O Canada
By directly confronting Trump, Mark Carney and the Liberals complete a remarkable turn-around.
If 2024 was the ‘Year of Democracy’, when more people than ever before voted in national elections, 2025 is about the fall-out of these elections.
Sure, there have been a few notable votes, the early election in Germany and the vote in Greenland spring immediately to mind. But starting this week, we should get a real sense for how the world feels about the change ushered in by the elections of 2024.
In May, Australia, Romania and Poland all go to the polls to vote in elections that, to a varying degree, will at least be partially influenced by Donald Trump’s re-entry to the world stage. Today though we focus on an election much closer to home, where Trump’s presence flipped the race completely on its head.
The basics of Canada’s election
On Monday (April 28), Canadians elected a new parliament. This election came a few months after Justin Trudeau of the Liberal party resigned after nearly a decade as prime minister. By law, an election was going to be held in Canada in 2025 regardless, but Trudeau’s decision and the shifting geopolitical moment, meant an earlier vote than previously anticipated.
Canada uses a ‘first-past-the-post’ system, similar to that used in the UK to elect parliament or in the US to elect the House of Representative. The candidate in each district who gets the most votes wins the seat. This differs from proportional representation, the system used in most parliamentary governments around the world, where the distribution of seats ties closely to the proportion of votes case for each political party.
Canada has 343 electoral districts, so a party needs 172 seats to have a parliamentary majority. If a party does not gain a majority, they will form a minority government and have to work with other parties to govern.
The run-up to the vote
As recently as January 6, 2025, things were looking pretty bleak for the Liberal party in Canada. When Trudeau resigned in early January, the Liberals trailed the opposition Conservative party by 20 points.
The polling average in Canada from September 2021 to January 6, 2025. Since mid-2023, the Conservatives had enjoyed a massive lead as the Liberals support gradually fell.
Coupled with the anti-incumbency trend experienced the world over, this was thought to be an insurmountable deficit for the Liberals to climb. After all, Canadians have the same economic, cost-of-living concerns that voters across the globe had responded to by kicking the ruling party out of office (or at least cutting them down to size).
In polling conducted last year, voters who were most worried about economic issues overwhelmingly favored the Conservatives over the Liberals. The below chart is sorted by issue salience: ‘the rising cost of living’ was listed as one of the three most important issues facing Canada today by 71% of Canadians, far and away the most important issue.
In June 2024, 62% of Canadians thought the country was on the wrong track, compared to just 25% who thought it was headed in the right direction. That is a clear message from the people that change is required, a clarion call to the opposition party.
But after spending over two years trailing by double-digits in the polls, ultimately leading to Trudeau’s resignation, the Liberals experienced a major resurgence in the 100 days leading up to the election. And this can largely be attributed to one man.
The Trump Effect
As Donald Trump took office, he denigrated Canada as the “51st state”1, toggled with tariffs that threatens the global economy, and took a hammer to the US-Canada relationship. The US-Canada economic relationship is pivotal to the Canadian economy — in fact, there is more trade between Canada and the US than between Canadian provinces themselves.
Canadian exports to the US are worth hundreds of billions of $CAD more than intra-provincial trade.
20% of Canadian GDP is derived from exports to the US. And as Paul Krugman pointed out on Substack, this translates into Canadian jobs.
According to Statistics Canada, 2.6 million Canadians, 13 percent of the work force, are employed directly or indirectly producing goods exported to the United States. So U.S. tariffs will impose a huge shock on Canada’s economy.
Naturally, this means any self-respecting politician worth his salt had to respond. So rather than sit on their laurels and try to acquiesce to Trump, the Liberal party fought back. Earlier this year Mark Carney, a former financier at Goldman Sachs, and central banker at both the Bank of Canada and the Bank of England, was chosen as Trudeau’s replacement and embarked on a campaign of attacking Trump’s tough talk.
On the campaign trail, Carney (who had never before run for public office) proposed retaliatory US tariffs, met with Europeans leaders to shore up the Canada-Europe transatlantic alliance, and emphasized the importance of manufacturing in Canada.
He played up Canadian sovereignty and patriotism, riding the wave of national pride buoyed to the surface by Trump’s attacks on Canada’s independence, epitomized by Carney’s embrace of the slogan, “elbows up, Canada”2 to signify he and Canada would not back down from a fight.
Canadians across the political spectrum are boycotting American companies.
Carney’s chief rival was the Conservative leader Pierre Poilievre. Poilievre won had spent the past few years lambasting Trudeau’s agenda and vowing to “restore [Canadian] freedom and put Canada first.” Developing a Canadian version of Trump’s MAGA/America First ethos attacking “woke ideology” and immigration seemed to be the smart populist play in the global political landscape of 2024.
But we aren’t in 2024 any more. It is 2025 and the vitriol Canadians felt toward Trump forced Poilievre to pivot at the last minute, turning away from his previously Trump-molded, woke ideology messaging and focusing more on bread and butter issues. In the weeks before the election, it became clear that on the issues that now mattered to Canadian voters — principally Trump, tariffs and the economy — Carney and the Liberals now had the winning message.
In just three months, the Liberals were able to flip voters perceptions on the party and leadership best able to address voters’ most important issues.
In just 100 days, Carney and the Liberals had capitalized on Trump’s attacks and Poilievre’s perceived embrace of Trump policies to completely turn the election on its head.
After trailing in the polls for two years, the Liberal party surged into the lead in 2025.
So, what happened?
The polls turned out to be fairly accurate: Carney and the Liberals easily won the most seats.
The results
But the night was not a complete victory for the Liberals. While polls projected the Liberals could win a clear majority of 189 seats, the party fell well short of that figure. The party won 169 seats, just shy of the 172 needed to secure a parliamentary majority (though well within the range of likely outcomes). As a result, the party will need to work with the smaller parties, like the severely weakened NDP, to pass legislation. This won’t be new: the Liberals have not had a majority for much of the past two terms.
The Conservatives still performed well, securing 41% of the vote and winning more seats than they had held prior to the election. But after spending years ahead in the polls, the result is going to be a tough pill to swallow, especially for Poilievre, who lost the Ottawa-based seat he held since 2004.3 Despite this setback, Poilievre indicated he was going to continue on as the Conservative leader.
The election was a major disappointment for smaller political parties. Bloc Québécois, a party that only runs candidates in the province of Quebec, lost a dozen seats to the established parties, predominantly to Liberal candidates.
Because of the dispersion of Liberal votes in Canada’s first-past-the-post system, the Liberals will have a near majority of the seats, despite only defeating the Conservative by just 2% in overall vote share.
Election night was not kind to what had been Canada’s third largest party, the leftist New Democratic Party. Prior to the election the party held 24 seats and had worked with Trudeau’s minority government on a number of welfare reforms. But as the NDP siphoned off support to the Liberal and Conservative parties, it now has just seven seats, the first time it has had a single-digit seat count in over 30 years. Like Poilievere, Jagmeet Singh, the NDP leader, lost his seat.
Voters in Canada turned more toward the two traditional parties, leaving the NDP out in the cold.
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Now that the spectre of national elections, how Carney and the Liberals deal with Trump will be the defining story of 2025. As demonstrated above, disrupting Canada’s economic relationship with the US would devastate the Canadian economy. Carney may not be a politician, but he is a businessman, who has worked around the world with a rolodex a mile deep. He knows how markets work and won’t be afraid to engage with Canada’s partners, like the G7 (minus the US), to keep the global economy alive.
And lest you think Carney’s talk was merely political theater, he made clear during his victory speech on election night that Canada was not going to back down from a fight.
As I’ve been warning for months, America wants our land, our resources, our water, our country…But these are not idle threats. President Trump is trying to break us so he can own us. That will never, ever happen….When I sit down with President Trump, it will be to discuss the future economic and strategic relationship between two sovereign nations and it will be with full knowledge that we have many other options to build prosperity for all Canadians.
Mark Carney celebrates his victory with Liberal supporters.
Elbows up indeed.
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Cheers!
An idea Canadians strongly oppose.
This is a turn-of-phrase in hockey used as a way to protect yourself from an opposing player in a fight.
In a quirk of the system, Poilievre was running against 90 opponents(!) mostly linked to a group calling for electoral reform.