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51st or Fight: Trudeau leaves, Trump Arrives
Justin Trudeau is leaving you, Donald Trump is coming for you.
The timing couldn’t be worse. The threat couldn’t be bigger. The solutions couldn’t be more elusive.
Canada and the US are headed for a serious and economically dangerous trade war in less than two weeks, and President-elect Donald Trump, seeing Canada in a vulnerable leadership moment, smells blood.
In politics, as in most things, there is no opponent more powerful than time and, after nine years in power, time crushed Justin Trudeau’s political career. The “Sunny Ways” majority government of 2015 for Trudeau gave way to the medieval darkness of his current minority government, beset by dire polls, recurring scandals, and painful internal betrayals. What happened?
In short, there were no new policy ideas to bring back the light. The list of victories that Trudeau mentioned in his resignation speech (some genuinely transformative, others still deeply divisive) — the Canada Child Benefit that lifted over 300,000 children out of poverty (child poverty rates in Canada are now going back up), the first G7 country to put a price on carbon, renegotiating NAFTA, leading the country through the pandemic, legalizing cannabis and medically assisted dying, negotiating a health accord with the provinces, bringing in universal daycare — all these were, in the end, not nearly enough. Politics is all about tomorrow, not yesterday, and the tomorrow promise of Trudeau, once his brand, was gone.
Since the pandemic, Trudeau has been, like incumbents around the world, on his back foot on the trinity of core issues galvanizing populist support: inflation, immigration, and housing prices. His policies to address these were reactive, well behind the instincts of the leader of the official opposition, Pierre Poilievre. It didn’t help that the fiscal guardrails Trudeau had set up were blown. The Liberals were more than CA$20 billion past their target ahead of the fall fiscal update, an update his finance minister was set to give on Dec. 16. Instead, she dropped a radioactive resignation letter that very morning, pointing to Trudeau’s fiscal strategies as “costly political gimmicks” — and laying bare the internal divisions within the Cabinet. He was out of supporters, out of ideas, and looked out of touch.
It finally ended on Monday, an icy Ottawa day with the kind of cold that you can almost grab with a gloved hand and snap over your knee. The prime minister stood alone in front of the cottage where he had done so many press conferences during the pandemic and where I recall sitting to interview a gray-bearded version of him on a similarly frigid winter day back in 2020. Now, he was notably different. Stripped of the pretense and dramatics that sometimes characterized his tenure, he presented a more authentic version of the man most Canadians had long ago lost sight of, telling them that he was resigning as leader and prime minister.
For a boy born on Christmas Day, the pathetic fallacies that marked Justin Trudeau’s life had one last small signal to send. Just before he left the shelter of the cottage to make his resignation announcement, a gust of wind suddenly blew his speech off the podium, papers scattering into the January air. It was over.
For his party, Trudeau’s departure could not come soon enough, and while Liberal Party leaders are still dithering on the rules for a leadership race, the math is cruel. Parliament is prorogued — suspended — until March 24, on Trudeau’s orders. There will be a confidence vote soon after, so expect a Canadian federal election to kick off immediately and run into May. In other words, Trudeau gave the next leader a short runway — more like a cliff. The next PM will barely have time to find the bathrooms and grab a cup of coffee before they will have to hit the hustings and try to climb out of the political hole that finds them 25 points behind the Conservatives.
For Canada, this could not come at a worse time. In less than two weeks, Trump will be sworn in as US president, and he has promised to slap Canada with 25% tariffs and use “economic force” to try to absorb the country as the 51st state.
As I wrote last year, Trump’s threat to absorb Canada as the 51st state has gone from a joke to a trial balloon — and it is quickly becoming a policy goal.
Trump the Isolationist has looped inside out and become Trump the Expansionist, with designs on Greenland, Canada, and Panama. His foreign policy for Central America is basically now the famous palindrome: a man, a plan, a canal, Panama.
Is he serious?
Yes.
Always take the president of the United States seriously, especially when he says he’s being serious. He may be using aggressive rhetoric as a negotiating tool to get better deals, but the threats are very real. Trump believes in tariffs like a priest believes in God.
When Trump threatens to beggar Canada with the economic force of 25% tariffs, it is the ONLY THING THAT MATTERS.
Canadian industry is bracing for a dramatic, painful economic shock. From. Its. Closest. Biggest. Trading. Partner.
All this lines up perfectly with the Top Risks of 2025 that our parent company, Eurasia Group, released this week, as you have read about. Risks such as Trumponomics — high tariffs on all allies and foes — mixed with the risk of The Rule of Don, a mercurial leader who has destroyed norms and wants the rule of the jungle over the rule law, is a lethal combination for a middle power country like Canada.
The rules-based international order is the architecture of the multilateral world, one that the US built in its own image after World War II and, until now, has been the backstop. This order has led to incredible prosperity for both the US and Canada, and billions of others. It is now disappearing faster than the fact-checkers at Meta.
As Trump throws economic bombs, Canada will have to muddle through the next three to five months without a leader who has a national mandate, leaving premiers like Ontario’s Doug Ford to lead the fight. And credit to him: Ford, so far, has done a superb job defending his province and speaking out.
Trump is coming for Canada and wants it to be the 51st state, in part or in whole — and if there was ever a time for someone to prove they have the stuff for leadership in a time of crisis, it is now. To twist an old expression, it is the 51st or fight.
Canadians better be up for a fight.
Trump wants something, but likely not a 51st state
It has been a long time since the United States got any bigger.
In the 19th century, the American governing class believed in Manifest Destiny — that the country should govern the whole continent, spreading democracy and capitalism — and the young republic acquired Alaska and much of Mexico. Recently, though, Americans have seemed happy with their territorial limits.
On Tuesday, Donald Trump signaled that this may be about to change. In a news conference at Mar-a-Lago, the soon-to-be president expressed the desire to acquire Greenland, reacquire the Panama Canal — by force, if necessary — and use “economic force” to acquire Canada.
Observers do not think he can seriously intend to absorb his northern neighbor, but it’s hard to be entirely confident.
Trump has been teasingly calling Justin Trudeau “governor” for weeks and cracking jokes about making Canada the 51st US state, but his tone on Tuesday was different. He sounded serious.
Trump referred to the Canada-US border as an “artificially drawn line” and complained about the cost of the relationship with the United States.
“We don’t need their cars,” he said. “You know, they make 20% of our cars. We don’t need that. I’d rather make them in Detroit. We don’t need their cars. We don’t need their lumber. We have massive fields of lumber. We don’t need their lumber. We don’t need their dairy products. We have more than they have.”
Trump said he would impose “very serious tariffs on Mexico and Canada,” and complained about drugs and migrants crossing both borders.
Since Trump first threatened to hit both countries with tariffs in November, Canadians have shown signs of distress. Premiers, fearing the impact on exports to the United States, have urged Ottawa to cooperate on the border, and Trudeau flew down to Mar-a-Lago to kick-start talks. Canada rushed to present a border plan. But even as they sought to placate Trump, the president-elect increased the intensity of his rhetoric.
Snowball’s chance …
After Tuesday’s news conference, Canadian leaders responded by telling Trump that Canada is not interested in joining the United States — an idea that is just not that popular.
“There isn’t a snowball’s chance in hell that Canada would become part of the United States,” Trudeau tweeted.
“Canada will never be the 51st state,” tweeted Conservative Leader Pierre Poilievre. “Period.”
“Cut the crap, Donald,” tweeted the NDP’s Jagmeet Singh. “No Canadian wants to join you.
Canadian commentators also expressed that they were shocked and appalled by Trump’s suggestion.
South of the border, though, Trump’s supporters were cheering him on. Matt Walsh, Jack Posobiec, and Jesse Waters all want to conquer Canada.
It is hard to know how seriously to take any of this.
How serious is he?
Trump’s complaints about Canada seem manufactured. Little fentanyl comes across the northern border. The $100 billion trade deficit that Trump gripes about is largely the result of oil and gas exports, which help keep US gas prices low at the pumps. If the Americans don’t want it, Canada could find other markets. Imposing tariffs would wreck the Canadian economy, but it would also damage American interests, especially if Canada imposed retaliatory tariffs on, for example, Florida orange juice.
But some well-connected people are rattled by Trump’s talk. Could he plan to wreak havoc with the Canadian economy? Will he try to divide and conquer by offering oil-rich Alberta the chance to join its biggest market, creating a Donbas on the 49th parallel? Utah GOP Sen. Mike Lee joked that the United States might like to take Alberta and leave the rest.
But it doesn’t seem like the MAGA movement would want Canada. Its left-leaning voters would make it hard for any future Republican to win the presidency. English Canadians have been struggling to accommodate prickly French Canadians since the country was founded.
What does MAGA want? So this doesn’t look like a practical proposal, and in the same news conference, Trump sounded unhinged, opining that windmills are driving whales crazy, for example.
The best-informed observers doubt that he is serious about annexing Canada.
“I think he is rattling cages so that he can expand the boundary of acceptable outcomes,” says Eurasia Group Vice Chairman Gerald Butts, who, as a senior adviser to Trudeau, negotiated with Trump. “Something like, sorry we screwed up your auto industry and dairy market, but at least you still have a country.”
“Trump’s threats against Canada seem less than serious as of now, though his comments about Panama and Greenland should not be dismissed,” says Clayton Allen, Eurasia Group’s US director. “Those are a clear effort to expand the range of potential actions and have in-built strategic benefits which Trump or those in his orbit view seriously.”
“He’s negotiating like a real estate developer negotiates,” says Jamie Tronnes, executive director of the Center for North American Prosperity and Security. “He sees a bunch of land and thinks it would be really cool to have his name on it, but I don’t think that’s going to happen.”
“Trump is softening his targets up for negotiations to come,” says Graeme Thompson, a senior analyst with Eurasia Group. “He’s obviously serious about getting concessions on trade issues and the border, and he’s very happy to continue poking where he finds weakness.”
He has found it in Ottawa. Trudeau, who announced his resignation on Monday, could not be weaker. For the next few months, most of his best people will be occupied by the race to succeed him, and then whomever they choose will likely lose an election to Conservative Leader Pierre Poilievre.
Until then, Trudeau is an unpopular lame duck. The last time Trump was president, Trudeau managed to drive a hard bargain as the two countries negotiated the Canada-United States-Mexico Agreement.
This time, Trump should have an easier time getting whatever it is he wants, and Canadians had better hope that does not include their sovereignty.
Six issues that will shape US-Canada relations in 2025
In December, Justin Trudeauwarned that dealing with President-elect Donald Trump would be “a little more challenging” than last time around.
With Trump threatening massive tariffs that would hit Canada hard, taking aim at the country’s anemic defense spending, criticizing its border policy, eyeing its fresh water, and more, 2025 will indeed be a rocky time for US-Canada relations. But Trudeau might not be around for much of it. Down in the polls and facing calls from a majority of his caucus to resign, Trudeau is mulling his future and could resign any day.
Conservative Party leader Pierre Poilievreis heavily favored to win the upcoming federal election, which would make Trump his challenge – a challenge Canadians, in fact, prefer the Conservative leader take on over his Liberal opponent.
Whoever leads Canada in the months to come, these are the top US-Canada issues they’ll be focused on:
1. Trade and tariffs
Trade between the US and Canada is worth over $900 billion a year, so the exchange of goods and services will be a top issue regardless of who’s in office. But Trump’s threat to levy a 25% tariff on imports has taken it to another level. The tariffs would raise prices in the US and hit Canadian industry, particularly the energy, automotive, and manufacturing sectors, with added costs. The Canadian Chamber of Commerce predicts the tariffs, and Canadian retaliation, would cost Canada roughly CA$78 billion – 2.6% of its GDP – a year and lead to recession. Canadian exports to the US would plummet, says the Chamber, with a predicted 60% drop in the mining and quarrying industries, 39% in m0tor vehicles, and 27% in metals – which would be costly for both countries. Ontario, the country’s most populous province and home to its auto sector, would be hit especially hard – which is why Premier Doug Ford is threatening to stop energy exports to the US if Trump proceeds with his plan.
The economic harm to Canada would be exacerbated by the fact that Ottawa would likely respond with its own retaliatory duties. The Trudeau government is working to secure an exemption from the policy for Canada but hasn’t managed to yet. But energy experts say they expect the tariffs won’t apply to Canadian oil either way.
Graeme Thompson, a senior analyst with Eurasia Group’s global macro-geopolitics practice, says Trump’s tariff threat is real but also part of the incoming president’s strategy. He’s trying to gain concessions on issues of concern, including border security and the (very limited) flow of fentanyl from north to south, and the US trade deficit with Canada ahead of the looming renegotiation of the USMCA.
Thompson notes that Canada is in a weak bargaining position given that it’s utterly dependent on its trade relationship with the US, “and for that reason, doesn’t have a lot of cards to play.” He also expects that even if Canada does secure an exemption on tariffs, Trump will be prepared to threaten them again in the future as leverage in any given negotiation.
“This is not a one-and-done,” Thompson says. “I think this is a mode of operations that will repeat several times for the next four years over a variety of issues.”
2. A (metaphorical?) border wall
Trump has made border security central to his tariff threat, arguing that the flow of fentanyl and illegal immigrants across the border poses a public safety threat to the US. Canada is already developing a border security plan to respond to Trump’s concerns. It’s also scrambling to prepare for a possible rise in asylum claims – which will exacerbate the current backlog – and irregular border crossings if Trump goes ahead with his plan for mass deportations.
Canada was already revising its immigration policy before Trump won, but it may introduce further restrictions – and continue to toughen its rhetoric – in the coming months. After Trump’s win, Immigration Minister Marc Miller said “not everyone is welcome” to go to Canada, emphasizing that his government was ready to work with the Trump administration on border security. At the same time, Foreign Affairs Minister Melanie Joly said Canada was sticking to its new immigration plan, which would see fewer newcomers admitted to the country.
The Trudeau government reduced its immigration targets in October and cut the number of international students it welcomes. Its border security plan includes CA$1.3 billion in spending around five pillars that include a commitment to “detecting and disrupting the fentanyl trade” and “minimizing unnecessary border volumes,” including an end to flagpoling – or allowing temporary residents to leave the country (typically to the US) and return immediately to access immigration services at the border. But that may not be enough.
Thompson says leaders of the current government are “overestimating their ability to manage what is coming.” He notes future demands from Trump could include “tighter screening of regular immigrants into Canada. That means that much like with tariffs, the Canadian government may end up managing cascading demands from Trump, so no single promise or plan will likely be sufficient to placate the incoming US president.
3. Defense spending and securing the Arctic
US administrations, including Biden’s, have pressured Canada to increase its defense spending and hit NATO’s 2% of GDP target for years. In April, the Trudeau government outlined a plan to boost spending, focused in large part on building armed forces capacity in the Arctic. The new initiatives total roughly CA$81 billion over two decades and will push the country toward 1.76% of GDP by 2030. In December, the government announced a further adjustment to its Arctic presence, which will include more air and naval equipment, and a renewed cooperation strategy in the region with the US in the face of Russian and Chinese regional interests.
So far, Trump administration officials and other Republicans seem unimpressed with Canada’s defense plan. Former Trump ambassador to Canada, Kelly Craft, said the country could “do better.” That means spending more – and faster – especially since Trump has reportedly considered asking NATO allies to spend a whopping 5% of GDP on defense spending. He’s also threatened to leave countries that fail to spend more to fend for themselves against foreign aggression.
Philippe Lagassé, associate professor and Barton Chair at the Norman Paterson School of International Affairs at Carleton University, says Canada could raise military spending by increasing pay, boosting operations expenditures, and contracting more for services. He says procurement of military hardware would take longer. But in the face of financial constraints, such new spending would require raising taxes, growing the deficit, cutting other programs, or some combination of the three – which could prove a challenge for the current government or its eventual replacement.
Arctic defense may prove to be a smoother issue. “The US has been trying to get Canada to do more in the region for a while,” Lagassé says, “and we've responded to that. I don’t see that as a point of tension.”
“If anything,” he adds, “the US will be glad if we just get our act together because their sovereignty considerations up there are less than ours, and they have capabilities up there that we don’t, but they do want us to actually get our act together around it.”
So, while Canada may feel the pressure on defense spending – and may need to come up with a faster, heftier plan to placate Trump, it can always point to progress in the Arctic and is likely to do so.
4. Water, water everywhere?
In September, Trump floated an idea to solve California’s drought problems: import water from British Columbia. As Trump put it, the province has “a very large faucet” that, once turned, could supply drought-stricken US states with fresh water. Experts point out that Canada doesn’t, in fact, have water to spare, and Canada can’t just turn on a “faucet” to divert water to the US.
The water Trump referred to, coming from the Columbia River, is already spoken for, in part through an existing treaty between the US and Canada – the Columbia River Treaty, which sets out rules governing flood controls, dams, and hydroelectric power generation.
That arrangement is in the process of being modernized to account for new developments, including climate change. The Biden administration and the Trudeau government recently reached an agreement in principle after years of work that began during the first Trump administration. But this time around, should Trump decide to maintain an interest in water flows north to south, the terms of the treaty could – like free trade – come back up for negotiation, with the faucet on the table.
5. Critical minerals. It’s in the name
The US and Canada share several other areas of cooperation and competition, but one is of immediate interest that could incentivize working together. Both countries are spending big on critical mineral development, including co-investments in a development in Yukon.
Critical minerals are central to cellular phones, the electric vehicle industry – in which both the US and Canada are investing heavily – and national defense. So whatever other tensions shape US-Canada relations, cooperation on critical minerals will remain a shared goal, especially as the two countries look to rival Chinese and Russian interests in related sectors.
6. Setting limits on Big Tech
Both countries are also taking on big tech giants, such as Google, through anti-monopoly investigations lawsuits. Still, the US is pushing Canada to drop its 3% digital services tax on big tech companies, including Google’s parent company Alphabet. The Biden administration requested a dispute resolution process for the tax, claiming it unfairly targets big US tech firms. The Trump administration is likely to press the issue, too, which may leave the policy as a pawn in one set of negotiations – say, over tariffs – or another.
Does Canada have any leverage to rely on? Canada has some cards to play against Trump, but it’s not clear who’ll be playing them. The Trudeau government, down roughly 25 points in the polls, is not long for this world – and Trudeau himself may resign any day. The country is due for an election by the fall, but it could come much earlier.
Regardless of who’s in power, however, they’ll likely deploy the playbook from the last time Canada had to manage its relationship with Trump. That means working contacts in states, particularly border states in which the Republicans have an interest in winning or currently govern and contacts in Washington. Then, they work the message about Canadian, and shared, interests up to Trump. There’s also the threats of retaliatory tariffs and halting certain trade, like Ford’s threat to cut off energy to border states.
Together, pulling these levers may yield some results, but Canada is in for tough negotiations and is unlikely to emerge from them unscathed.
Don’t Panic: 4 Rules for Responding to Trump Threats
Amid all the geopolitical chaos, the best advice of the year: Don’t panic.
As they dined at Mar-a-Lago on a main course of tough, over-cooked tariff talk, President-elect Donald Trump suggested to Canadian Prime Minister Justin Trudeau — in what the Canadians present later called a joking manner — that Canada might make a good 51st state. Naturally, people freaked out. First, Trump threatens to destroy the Canadian economy with 25% tariffs on everything, and now this? An invasion?
As the breathless coverage spilled over the international media, my colleague Gerry Butts went on Bluesky with a message: “Trump used this 51st state line all the time with Trudeau in his first term. He’s doing it to rattle Canadian cages. When someone wants you to freak out, don’t.”
It is sound advice. Don’t freak out.
Canada is no more going to become the 51st state in the next four years than California, British Columbia, and Oregon are going to break away and become Cascadia. Jokes are not policy.
So what’s up?
Trump is a zero-sum negotiator. He uses the powerful leverage he has to create “I win, you lose” deals. Threats give him a real negotiation advantage before the actual negotiations happen. That is the prerogative of the Big Dog countries, especially those run by strongmen, mercantilist leaders like Trump. Trump threats are simply the expected prelude to any deal. But what is real and what is rhetoric? And how to respond?
Invasion: Rhetoric. Dismiss.
Tariffs: Real. Discuss.
Rule One: Stick With Facts. Don’t get caught up in the torrent of tweets and taunts. Don’t give anything away until the actual negotiations start. Facts are your best friends.
Facts? Really? You might think that since Trump has ushered in the post-fact world, facts are a diminishing currency. That is a dangerous bet. For example, at the root of the 51st state jab are the much more dangerous Trump threats to slap 25% tariffs on all goods coming in from Canada and Mexico. Trump based this threat on what he says is the heavy flow of fentanyl and illegal migrants across the border.
Initially, that threat caused panic. Alberta Premier Danielle Smith immediately went into appeasement mode, telling the CBC’s Power and Politics, “It’s incumbent, I believe, on the federal government, along with all of the provinces, to work together to address those concerns if we want to be able to avoid these devastating tariffs that’ll hurt all of us.”
She’s not wrong that the Trump rhetoric needs to be addressed, which is why Trudeau immediately got on a plane and took his team for a strategic schmooze fest at Mar-a-Lago. Trump prizes personal relationships above all else, so a connection matters.
Rule Two: Don’t Take It Personally. Even though Trump has a long-standing sour relationship with Trudeau — he’s even called the Canadian PM “two-faced” — in Trumplandia, that doesn’t matter. His relationships with people change like the weather in the Rocky Mountains: If you don’t like what is happening, wait five minutes. It will change.
Trump is quick to anger and quick to forget. Can he get over his past irritations with Trudeau? Well, he got over JD Vance comparing him to … that guy who ran Germany in the war. He nominated former rival Marco Rubio, whom he used to mock as “Little Marco,” for secretary of state. Trump doesn’t hold the very grudges he creates, and the best way to get over that is to find a way to make nice, show loyalty, and suck up. That’s what the Trudeau visit was all about. Feelings first. Facts second.
That doesn’t mean giving anything away. And that’s where the facts come in. On fentanyl and border security, the reality is far different than the rhetoric. Canada is hardly a major threat to the US on either issue.
“The facts are hard to deny,” Kirsten Hillman, Canada’s whip-smart ambassador to the US, pointed out on X. “Last year, 0.6% of illegal crossings and 0.2% of fentanyl seizures by US authorities were at the northern border.”
That’s right. Only .2% of fentanyl seizures happened at the Canadian border. If you want to go deeper, check out the latest stats from the US Customs and Border Protection agency, which shows that the problem of fentanyl is largely at the Mexican border, not the Canadian one.
In fact, the CBP’s top official, Troy Miller, has an extensive interview on the US government website about fentanyl coming over the US border. Guess what? He mentions the southwest border 21 times and Mexico specifically seven times. Canada? Not a word. Canada and the northern border are not mentioned a single time. Why? It is simply not a major issue.
Rule Three: Know What Actually Needs Work. On the other hand, illegal migration is a real issue, both internationally and domestically. There is a key section along the US-Canadian border called the Swanton Sector (which covers parts of New York, Vermont, and New Hampshire), and illegal immigration rates there have spiked according to stats from the CBP. But how bad is it? 23,000 arrests were made at the northern border between October 2023 and September 2024. That is up from 10,000 in 2023. Compared to Mexico, where over 47,000 arrests were made in November of this year alone, it’s a trickle (700 were arrested in November in Canada). Still, politically it is an issue Canadians will have to deal with if they want to avoid tariff punishments. Doing nothing is not an option.
Illegal migration is now driving election outcomes in France, Ireland, Germany, and many other places, so this ain’t a surprise. But proportionality matters, and the facts that prove that point can get lost in the storm of threats. It is critical this doesn’t happen.
Rule 4: Follow the Money. There is a high probability that a tariff-driven trade war — or skirmish — is coming very soon, and the facts here will be crucial. After all, high tariffs will hurt the very people Trump represents — namely, American workers. High US tariffs on Canadian goods will raise prices for US consumers and make life for them more miserable. That is a political loss for Trump.
Over 34 US states rely on Canada as their major trading partner, so expect state governors to pressure the White House to ease up on the tariff talk so as not to jeopardize the bilateral trading relationship that sees over US$2.7 billion worth of goods and services crossing the border each day.
To protect that, Canadian leaders will have to think hard about decoupling their trade relationship with Mexico, especially when the new US-Mexico-Canada trade deal gets renegotiated in 2026. The politics of the southern border have always cross-infected the northern one, but if the infection threatens to be economically fatal, there will be a change. The famed three amigos might be reduced to two.
But that is not for right now. Trade deals are not made on social media; they are negotiated face to face, when genuine swaps and deals can happen. Better to build relationships now over dinner, and serve up facts for dessert.
And don’t panic.
It hasn’t even started yet.
Is Mélanie Joly the potential Trudeau successor to watch?
The return of Trump is set to upend US-Canada relations, throwing all kinds of policy futures into doubt, including trade – with Trump threatening a 25% across-the-board tariff – border security, defense spending, and even freshwater management.
Joly will be directly or indirectly a part of it all, largely because of her ministerial portfolio, but also because of her place on Trudeau’s Cabinet Committee on Canada-U.S. relations, which has a full plate. Joly will be busy working with US contacts at the state and federal levels, in the White House and on Capitol Hill, as part of a strategy Canada deployed with Trump during his first term – an approach that more or less worked.
Beyond the immediate challenge of managing that relationship is the prospect of a potential leadership run in which Joly could be up against other heavyweights, including former Bank of Canada and Bank of England Governor Mark Carney, Finance Minister Chrystia Freeland, and Public Safety Minister Dominic LeBlanc.
Trudeau says he will stay on to fight the next election, but he’s down roughly 20 points in the polls, with the federal campaign due to launch no later than next fall. If Trudeau loses that election, he’ll almost certainly resign as leader of the Liberal Party, which could mean Joly would queue up to take on a new challenge – becoming the first woman to lead the Liberals.United States North? Surely, you’re joking
Donald Trump was just joking when he told Prime Minister Justin Trudeau that if Canada’s economy can’t function in the face of US tariffs, it should just become the 51st state. At least that’s what Canadian politicians on the government side are rushing to clarify.
Trump made the comment over dinner with Trudeau at Mar-a-Lago after the Canadian PM went stateside in the hopes of establishing a smooth – or smoother – working relationship with the incoming president.
Canada is desperate to avoid the 25% across-the-board tariffs Trump has promised to introduce. The tariffs would hit Canada – and the US – hard, particularly if Trudeau decides to retaliate, which he almost surely will. Cross-border trade between the two countries is worth roughly $1 trillion a year.
On LinkedIn, former Trudeau principal secretary and current Eurasia Group Vice Chairman Gerald Butts noted that this wasn’t the first time Trump had made the 51st state joke.
“Trump used this ‘51st State’ line with Trudeau a lot during his first term. He’s doing it to rattle Canadian cages,” Butts posted before offering a bit of advice.
“When someone is trying to get you to freak out, don’t. #protip”
Good advice.
Liberals face two showdowns to Trump-proof Canada
As if Justin Trudeau isn’t dealing with enough. His Liberal Party is down in the polls and struggling amid a House of Commons shutdown led by the Conservatives. Now it has to manage an incoming Trump administration intent on extracting as much as it can from Canada.
After nearly 10 years in power, the Liberals are politically weak, and they’re staring down another potential parliamentary showdown over what to do about Donald Trump. Last time, it was overTrump’s 2018 tariffs on Canadian steel and aluminum imports. This time, it’s likely to be about the president-elect's latest tariff threat and border security politics.
What the tariff man wants vs. Canada’s choices
Trumprecentlyannounced an intended tariff policy that made Canadian leaders blanch: 25% across the board — levies that would cripple Canada’s economy. The tariff hike wasn’t a surprise, considering Trump campaigned on it, but the 25% rate was a shock, and the inclusion of Canada disabused optimistic Canadians of any hope that a long, close trade and security relationship between the countries would mean preferential treatment.
The president-elect has said Canada would pay the high tariffs “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” So Trump has laid out his ground rules, but responding to his demands will be tough.
For one thing, the US Drug Enforcement Agency says that while Canada’s border was a fentanyl threat a decade ago, it’s no longer a core part of the drug-poisoning crisis. Mexico poses a bigger threat — almost 500 times more fentanyl was seized by US Border Patrol coming from Mexico than Canada in 2023.
Still, border crossings are up. Encounters between irregular migrants and authorities along the US-Canadian border in 2023 account for just a fraction of the 1.5 million along the US-Mexico border, but the Canadian numbers are higher than ever. Along the northern land border — the world’s longest at 5,525 miles — border patrol reported 189,000 encounters last year, a 73% uptick from the year before — and nearly 600% higher than in 2021.
The Liberal government has promised to be “very visible” on border policy in response to Trump, adding more staff and equipment, including additional helicopters and drones to monitor the frontier. It is also pledging additional resources for the Royal Canadian Mounted Police aimed at curbing human smuggling across the border. They’ve also launched an online ad campaign — in 11 languages — to dissuade refugees from making asylum claims in Canada.
The Mounties, in turn, plan to send more police to the border if necessary, largely in response to Trump’s plan for mass deportations, which it expects will lead to a surge in illegal crossings. The exact number of pledged Mounties is unclear, though the increase could involve sending cadets to the border. The Canada Border Services Agency says it would need up to 3,000 more officers to manage its share of increased border activity.
Border security poses domestic challenges for Trudeau
Any new Canadian border security plan will cost money the government must come up with as part of its budget in early spring. Since the Liberals rely on support in a minority parliament, they require support from opposition parties to pass legislation.
At least one province isn’t waiting around for Trudeau. Alberta is working on its own border plan, which may include a special sheriff unit to patrol the crossing between it and Montana. But the bulk of any plan will come from Ottawa.
While he can’t implement policy, Conservative Leader Pierre Poilievre — whose side leads the Liberals by 20 points in the polls — can cajole and pile more political pressure on Trudeau. Poilievre’s podium sign during a recent speech read: “Fix the broken border,” and he’s calling for a plan to be presented to Parliament by the Liberals that includes more border patrols, stricter visa rules, a cap on how many asylum-seekers the country accepts, and more.
Trudeau met with opposition leaders on Tuesday to discuss border security and the tariff threat, but Poilievre has political reasons to keep calling it “Trudeau's broken border.” After all, the Conservatives, if their polling holds, are set to replace the Liberals, and the country is due to vote by October 2025.
To pass legislation in the meantime — including the crucial budget Trudeau needs to tighten border controls and keep Trump’s tariffs at bay — the Liberals must win the support of another party in the House of Commons, most likely the NDP, if anyone.
In theory, Poilievre might back a robust Liberal border plan, which Conservatives would claim as their own. But it may be more likely that they’ll reject whatever the Liberals come up with as insufficient and wait to present their own plan if they form a government after the next election.
The Conservatives won’t hand Trudeau a win, says Graeme Thompson, a senior analyst with Eurasia Group’s global macro-geopolitics practice, and will likely respond to the Liberals’ border plan with: “Great, but it’s too late and not enough.” So they’d “vote against it for being too spendthrift and for not doing enough on security and defense.”
That would leave Trudeau with two choices for a partner: the Bloc Quebecois, who are also set on defeating the Liberal government, or the New Democratic Party, who are taking things one day — and one vote — at a time. So far, on the border, the NDP is calling on the government to hire 1,100 new border agents and to expand the agency’s powers.
Thompson says the left-wing Bloc and NDP “might not be the most excited about okaying massive expenditures on border security.”
For the NDP to vote against the Liberals, they’d likely have “to find the budget insufficiently generous when it comes to economic and social supports for Canadians,” Thompson says. But if they simply say the Liberals have gone too far on border and defense spending? “Then suddenly you’re in a situation where the Liberals have lost both flanks, and that could be a trigger for an election,” he adds.
Such a border security showdown could lead to an early election, says Thompson, as the Liberals try to navigate competing demands from Trump and opposition parties at home.
Could a new government fare better?
Should the Conservatives replace the Liberals in 2025, the changing of the guard may give Canada a stronger negotiating position vis-à-vis Trump. Poilievre’s Conservatives, for example, could scrap Liberal policies such as the Online Streaming Act and the digital services tax that irk the US, giving them leverage in negotiations with Trump.
Meanwhile, Trudeau’s ability to navigate tense US-Canada relations could determine his political fate and Canada’s economic future.
Three amigos, or two?
Ford called on Mexico to match Canadian and American tariffs on Chinese imports to stop it being a “backdoor for Chinese cars, auto parts, and other products."
Ford’s province depends on the CA$11.6 billion auto industry, with integrated supply chains across the border. Any threat to that could cause an economic meltdown.
During the negotiations of the new NAFTA — the United States-Mexico-Canada Agreement — in 2019, some Conservative critics of Justin Trudeau’s government faulted the Canadians for making common cause with Mexico in resisting US demands. They are getting an early start this time ahead of the deal’s review in 2026.
“If Mexico won’t fight transshipment by, at the very least, matching Canadian and American tariffs on Chinese imports, they shouldn’t have a seat at the table or enjoy access to the largest economy in the world,” Ford said.
Deputy Prime Minister Chrystia Freeland, who played the pivotal role in negotiating USMCA withUS Trade Representative Robert Lighthizer, has repeatedly emphasized that Canada and the United States are in lockstep on tariffs on China.
Graeme Thompson, a senior analyst with Eurasia Group's global macro-geopolitics practice, says it is hard to know if they will remain in lockstep if Donald Trump’s tariffs on China get too high.
“Given Canada’s dependence on the US market, I think Ottawa will be tempted to do things that only a few years ago would have seemed impossible – including imposing significant new tariffs on China and abandoning Mexico if necessary to preserve its trade and security relationships with Washington.”
Lighthizer, who is expected to return to his job under Trump 2.0, is laying the groundwork for a new tariff policy that would include a 20% tariff on all goods coming into the US.
If there is no exemption for Canada, the policy would also lead to a sudden and dramatic slowdown in the Canadian economy.
Expect the Canadians to remind the Americans that Canada exported $124 billion of oil to the United States last year. Any new tariffs on that trade would increase prices at the pump for Americans, which Trump’s party would pay for in the 2026 midterms.