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Carney looks like he will win a chance to lose
Unless some strange things happen, the next prime minister of Canada is likely to be an ambitious, high-achieving Albertan who made a mark on the world stage after excelling at Harvard and Oxford.
We don’t know yet whether that Albertan will be Mark Carney or Chrystia Freeland. But whoever becomes the Liberal Party leader on March 9 is unlikely to ever live in the official residence, because Justin Trudeau will probably still be packing boxes by the time his successor faces a different Albertan in an election.
Conservative Leader Pierre Poilievre has an enormous lead in the national polls, which have not moved despite Trudeau announcing his long-pined-for resignation. The polls may move when the Liberals pick a new leader, but not enough to stop a Conservative landslide this spring.
It is impressive in a way that both Carney and Freeland — both extraordinarily accomplished people — have decided the race is worth the trouble because it looks like all the winner will get is a chance to lose. (House Leader Karina Gould is also running, but she is unlikely to find a way to be competitive in such a short race.)
A lot to give up
It is particularly striking that Carney — the former governor of the central banks in both Canada and England — is willing to give up a lucrative life in lush boardrooms for a difficult and uncertain political career. He has resigned as chair of both Brookfield Asset Management and Bloomberg LP and disentangled himself from a variety of other desirable gigs, giving up goodness knows how much money.
He must think he can win the leadership — and believe he has some chance of beating Poilievre — or he wouldn’t be doing all that.
Carney looks like he will win the first race. He kicked off his campaign by cracking jokes during a successful interview with Jon Stewart last week on “The Daily Show,” which drew approving reviews from Canadian Liberals who previously had found him staid, even for a banker.
But, without Stewart to loosen him up, he appeared wooden during his official launch in Edmonton, a sign of his inexperience as a politician.
Emotional and divisive
Freeland doesn’t have that problem. A former journalist who impressed Canadians with her toughness during trade negotiations with Donald Trump during his first term, she will be a formidable opponent. In her launch video, she presented herself as the candidate best suited to stand up to Trump, who is threatening to impose economy-killing tariffs on Canada.
But Freeland’s launch was interrupted by Gaza protesters and overshadowed by news that Foreign Affairs Minister Mélanie Joly — a crucial organizer in Quebec — would support Carney. Former Minister Navdeep Bains — a crucial organizer in the rest of the country — is also said to be on Team Carney, as are a growing number of prominent ministers. On Sunday, François-Philippe Champagne, the influential industry minister, is expected to endorse Carney, adding a note of finality.
Canada’s Middle East policy has not emerged as a point of debate — there have not yet been any debates — but it appears to be a dividing line in the race ahead, judging from how supporters are sorting themselves. Joly has often been criticized by Israel’s supporters, and they were quick to see her Carney endorsement as a bad sign.
Freeland has spoken up for Israel in the past, while Carney has no public record on the issue but appears to be attracting supporters who are more critical.
They will likely both be challenged to take a position as the race continues, which may damage whoever wins. An emotional and divisive dispute over Middle East policy is exactly what the Liberal Party doesn’t need as it gets ready to face Poilievre, who is strongly pro-Israel — but it may be what the party gets.
An outsider? Really?
Whether that so-far sublimated division emerges into the open or not, Carney is likely to win. He has the advantage because of “the short timeline, the high buy-in, and just the sheer number of early caucus support he’s gotten,” says pollster Quito Maggi, of Mainstreet Research.
“In a long leadership, caucus matters very little. In a short leadership like this, where each caucus member is going to bring to the table a couple hundred supporters from their riding to be able to sign up for this, it matters a lot.”
And Freeland faces challenges. She will find it hard to distance herself from unpopular Trudeau policies since she was his deputy prime minister.
Carney was on the sidelines, giving him more of a credible claim to being, as he called himself on “The Daily Show,” an “outsider.” The Conservatives will ridicule that, pointing to his public support of carbon pricing, for example, but they might have to work up a sweat to make it stick. It is already stuck on Freeland.
“He’s got a lot to prove,” said a senior Liberal who prefers to remain anonymous. “Freeland has a lot to disprove, which means, I think that he has the easier go of it.”
And the manner in which Freeland left the Trudeau government — resigning on the day she was to deliver a fall economic update and throwing the government into chaos — may not sit well even with those Liberals who were relieved to see Trudeau pushed out.
There’s an old adage in politics: She who wields the knife never wears the crown.
It would be hard for her to win, but Carney — who is entering a demanding new profession at age 59 — might find a way to lose.
Whoever comes out on top will almost immediately face the fearsome Poilievre, giving them a good chance of beating the record set by Charles Tupper, who had the shortest tenure as Canadian prime minister when he served for just 68 days in 1896.
FILE PHOTO: Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks during a press conference in Ottawa, Ontario, Canada November 6, 2024.
The Liberal leadership race is set to be a two-candidate throwdown
On March 9, the Liberal Party will have a new leader, and soon after, Canada will have a new prime minister.
The race is set to be a contest between former Bank of Canada and Bank of England Governor Mark Carney and Chrystia Freeland, who was Justin Trudeau’s finance minister and deputy prime minister until she resigned in December over differences with the PM.
A handful of others have declared a run including longtime Cabinet minister Karina Gould, former member of Parliament Frank Baylis, and current MPs Jaime Battiste and Chandra Arya. Resource Minister Jonathan Wilkinson is reportedly considering a bid. But they’re long shots at best.
Candidates have until Jan. 23 to declare.
With the Liberals down more than 20 points in the polls and facing an election as early as March, whoever wins has a tough task ahead. Rather than battle for a poisoned chalice, a number of high-profile Cabinet ministers are sitting out, including Foreign Minister Mélanie Joly, Industry Minister François-Philippe Champagne, Finance Minister Dominic Leblanc, and Transport Minister Anita Anand. Former British Columbia Premier Christy Clark also demurred, citing her poor French speaking skills.
The Liberals set a hefty entrance fee for candidates at 350,000 Canadian dollars — a steep amount for a short race in which strict election finance rules forbid individual donors from contributing more than CA$1,750, and companies are prohibited from donating at all. That means that only heavy hitters with wide recognition have a shot at raising enough cash in time, leaving the high-profile Carney and Freeland ahead of the pack before the race even begins.
Trudeau’s successor: All eyes on Freeland, Clark, Carney
Who is lining up to replace outgoing Justin Trudeau as Liberal Party leader and prime minister?
Popular MP Dominic LeBlancannounced Wednesday that he will not run. He took over the Finance portfolio after Chyrstia Freeland abandoned the sinking Trudeau ship last month, and he was already engaged with border issues, having gone with Trudeau to Mar-a-Lago at the end of November. The bilingual LeBlanc – French fluency is a must for Canadian PMs these days – was considered a potential replacement for Trudeau, but he couldn’t abandon his crucial portfolios to take part in the race.
Most speculation is now centered on Freeland, former British Columbia premier Christy Clark and former central banker Mark Carney, who are all considering candidacies.
They all have strengths and vulnerabilities. Freeland has the highest profile and is seen as tough and capable, but she would find it hard to distance herself from unpopular Trudeau policies. Also, some Liberals might resent her for hastening Trudeau’s political demise with her resignation.
Clark is a proven political performer with deep roots in the right wing of the party and could easily distance herself from Trudeau, but the quality of her French is an open question.
Carney, meanwhile, has impeccable economic credentials, a record of achievement at a global level, and speaks French, but he has not proven himself in the rough-and-tumble world of politics.
Several ministers are also considering runs, including François-Philippe Champagne, Karina Gould, Mélanie Joly, Steve MacKinnon, and Jonathan Wilkinson.
They all may wait until the rules are announced to announce their candidacies. The party is under pressure to tighten leadership voting rules, which currently allow foreign students and temporary workers to vote.
It’s too soon to handicap a race, but Carney is the one to watch. The Conservatives keep attacking him, which suggests he makes them nervous. But Carney has never sought public office, and it is impossible to predict if his skin is thick enough or stump presence appealing enough for the job.FILE PHOTO: Canada's Foreign Minister Chrystia Freeland speaks during a news conference at the Canadian Embassy in Washington D.C., U.S. June 13, 2019.
Freeland to miss her target, thanks to Trudeau
Canadian Finance Minister Chyrstia Freeland is expected to reveal Monday that she has missed the $40.1 billion deficit target that she set for herself last year, the latest in a long string of fiscal targets Justin Trudeau’s government has missed over the years.
Freeland said Tuesday she expects the fall economic statement, which she will present on Dec. 16, will show a declining debt-to-GDP ratio, but she did not mention the deficit target. “I chose my words with care because it is important to be clear with Canadians. It is important to be clear with capital markets.”
The missed target will make Freeland a target of criticism by the business community and Conservatives.
According to a report in The Globe and Mail, Freeland and Trudeau are at odds over spending. Her office and nonpartisan Finance Department officials are unhappy about the government’s $6.28-billion plan for a holiday sales-tax break and $250 checks for people earning up to $150,000.
The gimmicky measures – which have not moved the polls for the Liberals – seem to have made it impossible for Freeland to hit her target.
The tension between Freeland and Trudeau revives questions about her future in the government. Trudeau brought Public Safety Minister Dominic LeBlanc, not her, to Mar-A-Lago last month, and the Globe reported Thursday that Trudeau is again trying to recruitMark Carney, presumably to take her job.Correction: This post originally referred to Dominic LeBlanc as the transport minister.
A worker is assembling auto parts on a production line at the Li Auto Manufacturing base in Changzhou, Jiangsu Province, China, on March 27, 2024.
Canada in lockstep on Chinese auto software
Deputy Prime Minister Chrystia Freelandannounced Tuesday that Canada may ban Chinese-made software in vehicles, following a similar plan from the US government.
Canada recently announced a 100% tariff on Chinese EVs, along with 25% tariffs on aluminum and steel. China has announced it will challenge the tariffs at the World Trade Organization, where it could succeed. A security-based ban on software would potentially represent a surer way of closing the door on Chinese electric vehicles, which threaten to overwhelm North American manufacturers.
Governments in both Canada and the United States have sunk tens of billions into tax credits, rebates, and subsidies for EV manufacturers, but China, which has had a huge head start, looks able to outcompete the North Americans unless they are prevented by trade barriers.
The announcement by Freeland is another sign that those trade barriers are likely to be imposed in unison, since the Canadians want to be in lockstep to ensure continued access to the enormously important US market. The protectionist measures will slow the electrification of North America passenger vehicles, but leaders in both countries seem to have decided that it is politically impossible to surrender their markets to China.
Canada's Prime Minister Justin Trudeau speaks to the media following a cabinet shuffle at Rideau Hall in Ottawa.
Team Trudeau adds fresh faces
Justin Trudeau shuffled his cabinet on Wednesday, a major shakeup as his government struggles in the polls ahead of an election in which the Conservatives look poised to make gains. Trudeau dropped seven ministers who were seen to be struggling and introduced seven newcomers.
Most of the key players on Canada-US files stay in place. Chrystia Freeland, the deputy prime minister and finance minister who played a central role in negotiating USMCA, keeps her dominant position. Foreign Affairs Minister Mélanie Joly remains in place, as does François-Philippe Champagne, the energetic industry minister, who has been busy luring EV companies to open plants in Canada.
Anita Anand, the well-regarded defense minister who worked with her American counterpart on upgrades to the joint NORAD northern defense system, takes the helm at the Treasury Board, a powerful but less public-facing post. Taking her place at defense is former Toronto police chief Bill Blair. Pablo Rodriguez, the Quebec MP who led the government’s (so far) unsuccessful effort to squeeze money for journalism out of the tech giants, is shifted to Transport. Pascale St-Onge, another Quebecer, will take over his department, perhaps opening the door to a fresh approach to Google and Meta.
The shuffle comes as Trudeau approaches eight years in office. He is now the longest-serving leader in the G-7, but he faces a difficult path to reelection, with low approval ratings and signs that the public is losing faith in his leadership, particularly on economic issues. A poll released Wednesday shows his Liberals 10 points behind the opposition Conservatives. Trudeau has said he plans to lead his party into the next election, expected either next year or in 2025, but no prime minister has won a fourth consecutive election since Wilfrid Laurier, in 1908.Trudeau’s fight with big tech could bleed into US election
Justin Trudeau and Joe Biden appear to be headed for a showdown over tax policy that could bleed into the US presidential election – and Bruce Heyman, one of Canada’s best friends in the United States, is worried.
Heyman, a former Goldman Sachs banker who Barack Obama sent to Ottawa as ambassador to Canada in 2014, is normally upbeat about the relationship between Washington and Ottawa. During the long and difficult USMCA negotiations, when Donald Trump threatened to tear up NAFTA, Heyman was a loud and persistent voice calling for calm, pointing to the benefits of the enormous cross-border trade.
But he has been worried since last Friday when he watched Finance Minister Chrystia Freeland firmly defend Canada’s plan for a new digital service tax at a forum in Aspen, and absorbed a stern warning from current Ambassador David Cohen. The plan is to impose a 3% tax on big tech revenue in Canada.
“I would recommend everybody take Ambassador Cohen’s comments last week very seriously,” Heyman says. “The US would have to respond in some way.”
In a Canadian interview published Friday, Cohen said that if Canada proceeds with its tax plan, the United States will have “no choice but to take retaliatory measures in the trade context, potentially in the digital trade context.”
On the same day, in Aspen, Freeland stood firm, delivering lines that sounded very much like those she delivered during the high-stakes USMCA negotiations.
“We believe in being nice,” she said. “We believe in being polite. When we have disputes we think they should be negotiated in a civil way. But we also believe at the end of the day you have to stand up for the national interest.”
How we got here
The roots of the dispute go back to the Canadian election of 2019, when the Liberals promised to “make sure that multinational tech giants pay corporate tax on the revenue they generate in Canada,” in the form of a 3% digital services tax, similar to measures in the UK, France, and Italy. Freeland included the measure in a budget document in 2020 but postponed the plan for two years while OECD members worked toward an international agreement. The 143 countries in the tax deal are trying to reallocate taxing rights on about $200 billion in profits from multinationals to the countries where they do business.
But the OECD talks ended two weeks ago with the parties agreeing to another delay, at which point Freeland said Canada would bring in its own tax on Jan. 1, 2024. “Canada is being asked, again, having agreed to a two-year standstill, to agree to further standstills with no fixed date … so for us, that’s clearly a disadvantageous position,” she said in Aspen.
Canada is isolated. Of the countries in the tax talks, only four other countries — Belarus, Pakistan, Russia, and Sri Lanka — rejected a one-year extension. “When you look at the countries that do not agree with that position, they are not countries that you would normally think Canada wants to be a part of,” Cohen said. “They are a combination of autocracies and Third World countries.”
This is the second run the Canadians have taken at Silicon Valley this year. In June, Trudeau’s government passed a law that would require social media platforms to make payments to Canadian news outlets. Both Meta and Google have balked and moved to drop Canadian news from their platforms rather than pay, embarrassing the government.
Tyler Meredith, a former advisor to Trudeau, helped write the tax policy in question. He says the Canadians are determined to implement a digital services tax, in part because multinationals are able to shelter their profits in low-tax jurisdictions, meaning they extract money from Canada without contributing meaningfully to the economy.
How Washington will respond
Meredith says that while the United States can impose tariffs, they may not win a trade-dispute resolution process on the issue because the tax measure is within Canadian jurisdiction, and any tax would apply to both Canadian and foreign companies. He says the government won’t want to just drop its plan.
“Having put effectively four years into this effort and already made assumptions in our fiscal framework … and having worked in partnership with the US and other OECD partners, it’s very hard for Canada to move off that position without confidence we’re getting something in return.”
But Heyman warns that Cohen isn’t bluffing. “The US embassy and the US government are going to work hard to stand up for US industry. I don’t know what actions will or could be taken. But, trust me, I would just take the ambassador's comments seriously.”
Jonathan Lang, Eurasia Group’s director for trade and supply chains, agrees that the US will feel obliged to respond if Canada proceeds. “I do think the US would have to respond with a tariff regime of some kind if DST were to move forward in Canada, sidestepping the OECD negotiations,” Lang says. “That would be a warning to others.”
Lang, who was director for international economic affairs in Trump’s White House, points out that the former U.S. president threatened France with a wine tariff when French President Emmanuel Macron brought in a similar tax in France. The Americans, under Biden or Trump, don’t want to see countries imposing taxes on U.S. tech companies. “I strongly suspect that the US would have to draw a line in the sand of some kind here,” he adds.
This high-stakes showdown is taking place in the run-up to the 2024 presidential election, in which Trump can be expected to argue that Biden is too soft on foreign competitors.
That is what makes Heyman nervous about the whole thing: “The US in 2024 may have a Trump card, and that changes the dynamic of the poker game entirely.”
In April, Hillary Clinton visited Belfast to mark the 25th anniversary of the Good Friday Agreement.
A Clinton in Ottawa
Canadian Liberals gathered in Ottawa on Thursday for their annual political convention. This year’s event features a special guest appearance from Hillary Clinton, who will be chatting with Deputy PM Chrystia Freeland on Friday. Coincidence? Well, it’s hard to ignore the parallels.
The conference opened with a speech from Justin Trudeau, after which he flew to London for the coronation of King Charles III. In his absence, Clinton and Freeland will discuss the future of the US-Canada relationship.
As always, Canadian political watchers are looking at this as a leadership test. After all, Trudeau is eight years into his tenure, has accumulated more political baggage than a Samsonite factory, and suffers from poor approval numbers.
Freeland, by far the most powerful minister in Trudeau’s cabinet, is often touted as a possible successor to Trudeau. But Liberal strategists worry that pitting her against Conservative Party leader Pierre Poilievre – who detractors have likened to Donald Trump – could set up a replay of the 2016 US election, which Democrats lost. And Freeland faces some of the same issues as Clinton did: Trying to break the glass ceiling as the first Liberal female PM, she over-indexes on competence and underperforms on the stump.
In any case, Trudeau says he intends to stick around for the next election, likely in 2025, although he leads a minority government that could fall before then. Which is why the Clinton-Freeland exchange will be so closely parsed.