Davos Speech and the Alliance of the Centrist Forces: Global Trade Restructuring Amid the U.S. Leadership Crisis

On January 21, at the World Economic Forum in Davos, Switzerland, Canadian Prime Minister Mark Carney's speech sparked a tremor that lasted for days. Addressing a global audience of political and business elites, including the U.S. delegation, Carney bluntly stated that the rules-based international order has perished and the world has entered an era where might makes right. He called on middle-power nations such as Canada, Australia, and Germany to abandon illusions, unite, and chart their own course to counter the impact of American unilateralism. This speech served as an open declaration of rupture, marking the deepest fissure within the traditional alliance system since the end of the Cold War. Carney's remarks were not an isolated incident but rather the culmination of collective anxiety ignited by a series of U.S. actions over recent months, including repeated threats to annex Greenland, imposing tariffs on seven EU countries and Norway, and publicly humiliating NATO allies. Davos is no longer merely a forum for economic discussions; it has become a crucial barometer for observing the decline of U.S. global leadership and the emergence of a new wave of geopolitical realignments.

Davos Speech: The Diplomatic Uprising of the Centrist Forces

Mark Carney's speech was interpreted by the outside world as a punch on America's nose due to its unprecedented candor and the clarity of its strategic shift. The cornerstone of his core argument is that the old order will not return, and we should not mourn its loss. This judgment directly responds to a series of actions by the Trump administration since 2024: from initiating military intervention in Venezuela, to publicly declaring the intention to acquire Greenland, to threatening punitive tariffs against disobedient European allies on national security grounds. Carney's speech strategy is subtle—superficially addressing the United States, but essentially speaking to all other uneasy nations. He outlines a blueprint for an alliance composed of like-minded countries with shared values and interests, and explicitly states that Canada will take the lead in driving this process.

The immediate response to the speech confirmed the depth of its resonance. Australian Prime Minister Anthony Albanese promptly responded, inviting Carney to a meeting in March to explore a framework for cooperation. This quickly gave rise to the conceptual outline of an alliance of middle-power nations. According to the widely accepted definition in diplomatic circles, middle-power nations are not superpowers or traditional great powers, but they can exert significant influence regionally or even globally through diplomacy, economic strength, or alliance-building. A potential list of members was swiftly outlined: in addition to Canada and Australia, it includes Germany, Italy, Spain, the Netherlands, Sweden, Denmark, Norway, Japan, South Korea, Turkey, Indonesia, Mexico, Brazil, South Africa, and others. Notably, following the Davos controversy, analysis suggests that only Saudi Arabia, the United Arab Emirates, Qatar, and Argentina—which has adopted a pro-American stance after receiving $20 billion in aid from the United States—may still regard the U.S. as a stable trade partner. The growing estrangement among other traditional allies has become increasingly difficult to conceal.

Trade Agreement Shift: From Dependence to Diversification in Practical Action

Karni's remarks quickly translated into concrete shifts in trade policy, with the Canadian government demonstrating its determination to decouple from the United States through a series of new agreements. The most symbolic of these was the electric vehicle agreement reached between Canada and China in early 2025. Under this agreement, Canada will allow 49,000 Chinese electric vehicles to enter its market annually at a 6.1% tariff, directly reversing the 100% punitive tariff implemented in 2024. In exchange, China committed to reducing tariffs on Canadian rapeseed to 15% by March 2026 and eliminating tariffs on Canadian lobster, crab, and peas by the end of 2026. This represents Canada's most significant new trade arrangement since the Canada-European Union Comprehensive Economic and Trade Agreement, sending a clear and unmistakable strategic signal: amid ongoing U.S.-Canada tariff tensions, Ottawa is deliberately reducing its economic reliance on the United States.

This shift has triggered a fierce reaction from Washington. President Trump threatened to impose 100% tariffs on all Canadian goods exported to the United States, accusing Canada of attempting to become a backdoor transshipment hub for Chinese goods. However, the threat appears to be too late, as Canada's trade diversification train has already accelerated. On September 24, 2025, Canada signed its first bilateral trade agreement with Indonesia—a deal described as a Comprehensive Economic Partnership Agreement. Given that Indonesia is a G20 economy and a rising middle power, this agreement further embeds Canada into the ASEAN supply chain. In November of the same year, during a visit to Abu Dhabi, Carney signed the Canada-United Arab Emirates Foreign Investment Promotion and Protection Agreement. While not a comprehensive trade agreement, as a binding investment treaty, it provides a dispute resolution mechanism for two-way investment and is part of Canada's broader engagement with the Gulf region as a global logistics and capital hub.

Data reveals the scale of this shift. The proportion of Canada's exports to the United States relative to its total exports has declined from 75% to 67%, and the trend continues. In 2025, the total bilateral trade between Canada and the United States is estimated at 750 billion USD, still ranking first, but its share is shrinking. Canada-China trade is expected to be around 120 billion USD, with Mexico in third place at 56 billion USD. Japan, Germany, the United Kingdom, and South Korea constitute the remainder of Canada's top seven trading partners, providing mature infrastructure for trade expansion. Internal briefings from the Canadian Trade Minister's office indicate a clear strategic pivot toward low-hanging fruit—the Indo-Pacific region, particularly India, ASEAN, and Australia.

Alliance rift widens: Multidimensional tensions from trade to security.

Trade restructuring is merely the tip of the iceberg; friction in the security domain is also eroding the foundations of traditional alliances. The U.S.-Australia alliance has recently shown public cracks over defense spending issues. U.S. Secretary of Defense Pete Hegses publicly demanded that Australia quickly raise its defense expenditure to 3.5% of GDP, a demand that was flatly rejected by Australian Prime Minister Albanese. At a press conference in Canberra, Albanese made it clear that Australia's defense policy is determined by its own government based on its security needs, rather than in response to external coercive directives. This incident has created noticeable tension within the Five Eyes alliance.

Mexico continues to confront the United States on immigration issues. The Trump administration has been pressuring Mexico to take on more responsibility for preventing migrants from heading north, even internally discussing extreme options such as bombing drug cartel camps. Mexican President Claudia Sheinbaum responded firmly, explicitly rejecting any form of U.S. military intervention. Meanwhile, leveraging one of the world's most extensive free trade agreement networks (covering 50 countries), Mexico is accelerating trade integration with Canada and ASEAN nations. Its long-term strategy similarly aims to reduce excessive dependence on its northern neighbor.

A broader rift within the alliance is reflected in the attitudes toward the Trump administration's Peace Commission initiative. As of January 24, 2026, 35 countries worldwide have signed up to join the commission, which requires a membership fee of 1 billion dollars, including Middle Eastern powers such as Israel, Turkey, Egypt, Saudi Arabia, and Qatar. However, traditional U.S. allies—European Union countries and Canada—have generally expressed reservations or outright rejection of this initiative. Trump subsequently announced the withdrawal of the invitation to Canada, while Ottawa's response was almost indifferent. A senior Canadian foreign ministry official privately stated: The chapter of our relationship with the United States has already turned. The question now is to build a new chapter, and the authors cannot be only Washington.

Global Landscape Restructuring: Opportunities and Risks for Middle-Power Alliances

Current geopolitical analysis generally holds that as U.S.-China competition intensifies and U.S. relations with numerous allies continue to deteriorate, the importance of middle-power nations is rising significantly. ASEAN member states, Gulf countries, and medium-sized European economies are being compelled to adjust their supply chains, engage in strategic hedging, and form temporary alliances. The blueprint for a middle-power coalition outlined by Mark Carney at Davos is a concentrated manifestation of this adaptive response. Its core logic is: in a context where rules-based order is failing and power politics is returning, a single middle-power country is unable to resist the economic coercion of major powers, but through unity, they can form a collective bargaining power that cannot be ignored.

This process faces multiple challenges. The first is the difficulty of internal coordination. Potential middle-power countries have diverse interests and varying geopolitical stances. Germany and Turkey have disagreements on many issues, Japan and South Korea have historical grievances, and Gulf states do not fully align with some European countries in terms of values. Building a coalition with the capacity for joint action is far more complex than restructuring bilateral trade relations. The second is the practical economic constraints. Although Canada's trade dependence on the United States is declining, the U.S. market remains irreplaceable in the short term. A complete decoupling would cause significant economic pain, and any responsible government must weigh the consequences carefully.

However, the forces driving alliances are equally formidable. The global business community has grown weary of the persistent market volatility triggered by U.S. policies. During the Davos Forum, California Governor Gavin Newsom’s theatrical gesture of distributing knee pads to representatives of countries that chose to yield, though satirical, reflected the resistance among some elites toward unilateral coercion. At a deeper level, most nations within the international system are neither willing to fully align with China nor able to continue enduring the capricious bullying of the United States. Consequently, a third path—one that seeks strategic autonomy, grounded in multilateral rules and pragmatic cooperation—naturally holds significant appeal.

From a strategic perspective, if the alliance of middle powers can take shape, it may reshape the global trade and security architecture for the next decade. It could give rise to new regional supply chain clusters, such as a North America-Asia supply chain axis centered on Canada-Mexico-ASEAN, or a high-tech industry alliance revolving around Germany-Japan-South Korea. In terms of security, it may promote new cooperative frameworks outside of NATO, focusing on non-traditional security areas such as maritime route security, cybersecurity, and joint disaster relief. Carney's speech may be marked by history as a turning point, declaring the formal end of the unipolar moment dominated solely by the United States after the Cold War, and heralding the beginning of a more fragmented, diverse, and uncertain era of multipolar competition. Diplomats stationed in Geneva are closely assessing whether their countries will become honored guests in the new alliance or, as Carney warned, end up as a dish on someone else's menu. The answer will determine the new landscape of global power in the future.

Reference materials

https://www.worldpoliticsreview.com/carneys-new-world-order-isnt-so-new/

https://udn.com/news/story/121823/9292917

https://www.jdsupra.com/legalnews/the-davos-speech-by-canadian-prime-9343003/