The 1988 Canadian federal election was fought over a perennial issue in Canadian politics: the relationship with the United States. The Progressive Conservatives under Brian Mulroney had negotiated a Canada–US free-trade agreement that was furiously opposed by the opposition Liberals and New Democrats. The election highlight was a debate between Mulroney and Liberal leader John Turner, who spoke passionate words:
We built a country east and west and north. We built it on an infrastructure that deliberately resisted the continental pressure of the United States. For 120 years we’ve done that. With one signature of a pen, you’ve reversed that, thrown us into the north–south influence of the United States and will reduce us, I am sure, to a colony of the United States because when the economic levers go, the political independence is sure to follow.
Canadians didn’t find Turner’s words sufficiently convincing, and Mulroney’s Conservatives went on to win a majority and pass the agreement into law. Nearly four decades later, though, as Canada finds itself at the mercy of the trade policies of the Trump administration, the warning is all too relevant.
And yet those same trade policies have precipitated a remarkable turnaround in Canadian politics, with the unpopular Justin Trudeau replaced by political newcomer Mark Carney, whose resumé seems tailor-made to take on Trump and has the potential to bring the governing Liberals back from the political dead.
Since November, Trump has repeatedly threatened 25 per cent tariffs on goods from Canada as well as Mexico, and then stepped back to varying degrees. Tariffs did finally go into effect on 4 March, but the next day Trump exempted the crucial automotive sector, along with some other goods, for another month. Oil exports had previously been held to 10 per cent, but starting this week Canada will also be subject to Trump’s general steel and aluminium tariffs on top of the broader 25 per cent.
The tariffs — which may well have changed again since this writing — make a mockery of the free-trade agreement signed by Trump in 2018 to succeed the North American Free Trade Agreement, itself the successor of the original 1988 agreement Mulroney and Turner fought over. At the time, the 2018 negotiations felt aggressive and unbearable; now they seem quaint, with Trump having since departed entirely from legal or factual reality. He now frequently expresses disdain for Canadian trade entirely, declaring in January that “we don’t need them to make our cars… we don’t need their lumber… we don’t need their oil and gas, we have more than anybody.”
Given Canada’s heavy dependence on American trade, it’s not surprising that the tariffs have dominated political discourse here. Trump’s nominal aim is to punish both Mexico and Canada for allowing rampant fentanyl across the border, an accusation without factual basis. Nevertheless, since November Canada has invested heavily in new border security and other initiatives to try to appease the US president while preparing countertariffs in response.
Turner’s 1988 words have extra force because Trump’s economic policies are nested in what he claims to be his larger political goal: the annexation of Canada. As with all things Trump, it is impossible to discern whether this is a serious intent or a bargaining tactic. Regardless, Canada feels at the economic mercy of the United States and worries that a loss of political independence will follow.
But Trump’s plan may backfire, for his aggressive actions are only provoking the opposite response. His second administration has created havoc in a hundred areas that seemed settled and beyond politics; the Canada–US trade relationship is only one of them. But in no other country have Trump’s actions created such a complete flip in political fortunes.
“Canada is broken” was a widespread theme during 2024. The country seemed adrift under the no longer popular Justin Trudeau, his progressive policies seemingly inadequate for current economic realities. But the Trump threat has galvanised national pride and resistance. Maple leaf flags have blossomed and “buy Canadian” is the mantra, with Canadian firms wildly advertising their domestic roots. Only 9 per cent of Canadians express interest in joining the United States, and public warmth toward the southern neighbour has plummeted.
No less a figure than former Conservative prime minister Stephen Harper, who Trudeau defeated in 2015, says that Canadians should “accept any level of damage” to ensure the country remains independent. “I would be prepared to impoverish the country and not be annexed,” he added, “if that was the option we’re facing,”
Two months ago the Liberal Party under Trudeau seemed headed for oblivion, but the Trump disruption has turned the tables. Under a new leader elected on Sunday, the party now has a serious shot at re-election. Conservative leader Pierre Poilievre, having lost the enormous lead in the polls he enjoyed for over a year, faces the dilemma of how to position himself in the Trump II era.
If there is a winner amid the Trumpian mess, it is that new Liberal leader, Mark Carney, who only formally entered politics two months ago and yet won a staggering 86 per cent of party members’ votes at the weekend and will soon be sworn in as prime minister. Carney boasts a golden resumé and some lucky timing. Of modest background, he studied at Harvard and Oxford, earning a doctorate in economics from the latter. He then spent more than a decade with Goldman Sachs in various global centres before being recruited as a senior public servant in Ottawa. In 2008 he became head of the central Bank of Canada, where he was widely credited for his steady hand in that year’s financial crisis. In an unusual reminder of Canada’s colonial connection, he was appointed governor of the Bank of England in 2013, in time to steer it through Brexit.
Carney stepped down from that post in 2020 and returned to Canada, making little secret of his interest in another position: prime minister of Canada. He became a fixture at Liberal events yet resisted taking the plunge by running for a parliamentary seat or moving to truly partisan activity. Instead, he spent his time on policy councils and corporate boards. As Trudeau’s Liberals plunged in the polls last year, Carney’s reticence became almost comical, reaching a nadir in December when Trudeau botched a cabinet shuffle by telling his finance minister Chrystia Freeland he was moving her aside to make a place for Carney. The insulted Freeland resigned, while Carney — possibly unaware of Trudeau’s plan — once again elected to remain on the sidelines.
But Freeland’s resignation was the final blow for the unpopular prime minister, spurring further caucus rebellion and a reluctant 6 January resignation by Trudeau. Ten days later Carney announced his candidacy for the leadership, finally entering formal politics at the age of fifty-nine. Freeland also announced her candidacy, amid high expectations but also fears that she would follow the Conservatives’ Kim Campbell as another short-lived female prime minister given the captaincy of a sinking ship.
Other senior ministers declined to run, leaving only two other candidates, thirty-seven-year-old House leader Karina Gould and former MP Frank Baylis. The two-month race, quick by Canadian standards, finished on 9 March with the results of a mass vote of party members. While he was widely expected to win, Carney’s landslide was truly impressive, leaving second-placed Freeland with only 8 per cent and the others at 3 per cent each.
In normal times, an almost sixty-year-old who had spent his entire career at the top of the financial world and done nothing relatable for the average voter since graduating from high school in Edmonton in 1983, would not be a strong bet for office. But Trump times are not normal times. Carney’s track record of cool excellence amid crisis and his lack of ties to Trudeau’s governing record have made him irresistible to large segments of the party and the public, at least for the moment. In addition to sweeping the membership vote, he also bested his rivals by wide margins within the parliamentary caucus and in polls of both Liberal supporters and the general public.
Most amazing was the drop in support for the Conservatives, who consistently led the Liberals by 20 per cent or more throughout 2024. The latest figures show a much narrower gap, with some polls even putting the Liberals under Carney slightly in the lead. While it might not last, the Liberal turnaround is astounding and the new leader’s timing impeccable. “If it’s not a crisis, you wouldn’t be seeing me,” Carney has himself said. “I’m most useful in a crisis. I’m not that good in peacetime.”
If Carney is a political winner in the Trump crisis so far, Conservative leader Pierre Poilievre has so far been a loser. For two years he feasted on the declining Liberals and their stubbornly unpopular leader. But Trudeau’s departure, spurred by the tariff crisis, took away that easy pleasure, and Carney can plausibly distance himself from Trudeau’s unpopular policies by truthfully pointing out he wasn’t in the room.
By any measure Carney is a “business Liberal,” a wing of the party composed of pragmatic centrists that often seems defunct but keeps coming back, and his initial policies follow that theme. Poilievre’s longstanding top target has been “the carbon tax” — a complex Liberal carbon-pricing regime that is sensible public policy but unpopular politics. Carney’s pledge to eliminate it, along with the rise in capital gains taxes and other contentious policies, has blunted Poilievre’s attacks.
The Conservative leader and his party have been left with an unprecedented strategic problem. For decades Canada’s Conservatives have had a happy relationship with the United States, of which Mulroney’s free-trade agreement is emblematic. While the Liberals have equivocated according to circumstances and the left-wing New Democrats have been the most sceptical, the Conservatives have been reliably but not slavishly pro-American. But Trump’s antics have blown apart that safe default and robbed the party of initiative and momentum.
The onslaught has left Poilievre with little option but to join the unified call for countermeasures and national unity. He has issued his own warnings to Trump alongside his predecessor Harper’s pledge to impoverish the country if necessary. And the speed, extremism and chaos of the Trump takeover in Washington will force him to spend more and more effort differentiating himself while his opponents will argue he is merely Trump-lite.
Poilievre must also keep his party united. He won his post because of his ability to straddle its centrist and populist wings, including the “trucker convoy” of right-wing protestors that occupied downtown Ottawa three years ago. Much like Stephen Harper, he puts enormous effort into tending the party and ensuring its more volatile elements feel respected, while managing to remain vague about the extent to which he agrees with them. This will get harder, since a segment of the party is pro-Trump, notwithstanding the tariff threat, and welcomes attacks on diversity policies and other progressive initiatives. Although Trump recently did Poilievre the backhanded favour of calling him “not a MAGA guy,” Carney’s centrism holds new appeal to those who previously chose the Conservative leader as the only alternative to Trudeau.
And the test for both leaders is imminent. Carney is likely to call an election soon after being sworn in, both to capitalise on momentum and because he has little other choice. Parliament returns on 24 March after being prorogued since January as part of Trudeau’s exit plan. The Liberals hold a minority in the House of Commons and Carney, without a seat of his own, is presumably not interested in watching from the galleries. With the Conservatives having spent months trying to bring down the government, which was kept alive primarily by the fourth-place (and increasing ambivalent) New Democratic Party, there is little sense in Carney trying to keep the current feeble regime alive.
Carney might have won the leadership with ease but his performance in a general election is anyone’s guess. Other prime ministers replacing unpopular leaders have seen initial surges of popularity but gone down to massive defeat; among them is the aforementioned John Turner, another business Liberal who replaced a prime minister named Trudeau (in his case in 1984) but was soundly defeated and went on to fail in his comeback attempt against Mulroney four years later.
Carney, who has faced largely friendly crowds and media so far, is only charismatic by central banker standards, and his French — essential for Canadian national office — doesn’t flow easily. Beyond hot-button items like the carbon tax, he has been more aspirational than specific about his policy plans, and while he himself wasn’t part of the Trudeau government, the rest of his likely team was. He also carries baggage accumulated during his corporate years, including the decision by Brookfield, a conglomerate of which he was board chair until January, to move its head office from Toronto to New York.
And no one should discount Pierre Poilievre. Trump may be an enormous distraction, but Poilievre is a disciplined and nimble campaigner with a longstanding focus on the cost-of-living issues that are top of mind for most Canadians. The Conservatives have been so successful in fundraising that they have already opened the spending gates against “Carbon Tax Carney” (despite his plans to cancel the policy). And Poilievre has announced few policies of his own so far, a wise move that allows the party to pivot to take on Carney. Still, the election will centre on which leader is best able to stand up for Canada against Donald Trump, and both leaders can make a strong claim.
Justin Trudeau, once the brightest light in Canadian politics, is now so unpopular that he gave only a short speech at the 9 March leadership election gathering, which was light on the traditional tributes to the outgoing leader. Instead the star was ninety-one-year-old Jean Chrétien, prime minister from 1993 to 2003, who gave a rousing speech — twice as long as Trudeau’s — emphasising the history of Canada–US relations. Addressing Trump, he said, “From one old guy to another old guy, stop this nonsense. Canada will never join the United States.”
But Chrétien’s message was ultimately one of hope. “Historically, despite our friendship, we have had problems but we always found a way to solve them,” he said. “We have worked with and collaborated with the US in the past and I’m telling you we will do so in the future.” He also joked that Trump should receive the Order of Canada for uniting Canadians “as never before.”
Like Trump’s other targets, Canada faces a serious and perilous challenge. But that challenge has brought the country together and given the Liberals a surprising new lease on life under a novice but crisis-tested leader. Canada might be under economic threat but it hasn’t lost its political independence. Instead, it has gained new political energy. •
