Charlene Theodore, McCarthy Tétrault LLP’s chief inclusion officer, is leaving the firm after it paused a celebrated hiring program for Black and Indigenous law students – a move made without her input, according to two sources. The program: McCarthy’s diversity efforts were widely seen as a blueprint for how major law firms could broaden access to the profession – a reputation now at risk as its flagship initiatives come under pressure. McCarthy’s diversity efforts were widely seen as a blueprint for how major law firms could broaden access to the profession – a reputation now at risk as its flagship initiatives come under pressure. The exits: Theodore, a former Ontario Bar Association president, joined McCarthy’s executive team three years ago to oversee its “Inclusion Now” initiative. Her exit follows those of Junior Sirivar and Atrisha Lewis, two other prominent Black lawyers. Theodore, a former Ontario Bar Association president, joined McCarthy’s executive team three years ago to oversee its “Inclusion Now” initiative. Her exit follows those of Junior Sirivar and Atrisha Lewis, two other prominent Black lawyers. The wider view: The firm paused its 1L diversity program in February amid a broader corporate pullback from DEI initiatives across North America. Open this photo in gallery: Illustration by Romain Lasser In focus A fragile inheritance The forces that have long shaped Canada’s economy – stable U.S. access, affordable housing, immigration-driven growth, and broad public services – are weakening. The Liberal government will have little time to celebrate before the strain worsens, our team reports. Yesterday, Trump appeared to call on Canadians to elect him, and said the country would avoid tariffs by becoming the “cherished 51st state.” Trade relations rupture Talk of annexation and attacks on continental trade have ruptured relations with Canada’s largest trading partner. Carney must now continue to balance appeasement, retaliation, and a long, uncertain push for diversification. No other market can readily replace U.S. demand, and facing the possibility a minority government, the Liberals could run into heavy opposition to key efforts such as energy projects before they get off (or into) the ground. An economy on weak footing Canada’s economic foundations had begun to erode long before Trump’s re-election. Household debt is among the highest in the OECD, and productivity growth has stalled as business investment sputters. The Bank of Canada has described the country’s productivity problem as a “break the glass” emergency. A deepening trade war could tip the economy into a year-long recession with lasting scars. A housing drag The Canada Mortgage and Housing Corporation estimates the country must build 3.5 million additional homes by 2030 to restore affordability. Without federal intervention – in funding, regulation, and construction – high housing costs will continue to hinder labour mobility and economic growth. Carney has vowed to create a new federal entity called “Build Canada Homes,” which will aim to build affordable housing, incentivize the housing industry, and provide financing to affordable homebuilders. Immigration squeeze Canada’s decision to cap temporary immigration streams and reduce permanent residency targets might ease pressure on housing and services, but it risks exacerbating labour shortages. Carney said early in the campaign that he will keep the cap in place “until we’ve expanded housing.” A growing backlog of claims and an unpredictable U.S. border will further test Ottawa’s capacity to manage migration. Defence and dependence Canada’s military underinvestment has economic as well as strategic costs. Meeting NATO’s 2 per cent spending target would require an $18-billion annual increase. True autonomy from U.S. security guarantees would require far greater outlays – a prospect no government has seriously contemplated. A fragile federation Elbows might be up, but some are aimed at each other. Quebec separatism has ebbed but not disappeared. In Alberta and Saskatchewan, demands for greater autonomy are growing sharp. Economic hardship – and a defeat after dominating the polls for so long – could further inflame divisions. 💡 Recommended reading Tony Keller: This election came down to one question: Who do you trust? Kevin Yin: The new federal government will spend big, raise deficits – and that will be fine. Licia Corbella: Alberta’s grievances need to be taken seriously. John Turley-Ewart: An unserious election, and a broken business model for Canada. Charted Tracking the U.S. brand A recent moderation in rhetoric on trade has caused equities to rally back close to their April 2 level and a small rebound in the dollar. Still, as the calendar crosses tomorrow into 100 days since Trump’s inauguration, the S&P 500 has fallen about 8 per cent and the dollar index has slid about 9 per cent. Bookmarked On our reading list In the North: Renewable energy is being touted as a force for sovereignty. In our carts: Buy American or buy China? This business tested shoppers’ readiness to spend more – with surprising results. In court: A suspect in the high-profile 2016 jewel heist targeting Kim Kardashian says he plans to take responsibility for his role. Morning update World stocks and U.S. equity futures are edging up this morning amid signals the Trump Administration will take a flexible approach to tariffs. Futures for the major U.S. indexes are up in the 0.2% to 0.5% range, and flat for the TSX 60. In Europe, the Stoxx600 index is up 0.38%. In Asia, Japanese markets were closed for a holiday, while Hong Kong’s Hang Seng was little changed and the mainland blue-chip index fell 0.2%. The Canadian dollar traded at 72.27 U.S. cents.