Policy Alert: Canadian Election and Bilateral Meeting with the US

Action: In a snap election on April 28, Prime Minister Mark Carney of Canada’s Liberal Party secured the most seats in Parliament but narrowly failed to win a majority. In the 343-member Parliament, Liberals hold 169 seats and the Conservative Party 144. Other parties, including the Bloc Québecois and the New Democratic Party (which saw its share of the vote fall dramatically) hold the rest. Conservative Party leader Pierre Poilievre lost his seat in the House of Commons.

Key Insights:

• Carney became Prime Minister in March after a vote of the Liberal Party, replacing the unpopular Justin Trudeau. Carney, who had never held political office, served as governor of the Bank of Canada and of the Bank of England. In his first move as Prime Minister, Carney removed the consumer carbon price put in place by Trudeau that had become deeply unpopular amid high inflation. A price on carbon for large emitters remained in place.
• Despite having a minority government, the Liberals are expected to be able to govern easily, with the tacit support of the New Democratic Party and on some issues possibly with the Bloc.
• In his victory speech, Carney stressed the importance of unity in the face of US tariffs and threats to Canadian sovereignty, also noting that the mutually beneficial system shared by Canada and the US since World War II has frayed: “These are not idle threats. President Trump is trying to break us so America can own us. That will never . . . ever happen. But we also must recognize the reality that our world has fundamentally changed.”
• Carney added that “[o]ur old relationship [with the US], based on steadily increasing integration, is over” and promised that Canada would “strengthen our relationships with reliable trading partners and allies,” likely including the EU.
• Prime Minister Carney met with the President at the White House on Tuesday. Carney, who campaigned on the promise to push back against US tariffs and threats of annexation, told the President that Canada is not for sale and asked him to stop referring to Canada as the “51^st state.” The President insisted during the meeting that he would keep tariffs on Canadian goods. However, the two leaders showed little animosity during an opening session at the Oval Office where both men praised each other in front of reporters.