By Paul Vieira

OTTAWA--Canadian Prime Minister Mark Carney unveiled Tuesday a new cabinet weeks following his election victory, leaning on newcomers and key officials working on U.S.-Canada relations to rebuild a weakened economy exposed by President Trump's tariff policy.

Carney is keeping François-Philippe Champagne as Finance Minister. Champagne faces two big immediate tasks: host his Group of Seven peers next week in Banff, Alberta in a three-day gathering likely to be dominated by trade; and present a budget plan, likely next month, to outline spending and tax-cut plans as promised during the spring election campaign.

The majority of the 28-member cabinet are either newly elected or are serving in cabinet for the first time, as Carney tries to further distance his administration from the previous government of former prime minister Justin Trudeau. Carney, a former central banker, won the election on April 28, arguing he has the economic acumen and policymaking mettle to lead Canada in this period of economic turmoil.

The new cabinet "is built to deliver the change Canadians want and deserve," Carney said. "Everyone is expected and empowered to show leadership - to bring new ideas, a clear focus, and decisive action to their work."

In addition, Carney also appointed 10 secretaries of state to support ministers on specific policy issues.

Before taking over as Liberal Party leader, he said the Trudeau government didn't pay sufficient attention to the economy, and acknowledged it was in a feeble state prior to Trump unveiling tariffs of up to 25% of key Canadian imports, such as automobiles, steel and aluminum.

Trade with the U.S. had accounted for about a fifth of Canada's economic growth, and Carney has warned the country's decades-long economic relationship with its southern neighbor -- highlighted by a closely integrated supply-chain network -- is over. Carney has talked about exploring new economic and defense ties with Europe and Asia.

"Could eastern Canada reorient itself towards trade with Europe, and western Canada towards trade with Asia? It's not impossible, but it will be costly," said Nobel Prize-winning economist Paul Krugman, in a podcast produced by CIBC Capital Markets.

Among the notable moves is shifting Anita Anand as Canada's Foreign Minister. Melanie Joly, formerly the foreign minister and part of Carney's inner circle on dealing with the Trump White House, moves to the industry portfolio, while Dominic LeBlanc retains responsibility for trade between the U.S. and Canada. LeBlanc and Joly traveled to the White House last week with Carney to meet with Trump and kickstart talks between Ottawa and Washington on a new economic and security pact.

Also in attendance with Carney at the White House was David McGuinty, who is now Canada's Defense Minister. Carney has pledged to increase and accelerate defense spending, amid complaints from the White House and other senior leaders in Congress that Canada is failing to do its share to secure the continent.

Carney has also appointed a former Goldman Sachs executive, Tim Hodgson, to be Canada's Energy Minister. Carney has promised to accelerate the construction of certain energy projects, like a cross-country pipeline connecting the west to the east. The oil-rich province of Alberta has warned it could hold a referendum next year on separating from Canada due to frustration over the federal environmental policy.

Hodgson once advised Carney -- also part of the Goldman Sachs alumni -- when Carney served as Bank of Canada governor. Hodgson was chief executive of Goldman Sachs' Canadian unit, and most recently chairman of electricity distributor Hydro One.

"The task for Carney was to demonstrate change while simultaneously ensuring the expertise of some of his more experienced cabinet members was not lost," said Shachi Kurl, president of the Angus Reid Institute, a polling organization. She said western Canada was keenly awaiting who would be put in charge of the energy file, amid conflicts with previous cabinet officials over resource development. As a result, Hodgson is the newcomer with most at stake in this revamped cabinet, Kurl said.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

May 13, 2025 11:40 ET (15:40 GMT)

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