For Trudeau’s successor, safeguarding Canada’s economy a ‘daunting’ task

The instrumentality of United States President Donald Trump to the White House has delivered a jolt to the stewards of Canada’s $2.1 trillion economy.

Already buffeted by home pressures specified arsenic stagnating maturation and a lodging crisis, Ottawa is present facing the menace of tariffs from the US, its biggest trading partner.

Trump’s committedness to steer the US connected a protectionist people sets up hefty challenges for whoever replaces Prime Minister Justin Trudeau, the country’s profoundly unpopular outgoing leader, earlier nationalist elections that could beryllium held arsenic aboriginal arsenic May, economists say.

“It’s a daunting task for whoever takes implicit from Trudeau due to the fact that from determination it’s a abbreviated ramp for an aboriginal predetermination call,” Tony Stillo, manager of Canada Economics astatine Oxford Economics, told Al Jazeera.

“It’s precise tough. The electorate looks acceptable for a alteration and Trudeau whitethorn enactment up fashionable enactment for the Liberal Party with a caller face, but it whitethorn not beryllium enough.”

While tariffs hardly got a notation successful Trump’s inaugural speech connected Monday, immoderate anticipation of a reprieve was banished hours aboriginal erstwhile helium announced that helium could enforce a 25-percent tariff connected Canada and Mexico arsenic soon arsenic February 1.

“What happens to Canadian exports successful lawsuit of a tariff warfare with the US – that’s a immense determinant of economical outcomes arsenic 80 percent of our exports spell to the US and that’s an atrocious batch of vulnerability,” Lars Olsberg, an economics prof astatine Dalhousie University successful Halifax, Nova Scotia, told Al Jazeera.

Canada’s exports to the US unsocial marque up astir 20 percent of its gross home merchandise (GDP).

A 25-percent tariff would person a “significant” effect connected the Canadian economy, perchance triggering a recession, Stephen Brown, lawman main North America economist astatine Capital Economics, told Al Jazeera.

Brown said, however, that Trump’s tariff threats could beryllium posturing to summation leverage successful negotiations implicit the United States–Mexico–Canada Agreement, which is up for reappraisal adjacent year. Trump is simply a negotiator and “will look for concessions truthful helium tin accidental he’s got a bully deal”, Brown said.

Trump has been wide that determination are 3 areas of interest with respect to Canada: the commercialized deficit, borderline information and Canada’s comparatively debased defence spending successful NATO.

Ottawa could woody with those successful 1 changeable if it chose to bargain much defence instrumentality from the US, Brown said, which alteration it to conscionable NATO spending targets and boost information connected the border.

Canadian officials besides person immoderate leverage since the state provides astir 20 percent of the crude lipid consumed southbound of the borderline and could theoretically unopen disconnected supplies, helium said.

Last week, Canadian Foreign Minister Melanie Joly told reporters that Ottawa was acceptable to respond to tariffs.

“And we are acceptable for a 2nd circular and we are acceptable for a 3rd round,” Joly said.

After Trump’s Monday nighttime comments, Canada’s Finance Minister Dominic LeBlanc said it would beryllium “a mistake” for the US to proceed with tariffs.

“It would beryllium a mistake successful presumption of the outgo of surviving successful the United States, successful presumption of jobs successful the United States, the information of proviso chains,” LeBlanc said.

A North American commercialized warfare would woody a “body blow” to the US economy, resulting successful slower maturation and higher inflation, unemployment and petrol prices, Oxford Economics said successful a enactment connected Tuesday.

That said, determination is besides the world of a “lame duck” premier curate who volition person to woody with the US administration, Stillo said.

Domestic pressures

Trump aside, Trudeau and his Liberal Party are nether unit connected the home beforehand amid wide discontent astir unaffordable lodging and the authorities of nationalist services specified arsenic kid attraction and healthcare.

Another resistance connected the government’s popularity has been the c tax, which has go a rallying outcry of the absorption Conservative Party, led by Pierre Poilievre.

Introduced successful 2019 to spur the modulation to cleaner energy, the taxation has risen four-fold to 80 Canadian dollars ($55.5) per tonne and is scheduled to scope 170 Canadian dollars ($118) by 2030.

To that effect, absorption person Poilievre has pledged to “axe the tax”.

While a repeal of the taxation would trim petrol pump prices by 25 cents per litre, scrapping the c pricing strategy would besides halt rebates provided to eligible individuals and families to offset the outgo of higher substance prices.

“While the nett interaction connected the bulk households volition apt besides beryllium a wash, it volition alteration for idiosyncratic households depending connected their circumstantial driving habits,” Stillo said.

Then determination is immigration.

While migration helped Canada’s colonisation turn by astir 1 percent connected mean each twelvemonth implicit the past decade, the fig of residents surged 3.2 percent betwixt 2023 and 2024, the biggest yearly emergence since the 1950s.

Blamed for exacerbating pressures connected Canada’s housing, healthcare and education, Trudeau successful October announced a sharp chopped successful the migrant intake, upending galore lives and concern plans successful the process.

“One of the tragedies of the Trudeau play is that the statement connected migration is looking beauteous shaky,” said Dalhousie University’s Osberg.

In an October canvass released by the Environics Institute for Survey Research, 58 percent of Canadians said the state accepts excessively galore immigrants, up 14 percent points since 2023. That followed a 17 percent constituent summation betwixt 2022 and 2023.

The emergence successful antagonistic sentiment toward migration implicit the two-year play was the astir accelerated alteration since the Environics Institute began asking the question successful 1977, the institute said.

The results besides showed that the proportionality of Canadians who accidental determination is excessively overmuch migration reached its largest since 1998.

While anti-immigration governmental parties person made small headway, an expanding fig of Canadians are for the archetypal clip expressing doubts astir who is being admitted to the state and however good they are integrating into Canadian society.

For years, Canada focused its migration argumentation connected skilled migrants, Olsberg said, but for a little play aft the COVID pandemic erstwhile tiny businesses complained they couldn’t find workers.

“Now you person radical moving successful [coffee chain] Tim Hortons and [department store] Canadian Tire connected impermanent idiosyncratic visas. Those are imperishable jobs, but present you’re stuck with the consequences,” helium said.

Some of the argumentation changes connected migration are already starting to trickle down to the system including the reduced fig of impermanent nonmigratory visas being issued. Along with looser owe lending rules, lodging availability is easing up and rents are starting to drop.

In summation to a slowdown successful migration that has helped thrust growth, the adjacent authorities volition besides look longstanding structural problems, including debased productivity and anemic concern investment, experts said.

“Increasing inequality and expanding insecurity creates a batch of choler and anxiety,” said Olsberg.

“Then on comes COVID, a monolithic information retired of nowhere, past abruptly there’s a large warfare successful Europe. The satellite is changing astir us. Pierre Poilievre has been precise adept astatine focusing each that choler connected Trudeau and present there’s chaos cause Donald Trump. All that choler and anxiousness is the halfway acceptable of issues.”