Prime Minister Mark Carney's 'middle powers' plan already failed — just ask Jamie Dimon, and your portfolio

But when Dimon was asked about it, his response was blunt: “It’s a fantasy. They did that, it’s called Europe.” He continued by stating: “The GDP of Europe has gone from 90% of America[‘s GDP] to 70%. And in our view, it will probably continue to erode over time because [of] high taxes.”

Europe as the cautionary tale

Dimon didn’t leave it there. He explained that Europe’s gross domestic product (GDP) — the total monetary value of all finished goods and services produced within a country — will continue to decline due to high taxes and regulatory fragmentation. Dimon argued that these factors are structural drag that no amount of coalition-building can easily overcome.

He was also clear that the European experience is a pointed lesson for Canada.

Carney’s middle powers strategy envisions closer economic ties with the European Union, India, Japan, Australia and others — explicitly modelled, in part, on the kind of bloc-building that the EU was supposed to represent. For Dimon, if Europe itself is losing economic ground, the strategy’s foundation deserves scrutiny.

To be clear, Dimon is not dismissing Canada or Carney personally — he said plainly at Davos, “I have a lot of respect for Carney.” But respect and agreement are different things. And the stakes of this disagreement land directly in your portfolio.

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What this means for Canadian investors

Canada’s economy is deeply tied to the U.S. — roughly 66% of Canadian merchandise exports go south of the border. And Carney’s government has made diversification the centrepiece of its economic agenda with new trade deals with China, Qatar, the EU and others, and trade negotiations with India, the Association of Southeast Asian Nations (ASEAN), and Mercosur.

If those partnerships mature and deliver, then Canadian companies — and by extension, Canadian portfolios — will gain new revenue streams and reduce vulnerability to U.S. policy swings. That’s the bull case for the strategy.

The bear case, which Dimon is essentially making, is that middle-power coalitions are harder to build and sustain than they appear, and that the economic gravity of the U.S. is not easily replaced. If the diversification effort underdelivers, Canada could end up with strained U.S. relations and disappointing returns from new partnerships — the worst of both worlds.

Dimon has a well-documented history of sounding economic alarms — from warning of a “hurricane” in 2022 to flagging market complacency at Davos — earning him a reputation among some observers as Wall Street’s most prominent pessimist.

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The market risk hiding in plain sight

Dimon also flagged a concern that applies directly to any Canadian investor with exposure to bonds or equities: Market complacency.

At Davos, he noted that markets appear to be underpricing the risk of further U.S. interest rate hikes — he put the odds significantly higher than consensus — citing inflationary pressure from tariffs, persistent budget deficits and immigration policy.

Higher U.S. rates ripple into Canadian markets quickly. They put upward pressure on the Bank of Canada’s rate decisions, affect bond valuations and dampen equity multiples. For Canadian investors holding a mix of domestic equities and bonds in a registered retirement savings plan (RRSP) or tax-free savings account (TFSA), this matters.

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What you can do now

You don’t need to pick a side in the Dimon-Carney debate to take useful action. The underlying message from both perspectives is the same: The world is more uncertain, and portfolios built for a stable, U.S.-anchored global economy may need to be stress-tested for a different reality.

A few things worth considering:

Review your geographic exposure. If your equity portfolio is heavily weighted toward Canadian stocks or U.S. equities with no meaningful international diversification, consider whether that reflects a deliberate view or simple inertia