Posted on: January 6, 2025, 10:40h.
Last updated on: January 6, 2025, 10:40h.
Justin Trudeau has announced he is stepping down as Prime Minister of Canada, a move that sets in motion what will be a hurricane of activity on the Canadian political front heading into 2025.
Trump Impact
The announcement by Trudeau this morning is the latest chapter in political turmoil led off by the resignation of Trudeau’s finance minister, Chrystia Freeland, just before Christmas, in part over a public dispute between Trudeau and Freeland about Liberal government economic policies.
In particular, there was reportedly disagreement on how to deal with 25% tariff threats made by incoming U.S President Donald Trump, mainly around Trump’s dissatisfaction about how seriously the Canadians take border security.
Minority Government Hangs By a Thread
Said Freeland, in her resignation on X Dec. 16:
“Upon reflection, I have concluded that the only honest and viable path is for me to resign from the Cabinet,” she wrote. “To be effective, a Minister must speak on behalf of the Prime Minister and with his full confidence. In making your decision, you made clear that I no longer credibly enjoy that confidence and possess the authority that comes with it. For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada.
“Our country today faces a grave challenge. The incoming administration in the United States is pursuing a policy of aggressive economic nationalism, including a threat of 25 per cent tariffs.”
Trudeau Way Down in the Polls
Trudeau, whose government was elected to power in 2015, is immensely unpopular with the Canadian electorate. Angus Reid’s “Trudeau Tracker” had him at an approval rating of 22% Dec. 24. The past few weeks have seen the Ontario, Quebec and Atlantic Canada Liberal caucuses all telling him to resign.
The minority Liberal government is hanging by a spinster’s thread – the Conservatives under Pierre Poilievre are far away ahead in the polls, 44.2% this morning according to CBC polling, projected to win 227 seats and form a majority government.
A non-confidence vote bringing down the Liberal government would require the support of the New Democratic Party under Jagmeet Singh, a party that has been propping up the Liberals via an agreement between those two parties. The spotlight is now firmly on Singh’s intentions going forward.
Carney a Frontrunner to Replace Trudeau
The spotlight is also on who will replace Trudeau and lead the Liberals into the next election, scheduled for Oct. 20, 2025. Mark Carney, Freeland, Melanie Joly (Minister of Foreign Affairs), and Dominic LeBlanc (who replaced Freeland as Minister of Finance) are some of the names being bandied about.
Carney, the economist and banker, who served as governor of the Bank of England from 2013 to 2020, would be interesting, since he would represent a fresh face from outside Trudeau’s inner circle, unsullied from the current day turmoil.
Carney would represent a credible re-set in terms of Liberal economic policy, and potentially bring Liberals disillusioned by Trudeau’s leadership back into the tent. How that would impact the Conservative edge in the polls currently is a big question.
If Trudeau decides to prorogue Parliament (scheduled to reconvene from Christmas break Jan. 27), as his party heads into a leadership campaign, which would take months, that would delay any non-confidence vote. Assuming the NDP would join the Conservatives in a non-confidence following the tabling of a new budget under a new Liberal leadership, that would take Canada into a summer-time national vote. All big “ifs”.
Prediction Markets
The prediction markets are all over this. Here’s a taste from Polymarket this morning:
- Canada election called by April? (61% chance that it will, $129,204 volume)
- Next Prime Minister of Canada (91% chance it will be Poilievre, Freeland at 6%, on $283,000 volume)
- Trudeau no confidence motion passes in 2024? (1% chance it will, $415,884 volume)
