The middle child

Canada enters summer 2026 at a strategic inflection point. Prime Minister Carney has declared that the nation’s previous relationship with Washington, built on decades of managed dependence, “is over.” What has replaced it is deliberate hedging: a NATO commitment to spend 5% of GDP on defense; a Canada-EU Security and Defence Partnership embedding Canada into Europe's defense architecture for the first time; selective engagement with China on energy and agriculture with hard exclusions on AI and critical minerals, and a target of doubling non-U.S. exports by 2035. 

The July 1 USMCA deadline is where theory meets reality. Carney has acknowledged a tariff-free deal is unlikely, with many issues, including supply management, softwood lumber and banking, still unresolved. Canada remains roughly 75% export dependent on the U.S., which is precisely why Ottawa is not defecting entirely from the U.S.-led international order. It is negotiating its terms of partnership. 

New terms:

• The clock is running. Companies with North American supply chains should stress-test cost structures against a no-deal or bifurcated USMCA scenario now; the upcoming deadline leaves little runway for contingency planning. 

• Selectivity is the strategy. The Investment Canada Act overhaul has tightened investment screenings on AI and critical minerals, raising the due diligence bar materially for any cross-border transaction touching Canadian assets. 

• Procurement is politics. Canada's entry into SAFE – the EU’s €150 billion defense procurement fund – has turned allied procurement into diplomatic signaling as much as operational decision-making. Clients in the defense industrial base should expect non-U.S. supplier wins to multiply across NATO. 

For tailored insights on sectoral, geographic, or scenario-specific risks, please reach out directly to geopolitics@fgsglobal.com. 

In a crisis, everything that wasn't decided in advance gets decided badly. Christine Graeff, FGS Global's Chief Growth Officer and a veteran of crisis communications, recently shared what she has learned leading communications through some of the most consequential institutional moments of the last decade:

• Independence of mind is the ultimate asset. The best crisis leaders give honest advice and accept the consequences, even at personal cost. That conviction is what enables clear-headed judgment when pressure pushes others toward emotional decision-making.

• A plan is not the same as being ready. Whatever scenarios you plan for, the one that hits will look different. Rehearsal reveals who takes charge, who speaks, and who keeps the business running.

• Get the basics right. Speed of response depends on unglamorous fundamentals: decision authority, escalation paths, and backup protocols. A clear "if person #1 is unreachable, person #2 decides" rule is what makes fast action possible.

• Crisis management is top-down, not consensus. Legal and communications must be aligned, but they serve different mandates. Invest in the relationship early, clarify decision rights before the storm hits, and you can disagree productively when it matters.

• AI is both threat and tool. Deepfakes are near-impossible to spot and accelerate escalation. The same technology enables faster scenario testing, synthetic audience modeling and predictive messaging.

• Recovery requires credibility. Rebuilding takes visible, sustained follow-through. Promises unmatched by behavior erode trust fast — and recovery rarely offers a second chance.

• Look after yourself. Sleep matters. Stepping back matters. The best leaders deliberately create space to think, even when time feels impossibly short.

The separation between geopolitical risk and business strategy is gone. What used to be monitored by government affairs teams and flagged in footnotes is now reshaping supply chains, investment decisions, and board agendas in real time. Across eight markets, FGS Global's Geopolitical and Policy Risk Advisory team identifies the trends that will define the operating environment over the next twelve months:

• United States: Energy security, trade policy and national security have merged into a single strategic framework. Companies must factor export controls, investment screening and infrastructure policy into their core operating models.

• United Kingdom: Transatlantic trade relief, elevated inflation and domestic political fragmentation are creating a complex operating environment. Businesses should build broad political capital and engage with an increasingly multi-party landscape.

• Germany: Berlin is navigating a delicate balance – managing public pressure for a harder line on Washington while remaining strategically dependent on U.S. security and trade cooperation.

• Canada: A deliberate pivot toward China, India and Europe is underway, driven by U.S. trade tensions. Geopolitical awareness is now a governance responsibility, not merely a government affairs concern.

• Japan: Deepening U.S. alignment is colliding with entrenched corporate dependencies on China, while new investment screening rules signal tightening economic security measures.

• China: The incoming Five-Year Plan prioritizes AI-driven growth and self-reliance. Beijing is actively balancing openness to foreign investment with assertive national security enforcement.

• France: The transatlantic fracture is reshaping commercial decisions – cloud, finance, supply chains – into political ones ahead of the 2027 presidential election.

• Singapore: Security-driven geoeconomics is replacing inclusive globalization. Supply chains are risk-priced rather than cost-optimized, and governments are intervening more aggressively across industrial and technology policy. 

For tailored insights on sectoral, geographic or scenario-specific risks, please reach out directly to geopolitics@fgsglobal.com.