MNI: Trudeau Quitting Amid Party Rebellion, Inflation Anger
MNI (OTTAWA) - Prime Minister Justin Trudeau said Monday he will step down March 24 amid an internal Liberal Party rebellion fed by Canadians’ anger over the cost-of-living squeeze and a threatened U.S. trade war, after months of insisting he would fight this year’s election.
Trudeau also shuttered a Parliament due to resume Jan. 27 to allow for a leadership race, a move known as prorogation that’s within his power but seen as a heavy-handed tactic. All three opposition parties had intended to pass a non-confidence motion, which would have forced an early election ahead of one due in October.
“Canadians deserve a real choice in the next election, and it’s become obvious to me with the internal battles that I cannot be the one to carry the Liberal standard into the next election,” Trudeau told reporters. He also gave that as a reason for not calling an election now.
Trudeau spent many of his recent days on vacation with Liberal members calling for him to step aside. Finance minister Chrystia Freeland quit Dec. 16 rather than deliver his budget update that showed the biggest cash deficit outside of Covid since the country was founded in 1867 well after the economy emerged from lockdowns.
That was the same day another potential leadership candidate quit, then housing minister Sean Fraser. Current ministers who could run include Anita Anand, Melanie Joly, finance minister Dominic LeBlanc and Francois-Phillipe Champagne. Former BOC and BOE Governor Mark Carney could also enter the race, and former British Columbia Premier Christy Clark could run as an outsider.
Polling aggregator 338Canada shows Conservatives led by Pierre Poilievre are likely to win a majority government if an election were held now. Poilievre seized early on inflation and out-of-reach home prices, damaged the government with tough questions in Parliament and attention-grabbing social media posts, while dampening internal divisions over social policies. His main economic promises are to eliminate a carbon tax and slim the deficit and he’s also said he’ll fire BOC Governor Tiff Macklem.
Canada’s dollar has been the weakest since 2016 in recent days in part because of political uncertainty, but most of the decline is linked to the BOC cutting rates faster than the Fed as the economy stumbles. Canadian bond yields are lower than in the U.S. however as budget deficits are much smaller and inflation has returned to target. High-profile grocery prices are still stuck more than 20% higher than a few years ago. (See: MNI: Trudeau Deficit Unlikely To Fix Canada's Vibecession)
The prime minster's exit plan leaves a power void as Donald Trump's Jan. 20 inauguration looms and the incoming U.S. president promises a 25% tariff on products from Canada. It also saps momentum from Canada's role hosting the G7 this year. (See: MNI INTERVIEW: BOC Faces Recessionary Risk On Tariff Hit: Lane)
Justin Trudeau is the son of former Prime Minister Pierre Trudeau, who famously quit after taking “a walk in the snow” to consider his future. Both also used emergency legislation that sapped their popularity, the elder to deal with Quebec separatists and the younger to end truck blockades of Ottawa and U.S. border crossings.
The younger Trudeau returned Liberals to power in 2015 after some of their worst ever defeats, though seeking a fourth straight election win was a quest no one has pulled off in a century.