European Commission President Ursula von der Leyen on Wednesday proposed making Canada the European Union's first "associate member."
Why it matters: Canada and the EU are testing whether a nation deeply dependent on the U.S. market can find economic independence by moving closer to Europe.
What we're watching: "If they do that, I think it's at all a hostile act, I will put very serious tariffs or stop trading with Europe on many things," Trump told reporters on Thursday evening.
Driving the news: In her annual state of the union address, von der Leyen framed the Canada offer as part of Europe's response to a world where "old assumptions and relationships have frayed."
What they're saying: The EU says it wants to create a relationship with Canada unlike any it has built before.
Context: The EU already extends its single market without full membership to Norway, Iceland and Liechtenstein, but Canada's associate membership would likely differ.
The big picture: Canada offers critical assets both the U.S. and Brussels need.
Between the lines: Canada is running an experiment other middle powers will watch: Can it replace its dependence on American markets?
What we don't know: Carney and von der Leyen haven't laid out what an associate membership would entail, including whether Canada would gain access to the single market, which EU rules it would have to follow, or whether Canadians and Europeans would gain rights to live, work or study across the Atlantic.
What's next: Carney is expected to address the European Parliament on Thursday. Canada will then host the next Canada-EU summit in Montreal on Oct. 29-30.
Editor's note: This story has been updated with comment from President Trump and an EU spokesperson.
