Looming trade war is shifting Canada's political terrain

As a trade war looms, the Liberal Party of Canada is seizing control of the election narrative, close political watchers say.

On Wednesday Prime Minister Justin Trudeau announced several measures to try to strengthen Canada’s economic position. Those steps include speaking to U.K. Prime Minister Keir Starmer to “promote economic security and stability,” hosting a summit on Canada-U.S. economic ties Friday to chart a path toward knocking down provincial trade barriers, and travelling to Paris and Brussels this weekend to meet with European leaders to strengthen cross-Atlantic trade. 

Much of Canada’s tariff response to date has revolved around natural resources. Energy and Natural Resources Minister Jonathan Wilkinson on Thursday floated building a new West-East oil pipeline and has repeatedly pitched American officials on an energy and resource alliance, while some experts call for measures like leveraging oil and gas exports to inflict economic pain on the U.S. 

At the same time Trudeau is on a full-court economic press, Conservative Leader Pierre Poilievre said Wednesday he would “lock up fentanyl kingpins and throw away the key,” in response to President Donald Trump’s stated (and thinly sourced) concerns over fentanyl trafficking across the border. On the economic file, he said in a seven-minute video posted on X on Feb. 3 that he would remove interprovincial trade barriers and focus on building major projects like pipelines, electricity transmission corridors, and ports. 

Conservatives are in the middle of another “Pierre pivot” after recognizing the carbon tax attacks aren’t resonating the way they used to in the face of American tariff threats, said University of Victoria associate professor James Rowe. 

“Trudeau, who had been the national scapegoat, as positioned by the Conservatives, is now being displaced by Trump as the scapegoat who is helping to unify us,” he said. “The Liberals are looking like adults who are managing the crisis really well … and they're the ones who are getting to deploy some of the tough talk that Canadians want to hear.”

At stake in the weeks ahead are questions that cut to the future of Canadian politics. If this year’s federal election is dominated by Canada-U.S. relations, will Liberals be able to turn their electoral fortunes around? And if the electoral terrain does shift, what will the Conservatives do about it?

After all, as former UK Prime Minister Harold Macmillan put it when asked what the greatest challenge in politics is: “events, dear boy, events.”

Vulnerable to the Behemoth

More polling will be needed to confirm the trend, but a series of recent polls underscore the threat to the Conservative lead. 

An EKOS poll published Jan. 29 found the gap between Conservatives and Liberals has closed to three points separating the two. However, that poll is an outlier even among polls that look less and less bad for the Liberals. According to 338Canada, an electoral projection company, Conservatives still appear poised for a majority government. And a Nanos poll published Feb. 4 found Conservatives enjoy a 16 point lead over the Liberals with the economy ranked as the top concern for voters. But the race is tightening — a recent Léger-Journal-TVA poll found the Trump tariff threat has led to a significant surge of Liberal support in seat-rich Quebec. 

“Conservatives continue to enjoy a ballot box advantage while Canadians remain focused on jobs/the economy,” said Nik Nanos, chief data scientist with Nanos in a statement. But, “Liberal fortunes are improving in the post-Trudeau era.”

How the leaders respond to the threat of tariffs is widely expected to shape public opinion going forward. The Angus Reid Institute found the tariff crisis is dominating the public’s attention with nine in 10 Canadians saying they’re following the issue closely — a level of attention only matched by the onset of COVID-19 pandemic in recent years. Notably, the polling outfit also found the threat of trade war has led to a resurgence of patriotism, reversing a three-decade trend of falling pride in the country. 

Rowe explained Canadian identity is shaped by not being American, and is deeply rooted in an intimate understanding of the threat the U.S. could pose. 

“We understand there's this giant behemoth below us with an incredible amount of economic and military power,” he said. “There's a certain vulnerability that's there, and Trump likes to smell out weakness and capitalize off it, and he's really gone to the core of Canadian fears and anxieties.”

Consequently, Canadians understand that even if the country can inflict some damage in a trade war to the United States, there’s a need for strategic stickhandling of the diplomatic relationship, Rowe said. 

“If it requires $1.5 billion more at the border, and if it requires a Fentanyl Czar, those are not big expenditures in the grand scheme of government balance sheets,” he said. Canadians “don't see it as bending the knee or kissing the ring or capitulation, they see it as a nice balance of strong retaliatory measures and … so-called concessions to Trump to just get him to back off.”

Competing visions

As Trudeau speaks to foreign leaders to help defend Canada’s economic position, Liberal leadership frontrunners Mark Carney and Chrystia Freeland also laid out competing economic plans Wednesday. 

Freeland laid out a 10-point plan that includes taking the opportunity “to make Canada an energy superpower” which would entail more hydropower on the grids and exporting LNG. 

Other priorities she pledged include reducing regulatory wait times for critical minerals, fast tracking at least 10 major projects each year, and creating a new fund at Export Development Canada to offer low-cost loans to businesses trying to expand to new markets. 

“My government will end costly timeline delays and reduce the number of projects that will require a federal assessment, while maintaining Canada’s robust environmental protections and engagement and participation from Indigenous communities,” she said in an email to supporters.  

Carney pitched his vision of Canada as a “clean energy superpower.” He said Canada and the United States had the most important commercial relationship in the world, but as U.S. priorities change, Canada must too. As the energy transition unfolds, he said Canada should take the opportunity to diversify its trading relationships. 

“We know we shouldn't put all our eggs in one basket, and so while we should remain closely integrated with the United States in the auto sector, in energy and security, in the new areas that will drive jobs and competitiveness in this century, we must diversify our trading relationships,” he said. “We should become the essential trading partners of countries that share our values, including the UK, the EU, and leaders in Asia. 

“And we can do so with our leadership in clean energy, critical minerals, and in the intelligence infrastructure of the AI revolution,” he said. 

Jonathan Rose, professor and head of the political studies department at Queen’s University, told Canada’s National Observer the Liberal Party is one of the most successful “brokerage parties” in the Western world because they are able to reshape themselves depending on the political zeitgeist. 

“Having a leader who is the former governor of the Bank of Canada reinforces what will likely be the ballot question, which is economic insecurity towards our largest trading partner,” he said. On top of that, Conservatives may have blundered by campaigning on an anti-Trudeau, axe the tax platform because it emphasizes those issues to voters, rendering Poilievere a blank slate on everything else since Trudeau announced his resignation and the carbon tax has faded from the public conversation. 

“The Conservatives were counting on Trudeau fatigue and carbon taxes to be the main issue, and it’s going to be very difficult to pivot from that when the leader has put all his stock in those two policies,” he said. 

Rowe called the Trump tariff threats a historic moment for Canada that fundamentally shifts politics moving forward. 

The “anti-Americanism” that’s long been integral to the Canadian identity has been “activated in a way that I’ve never experienced in my entire life,” he said, adding that with a sense of common purpose against an existential threat, whichever candidate is able to capture the mood is likely to see electoral success.

“It seems like Carney, whether compared to Freeland or compared to Poilievre, is closest to the mark for now, but the question about whether he has the political chops to communicate it effectively remains to be seen,” he said.

Peter Kent, who served as minister of the environment in Stephen Harper’s Conservative government, told Canada’s National Observer he doubts Liberals are rebounding significantly.

“It really goes back to [former Prime Minister John] Diefenbaker's original line about polls only being good for dogs. I would think there's still quite a big spread,” he said. “The biggest problem Carney and Freeland and any of the other leadership candidates, or the people that support them [have], is their credibility in flip flopping so quickly on the [carbon] tax.”

“It's whiplash trying to get your head around how quickly they flip flopped.”

Rose sees it differently. He said for Freeland, the carbon price reversal is a bitter pill to swallow because she was in cabinet when it was approved and has publicly defended it. But Carney doesn’t have the same policy baggage, despite having a long track record of advocating for carbon pricing in his other roles outside government. 

“One of the great advantages of Carney is he can appear both incredibly experienced, but also new,” he said. 

Kent left the Conservative Party after Poilievre took the helm, and helped launch the Canada Future Party led by former New Brunswick cabinet minister Dominic Cardy (who was part of both that province’s New Democrats and Progressive Conservatives parties). 

“The reason I left the party along with many others [was] we were made to feel unwelcome by a very hostile right wing of the party,” he said. “The policies under Pierre's leadership, the position the Conservative Party took during the trucker convoy, the position on anti-vax, the pro-bitcoin, the destroy the CBC, the fire the head of the Bank of Canada, and all of those policies were just too wacky for me and for an awful a lot of other people.”

“The other thing about Pierre is it seems to me he's been working harder to regain Maxime Bernier's conservatives … than he has to broaden his base among swing voters,” Kent said. 

“A lot is going to happen in the next election, and it'll depend on tariffs, it'll depend on Trump, it'll depend on so many things.”

John Woodside / Local Journalism Initiative / Canada’s National Observer