Until January, polls suggested that the Conservative Party would handily regain power from the Liberals in any Canadian election held this year.
Two things overturned that expectation: the resignation of Justin Trudeau as prime minister and President Trump’s trade war with Canada, along with his threat to annex the country and make it the 51st state by sowing economic chaos.
Trump’s Trade War
While Mr. Trump pulled back from his initial threat of tariffs on everything imported from Canada, he has imposed several measures that hit key sectors of Canada’s economy: a 25 percent tariff on automobiles, aluminum and steel, and a similar one on Canadian exports that do not qualify as North American goods under the United States-Mexico-Canada Agreement, which he signed during his first term in office. An auto parts tariff of 25 percent is scheduled to take effect on Saturday.
Last week, Mr. Trump suggested that the automobile tariffs, which are reduced based on their U.S.-made content, could be increased. He offered no specifics.
Autos and auto parts are Canada’s largest exports to the United States, outside oil and gas.
Canada Hits Back
Under Mr. Trudeau, Canada placed retaliatory tariffs on U.S. goods coming into Canada that are expected to generate 30 billion Canadian dollars, about $22 billion, in revenue over a year.
After becoming prime minister in March, Mark Carney imposed an additional 8 billion Canadian dollars, about $5.7 billion, in tariffs, including a 25 percent levy on autos made in the United States — but not on auto parts. Automakers with assembly lines in Canada will still largely be able to bring in American-made cars of those brands duty free.
The Canadian public has responded, too. Travel to the United States has declined sharply. Government-owned liquor stores in several provinces removed American beer, wine and whiskey from their shelves. As calls for boycotts of American products grew, Canadian manufacturers hurried to adorn their packaging with maple leaves and Canadian flags.
How to Handle Trump
Both Mr. Carney, who also succeeded Mr. Trudeau as the Liberal Party leader, and Pierre Poilievre, the Conservative leader and the other major contender in the election, have adopted a hard line when it comes to the U.S. president.
In a conversation with Mr. Trump, in March, Mr. Carney said that the president had agreed to begin economic and security negotiations with whoever emerges as prime minister. During those talks, Mr. Carney said during a televised debate, “the starting point has to be one of strength.”
He added: “It has to show that we have control of our own economic destiny.”
Throughout the campaign, Mr. Carney, who was a governor of the Bank of Canada and later of the Bank of England, has sought to emphasize that his background in the financial world makes him the ideal candidate to tackle both Mr. Trump and the economic challenges his tariffs pose.
When asked how he will deal with Mr. Trump, Mr. Poilievre, a lifelong politician, usually responds by saying that he will first tackle what he views as problems the Liberals have created within Canada.
“I would cut taxes, red tape and approve our resource projects so that we can get our goods to market and bring home the jobs so we can stand up to President Trump from a position of strength,” he said during the debate.
The Crisis Will Probably Get Worse
Mr. Trump’s auto tariffs had an immediate impact. A factory in Windsor, Ontario, where Stellantis makes Chrysler minivans and Dodge muscle cars, was shut down for two weeks while the company considered its options. The association of auto parts makers said that its members had already laid off several thousand workers in Ontario.
There have also been a small number of layoffs in the steel industry.
The threatened tariff on auto parts may have a profound effect. Auto parts makers employ more people than the automakers’ assembly lines. Many parts companies are small, sometimes family-owned businesses without the financial resilience of multinational car manufacturers.
Economic Ideas, but Few Details
Both leaders, but Mr. Poilievre in particular, have promoted the construction of oil and gas pipelines to make it easier to ship fuel to Europe. They have not offered any specifics about what companies, if any, are interested in those projects or how they would be financed.
Mr. Poilievre also said he would accelerate environmental reviews and consultations with Indigenous groups for natural resource projects. Environmental groups and Indigenous leaders have criticized the proposal and questioned its legality.
For the auto sector, Mr. Carney has proposed to create an “all-in-Canada” system in which cars are assembled in Canada using Canadian parts made from Canadian steel and aluminum. He has not said how he would persuade automakers to go along with the plan.
Mr. Carney has also promised to set aside 2 billion Canadian dollars to help the auto industry adjust to U.S. tariffs and vowed that the money collected from retaliatory tariffs would be used to help companies and workers disrupted by the trade war. He has not specified what that help would involve.
Ian Austen reports on Canada for The Times based in Ottawa. He covers politics, culture and the people of Canada and has reported on the country for two decades. He can be reached at [email protected].
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