13 Jan The Fall of Trudeau: Lessons for the UK
On Monday, 6th January, Canadian Prime Minister Justin Trudeau announced that he would step down once the Liberal Party has chosen a successor, ending his 13 years in leadership. Trudeau’s resignation comes shortly after Chrystia Freeland resigned as Minister of Finance and Deputy Prime Minister on 16th December.
Freeland’s resignation – like much of global politics at this time – was in large part to do with US President-elect Donald Trump’s re-election. Trump’s threats of 25% tariffs on Canadian imports into the United States, and his rhetoric surrounding the annexation of Canada to the US, seem to be key tactics in a negotiating strategy to extract the best trade terms for the United States. Trump clearly smelled blood in Canada as Trudeau was already in political trouble at home, with the Liberal Party polling just 20% across the country.
A US-Canada Trade War
On December 16th, just hours before she was due to release the country’s first economic plan ahead of the change of administration in Washington, Chrystia Freeland announced her resignation – a letter declaring to Prime Minister Trudeau that “for the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada”. Freeland and Trudeau had disagreed over proposals for temporary tax breaks and other spending measures for Canadians, which Freeland feared would risk exceeding spending goals. In her resignation letter, Freeland addressed Trump’s tariffs as a “policy of aggressive economic nationalism”, and also warned Trudeau against “costly political gimmicks“, arguing that Canada needs to keep its ‘fiscal power dry today’ in order to have the reserves for a coming tariff war.
The concern in Canada about a potential trade war is palpable. And it is unsurprising. The United States is Canada’s largest trading partner, and 66% of Canadians live within 100km of the US border. With that, around 1.8 million people (8.8% of total employment), work in industries where 35% or more of jobs depended on US demand for Canadian exports. However, while Canada and the United States enjoy a comprehensive trading relationship, the reality is Canada-US trade matters proportionately more to the Canadian economy than to the United States’ economy. The United States accounted for 77% of the value of Canada’s exports and 63% of its imports in 2023. Meanwhile, Canada accounted for 17% of the value of American exports, and 13.5% of its imports. Quite evidently, disruptions to US-Canadian Trade would have severe effects on Canada’s economy, at a time where the country is faced with a rising cost of living crisis, housing shortages, and a general dissatisfaction among Canadians towards the current government.
The Ripple Effect
Internationally, Canada has long been a strong G7 economy and has played a leading role on the international stage. Throughout his leadership, Trudeau grew to be somewhat of a global progressive icon by advancing foreign policy with a focus on international climate action, gender equality, and ongoing support for Ukraine. With this in mind, the political and economic instability facing Canada will certainly have ramifications well beyond its borders.
There is a lesson here in global order and power that all countries should look out for as Trump’s presidency picks away at even the strongest political and economic players. Trump’s alliances are fragile, his commitment to individual leaders weak and his policies are volatile – we must all be prepared.
And while we see the downfall of the centre-left Liberal Party, the Conservative Party Canada (CPC) and its leader, Pierre Poilievere, is gaining support from Elon Musk. Polievere, who rose to leadership as a champion of the Trucker Convoy in 2022, is very willing to use extreme rhetoric and utilise right-leaning populist ideals. With that, the move toward the right, which we’ve seen in Europe, is protruding into Canada in an unprecedented way. While Poilievere’s policies are ones of a conventional Canadian Conservative, which are more moderate than Trump or European radicals, he employs populist rhetoric through anti-elite language aimed at working-class voters. There is a lesson here too on the direction that domestic politics is taking. Nonetheless, there is an almost unanimous agreement across parties and populations, that Canada must remain sovereign, and both the incoming Liberal leader and Polievere will ensure this. How they do so, will likely look very different.
For the UK, there is a lot to be learned from Trudeau’s downfall. From the declining popularity of incumbents and the increasing adoption of populist rhetoric by mainstream parties, to the significant consequences of Trump’s interventions in other nations’ politics. And if the UK and the EU want to build strong alliances that can withstand – and where necessary, circumvent – Trump, continuing to work with Canada is increasingly important. Both for Canada, who at this time may diversify its trade engagements to reduce its reliance on the US, and for the UK, who may see an opportunity to leverage its longstanding history with Canada and its relationship through the Commonwealth.
