Scaramucci Won't Rule Out U.S. Military Action on Canada
A former Trump advisor says the odds of U.S. military action against Canada are not zero, days after Mark Carney confirmed he studied the scenario. What it means for trade, defence budgets and the loonie.
Anthony Scaramucci, a former advisor to U.S. President Donald Trump, said the risk of U.S. military action against Canada "should be zero ... but it's not," days after Prime Minister Mark Carney confirmed he had studied that risk.
Anthony Scaramucci, who served as an advisor to U.S. President Donald Trump, has declined to rule out the possibility of American military action against Canada, telling BNN Bloomberg that the risk "should be zero ... but it's not."
The remark landed days after Prime Minister Mark Carney confirmed he had studied the risk of U.S. military action against Canada — an acknowledgement that, on its own, marks a break with how the relationship between the two countries has been discussed for generations. Governments run contingency analysis on all manner of low-probability events; they rarely confirm in public that the neighbour with the world's largest defence budget is one of them.
Why a prime minister saying it out loud matters
Ottawa's defence and security planning has historically treated the United States as the guarantor of continental security, not a source of risk to it. The two countries share NORAD, an integrated air defence command, and a border that has been demilitarised for the better part of two centuries. Carney's confirmation that the scenario was examined does not mean the government judges it likely. It means the scenario has moved from unthinkable to assessable — and once something is assessable, it starts to appear in the risk paragraphs of trade agreements, insurance contracts and bond prospectuses.
Scaramucci's framing is the one that will travel: not a prediction, but a refusal to assign zero. That is a low bar in probability terms and a very high one in diplomatic terms. Coming from someone who worked inside the Trump White House, it carries a weight that the same sentence from an outside commentator would not.
Where the pressure actually shows up: trade before troops
The practical channel through which any deterioration in the Canada-U.S. relationship reaches Canadian households is commercial, not military. Canada sends the overwhelming majority of its exports south. Energy, autos, aluminium, lumber and agricultural goods move across the border on integrated supply chains that were built on the assumption that the border is an administrative line rather than a strategic one. Tariff threats, procurement exclusions and regulatory friction are the tools that get used long before anything else does — and they are the ones that show up in corporate guidance and in provincial budgets.
For Canadian exporters, the operative question is not whether a military scenario materialises. It is whether counterparties in the United States begin pricing political risk into contract terms, whether Canadian firms accelerate diversification toward Europe and Asia, and whether capital investment decisions that assume frictionless continental access get deferred. Those are slow variables. They do not announce themselves in a single trading session.
Defence budgets are the fastest-moving consequence
If there is one line item that responds quickly to a shift in threat perception, it is defence procurement. A government that has publicly confirmed it studied a continental risk scenario has, implicitly, made an argument for sovereign capability: domestic shipbuilding, Arctic surveillance, satellite communications, ammunition production and air defence that does not depend on a single supplier relationship.
That has knock-on effects worth watching:
- Procurement sourcing. Pressure to buy Canadian or European rather than American where a credible alternative exists.
- NORAD modernisation. Shared infrastructure becomes politically complicated if the partnership itself is being stress-tested.
- Industrial policy. Domestic primes and mid-tier suppliers stand to benefit from any shift toward sovereign capability, at the cost of a wider fiscal deficit.
- Allied alignment. Closer Canadian coordination with European and Indo-Pacific partners as a hedge.
The currency is the cleanest read on political risk
Foreign exchange markets price sovereign and political risk faster than equity markets do, and the Canadian dollar is the instrument most directly exposed to the state of the bilateral relationship. The loonie is already a commodity-linked, rate-differential-driven currency; layering a geopolitical premium on top of that changes how it trades against the U.S. dollar, particularly in thin sessions.
The loonie is already a commodity-linked, rate-differential-driven currency; layering a geopolitical premium on top of that changes how it trades against the U.
Investors watching for confirmation that markets are taking the rhetoric seriously should look at three places: the Canadian dollar's behaviour on headline risk, the spread between Canadian and U.S. government bond yields, and the relative performance of Canadian exporters against domestically focused names. If political risk is being priced, the exporters underperform first.
U.S. equity benchmarks showed no reaction
Whatever the diplomatic temperature, American equity markets closed higher on the day the comments circulated. As of the last trade on Friday, 25 September 2026 at 20:00 GMT, the S&P 500 tracker (NYSEARCA: SPY) finished at $771.35, up 0.54% from a previous close of $767.18, with a day range of $766.29 to $772.28. The Nasdaq 100 fund (NASDAQ: QQQ) closed at $744.50, up 0.46% against a prior close of $741.10. The Dow 30 vehicle (NYSEARCA: DIA) was the strongest of the three, closing at $517.49 for a gain of 0.94% from $512.68.
That is a market untroubled — at least in the immediate term — by the story. It is worth being precise about what that does and does not tell you. Broad U.S. benchmarks are not a sensitive instrument for Canadian sovereign risk; the exposure is diluted across hundreds of companies with global revenue bases. A quiet tape in New York is consistent with real and rising friction that simply has not reached the point of repricing anything.
What would move this from rhetoric to repricing
Three developments would turn commentary into a market event. The first is any formal Canadian policy response — a defence spending package, a procurement review, or a change in how Ottawa describes the security relationship in official documents. The second is a tariff or export-control action with a named sector attached, which gives analysts something to model. The third is any change in the operational status of shared institutions such as NORAD.
Absent those, this remains a story about language: a prime minister who confirmed a study was done, and a former White House advisor who will not say the number is zero. Neither statement is a forecast. Both are data points about how much the assumed floor under the relationship has moved.
Key facts
- Scaramucci's assessment: Risk of U.S. military action against Canada "should be zero ... but it's not"
- Carney confirmation: Prime Minister Mark Carney confirmed days earlier that he studied the risk
- S&P 500 (SPY): $771.35, +0.54%, as of 25 Sep 2026 20:00 GMT close
- Dow 30 (DIA): $517.49, +0.94%, as of 25 Sep 2026 20:00 GMT close
Frequently asked questions
What exactly did Anthony Scaramucci say?
Scaramucci, a former advisor to U.S. President Donald Trump, said the risk of U.S. military action against Canada "should be zero ... but it's not." He did not predict such action; he declined to rule it out entirely. The comment was made to BNN Bloomberg days after Prime Minister Mark Carney confirmed he had studied the same risk.
Did Mark Carney say Canada expects a U.S. attack?
No. Carney confirmed that he studied the risk of U.S. military action against Canada. Confirming that a scenario was assessed is different from judging it likely. Governments routinely analyse low-probability contingencies; what is unusual here is the public acknowledgement that this particular scenario was among them.
How did markets react to the comments?
U.S. equity benchmarks closed higher. As of the last trade on 25 September 2026 at 20:00 GMT, the S&P 500 tracker SPY closed at $771.35, up 0.54%, the Nasdaq 100 fund QQQ at $744.50, up 0.46%, and the Dow 30 vehicle DIA at $517.49, up 0.94%. Broad U.S. indices are not a sensitive gauge of Canadian sovereign risk.
Which Canadian assets are most exposed to bilateral tension?
The Canadian dollar is typically the fastest to price political risk, followed by the spread between Canadian and U.S. government bond yields. In equities, exporters with heavy U.S. revenue exposure — energy, autos, lumber, aluminium and agriculture — would be expected to underperform domestically focused companies if markets began pricing the risk seriously.
What would a Canadian policy response look like?
The most likely first moves are fiscal and industrial rather than military: a defence spending package, a procurement review favouring domestic or European suppliers, and investment in Arctic surveillance, satellite communications and ammunition production. Any change in how Ottawa describes shared institutions such as NORAD would be a significant escalation signal.
What should investors watch next?
Three triggers would move this from rhetoric to repricing: a formal Canadian defence or procurement announcement, a tariff or export-control action naming specific sectors that analysts can model, and any change to the operational status of shared continental defence arrangements. Until one of those lands, the story remains about language rather than capital flows.
