Nature abhors a vacuum, and this week’s political developments are already having seismic impacts on the state of Canada’s preparations for the Trump Administration 2.0.
While the status quo ostensibly continues for government business through the prorogation period, the Prime Minister’s announced resignation and the pending Liberal leadership race create challenging political and bureaucratic dynamics that will likely become more intractable in the coming weeks and months.
Meanwhile the federal opposition parties, business leaders and provincial Premiers are increasingly branching out on their own in their preparations for Trump 2.0. And in this political leadership void, Mr. Trump has been seemingly gleefully sowing further chaos.
Alex Steinhouse of the GR&PL group provides additional context below.
The political revolution of January 6th… 2025
The Prime Minister finally ended the burgeoning caucus revolt against his leadership, in advance of what was to have been an acrimonious Liberal caucus meeting this past Wednesday (January 8, 2025).
In announcing his intention to resign as Liberal leader and Prime Minister once his successor is chosen in the coming months, Justin Trudeau has made clear that his central focus for the remainder of his term in office will be on the Canada-US relationship.
While Parliament now stands prorogued until March 24th, 2025, Government work in theory carries on as usual. This includes Cabinet continuing to meet, the Prime Minister’s office staff continuing in their current roles, and the continued ability of the Liberal government to pass regulations and implement non-legislative policy measures, such as imposing retaliatory tariffs on American goods.
To that end, the Prime Minister attended the Cabinet Committee on Canada-US relations on the day his resignation was announced. Government sources suggest that the Cabinet committee discussed the prospect of the early publication of a list of proposed Canadian retaliatory tariffs on American goods, in advance of President-Elect Trump’s implementation of his threatened tariff measures on Canadian goods.
No decision in this respect has been announced, but the list of products is being finalized and will be shared with Premiers at the federal-provincial-territorial leaders meeting next Wednesday (January 15, 2025). The proposed list that is circulating is said to include products such as steel, plastics, ceramics including toilets and sinks, glassware, flowers, and even Florida orange juice in a nod to President-elect Trump’s adopted political home.
The Political and Bureaucratic Impacts of the PM’s Resignation
In practical terms, however, the impacts of this week’s developments on how Ottawa prepares for Trump 2.0, mere days before the President’s inauguration on January 20th, are tremendous.
While the Prime Minister will continue to retain his powers until his resignation becomes effective, he has now become what he had been trying to stave off for so long – a “lame duck.”
David McNaughton, who previously served as Prime Minister Trudeau’s Ambassador to Washington, said in this respect: "The reality is, today you announce you're stepping down, your power, your influence dissipates almost immediately." We're going to have a few months of uncertainty right now ... and in the meantime, Trump is feeling pretty cocky these days." He went on to say that there is little the Prime Minister can now do to stave off the tariffs threat.
Beyond weakening Canada’s bargaining position with the Americans, the Prime Minister’s diminished status will reverberate throughout the Canadian political and bureaucratic systems.
The Prime Minister and his office will be losing their centralizing cross-governmental authority, both in their ability to wield organizational power by setting and managing policy, as well as in adjudicating competing internal interests. Cabinet ministers and their staff will invariably increasingly recoil from centralized messaging and proposed policies, fearing little in the way of repercussions from the centre. Political staff both in the Prime Minister’s office and in Ministerial offices are also suffering from low morale, given the bleak political developments and electoral prospects.
Meanwhile, the civil service, already preparing for the anticipated election call and possible (or likely) expectation of a Conservative government led by Pierre Poilievre, will be even less inclined to expedite policy that either requires creating flexibility in the machinery of government or runs counter to longstanding public service recommendations or approaches. Through anecdotal accounts, it appears the civil service is increasingly descending into an informal caretaker mode, in advance of both a new Liberal Prime Minister and then the seemingly inevitable Conservative government to come.
What of Senior Cabinet Ministers and the Leadership Race to Come?
The Liberal Party has released its rules for its leadership race. Of note, the race will an expedited “robust, democratic” leadership process, as Prime Minister Trudeau had made clear was his preference. This means members of the Liberal Party, and not just caucus and/or the party leadership, will be able to vote for the next Prime Minister. The race will conclude on March 9th, and will require an entrance fee of $350,000 by January 23rd.
This extremely short timeline ensures a leader is in chair well before Parliament’s return from prorogation on March 24th. The next Prime Minister will need to swear in their cabinet, draft a speech from the throne, and prepare the Liberal Party for a likely election in the Spring. The next Prime Minister could also decide not to subject their government to the confidence of the House, and dissolve Parliament in favour of an early election call on their own terms before March 24th.
The Liberal Party has also amended its membership registration rules to respond to concerns over potential foreign interference in the race. Previously, anyone over the age of 14, including non-citizens and non-permanent residents, were allowed, at no cost, to register as party members. For the leadership race, only those who are above 14 years old, who are permanent residents, citizens or have status under the Indian Act, who support the purpose of the party, and who are not registered as members of another political party will be able to be registered members for the purposes of the vote.
However, there is no answer yet to the thorny question of whether Cabinet ministers will be allowed to continue in their roles should they decide to seek the party leadership. Under Prime Jean Chrétien, ministers were able to keep their roles while campaigning. By contrast the most recent Conservative party leadership races required “shadow ministers” to resign their critic roles while campaigning for leadership.
In the eventuality that senior Ministers join the leadership race, this will create even more of a political vacuum in Ottawa. Either the government will need to replace some of its most critical Ministers for the Canada-US relationship, or risk having those Ministers distracted by the significant time constraints created by their leadership runs. Moreover, concerns over conflicts of interest, and perceived conflicts of interest, as well as the use of government resources, will also inevitably figure prominently in news cycles and media speculation.
Some of the most senior Ministers themselves have already acknowledged this reality. The Finance and Intergovernmental Affairs Minister, Dominic Leblanc, indicated that the Canadian response to Trump 2.0 requires his “full attention” in his Cabinet roles, and for this reason he will not enter the leadership race. The Immigration, Refugees and Citizenship Minister, Marc Miller made similar comments in a Montreal radio interview this week. Meanwhile the Globe and Mail is confirming that Global Affairs Minister Mélanie Joly also will not run because “she feels her duty is to the country and dealing with the incoming Trump administration and the threat of massive tariffs on Canadian goods.”
We should know more soon about which candidates will ultimately move forward.
So far, former MP Frank Baylis was first out of the gate in committing to run, while current MP Chandra Arya has declared in intention to run. Potential other leadership contenders considering bids include Chrystia Freeland, Mark Carney, François-Philippe Champagne, Anita Anand, Christy Clark, Steven Mackinnon, Karina Gould, and Jonathan Wilkinson.
What are Premiers and the Business Community Saying?
With this leadership uncertainty, Premiers and business leaders are branching out on their own, with the apparent effect of further undermining the prospects for a unified Team Canada response to the incoming Trump Administration 2.0. The Premiers met on Wednesday, at the behest of Premier Ford, to discuss the impacts of prorogation and the Prime Minister’s resignation letter on the Canadian response to President-Elect Trump. Premier Ford said the Premiers confirmed they will head to Washington to meet with elected officials on February 12th.
Ontario (with its “Operation Deterrence”) and Alberta have already announced that they are providing their own provincial border security resources, in an attempt to respond to President Trump’s demands. Both Premiers have also been doing an American media tour.
Premier Ford has also announced a proposed enhanced energy partnership between Canada and the U.S., which is intended to lead to increased Canadian energy exports to the US, a more integrated electrical grid with the Americans, and foster greater energy security as the U.S. "decoupled from China and its global proxies.” On top of seeking red tape cutting for cross-border energy infrastructure such as transmission lines and pipelines, the plan intends to include fast-tracked approvals for new large nuclear plants and small modular nuclear reactors. In clearly asserting himself as Captain Canada, this continues to fuel speculation that Premier Ford intends to call a provincial election in Ontario early in 2025.
Meanwhile, the President and CEO of the Business Council of Canada, Goldy Hyder, said “political tumult in Ottawa means Canada is lacking sorely needed federal leadership on managing the relationship with Mr. Trump’s incoming administration and the threat of tariffs.”
The Canadian Chamber of Commerce expressed similar concerns about the political instability in Ottawa: “Canada can’t afford inaction with so much at stake. Unity is key: political leaders, businesses, and communities must come together around our common opportunities. Canada’s next Prime Minister must hit the ground running and be laser-focused on strengthening the Canada-U.S. trade relationship.”
Then there is Canadian business person (and American resident) Kevin O’Leary, who recently met with President-elect Trump, and advised him that it was a “complete waste of time” bothering to talk to or negotiate with the current Liberal government at this stage of its mandate
Finally, all three major federal opposition parties continue to call for an election as soon as possible and are responding to Trump Administration 2.0 on their own terms.
For instance, Conservative leader Pierre Poilievre did his first news conference of 2025 on Thursday, reiterating the Conservatives’ demand for an immediate “carbon tax election.” Poilievre also said that his future government would "stand up and we will state clearly that Canada is a sovereign and independent country, that we will protect our integrity as a nation through strength."
He also called on the federal government to make the case to American economic allies about the impacts tariffs would have on them: "We need to put Canada first by locking arms with American economic allies on the ground that will put pressure on Washington to do the right thing," he said. "We need to go to American home builders and say, we can help you build more affordable homes if your government would stop tariffing our softwood lumber.'"
While Mr. Poilievre confirmed that he will not attend the Presidential inauguration, insiders speculate that Conservative MP Jamil Jivani, who is a close friend of the next Vice-President, JD Vance, will be in attendance.
President Trump and the 51st State?
President-elect Trump seemingly has been enjoying stepping into the political vacuum. Most recently, amongst his many recent musings about Canada, he has said that he would consider using “economic force” to join Canada with the United States, and “get rid of the artificially drawn” border between our countries, to better protect national security.
Mr. Trump went on to say that the US does not need “anything Canada has,” specifically naming lumber, dairy and automobiles, and expressed frustration with what he now says, incorrectly, is a 200 billion USD “subsidy” of the Canadian economy—i.e. a trade imbalance. The President-Elect also failed to mention the $130.3 billion in crude oil, or the $36.6 billion in other petroleum products Canada sends annually southward.
While not rising to the level of threatening a military annexation of Canada, such as Mr. Trump has done with respect to Denmark’s Greenland or the Panama canal, Canada has been forcibly responding in rejecting the idea, and making clear we are taking his threats seriously.
Prime Minister Trudeau has said there is not a “snowball’s chance in hell” Canada will join the United States, while Minister Leblanc has said the time for these “jokes” is over: "The president and his allies continue to repeat this — we know it's not going anywhere — but the fact that he's repeating it, it's not very constructive."
On the margins of his attendance at former President Carter’s funeral, Mr. Trudeau did an interview on CNN with Jake Tapper, defending Canada against Mr. Trump’s threats. Of note, he said that he believes that Mr. Trump, who is a “very skillful negotiator, is getting people to be somewhat distracted” by the conversation of Canada becoming the 51st state, in order to detract from the considerable impacts these tariffs will have on Americans themselves. Mr. Trudeau will also appear Sunday morning on MSNBC with Jen Psaki.
Just as concerningly, Mr. Trump has begun to state that NATO members should be spending a minimum of 5% of their GDP in order to continue to benefit from American defence support. No NATO country spends anywhere that, including the US itself, which is at 3.4% of its GDP for its defence spend (Poland is the outlier of the group, coming closest at 4.14% and a goal of 4.7% this year). Meanwhile, Canada is struggling to meet its newly established spending target of 2% of our GDP by 2032.
With days to go before the Presidential inauguration, Canada’s unified response to Trump Administration 2.0 is looking increasingly uncertain. What is clear from recent polling, however, is that Canadians expect Ottawa and the provinces to work together as a ‘team’. We shall see in the weeks to come whether new life can be (re)instilled into a Team Canada approach to manage the increasingly tense Canada-US relationship.
Stay informed with in-depth analyses, legal bulletins, podcast episodes, and other resources on our Canada-Trump Administration 2.0 page. We update this page frequently with the latest information to help you navigate the evolving relationship between Canada and the United States.
