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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.
Canada sues Google over ad tech – and it’s not alone
Canada wants Google to split two of its ad tech tools and pay an administrative penalty “equal to three times the value of the benefit derived from Google’s anti-competitive practices, or if that amount cannot be reasonably determined, 3% of Google’s worldwide gross revenues.” So, potentially a decent chunk of cash.
Google is facing suits all over the place right now as countries struggle to reign in the company.
In 2021, the US launched a suit against Google alleging it was subverting competition in the online ad space. That suit, similar to the Canadian case, is ongoing. The US is also looking to break up Google, demanding it sell off its Chrome browser after a judge ruled in a separate case that the company has a monopoly on internet searches.
The European Union is also fighting Google over its ad practices, leaving the company encircled, but nowhere near defeated as cases, appeals, and deal-making will drag on for months or years.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.
Hard Numbers: Trump says Canada should join the US, Ireland’s new government braces for Trump tariffs, Research confirms Kremlin abducted Ukrainian children, Vietnam real-estate tycoon faces death sentence for fraud
1,000: The winners of Ireland’s election last week are scrambling to put together a new coalition government before Donald Trump takes office in January, expediting a process that normally takes months. The rush comes from Irish lawmakers recognizing that they must form a government strong enough to withstand the threat of Trump’s tariffs and protectionist rhetoric. The nearly 1,000 American multinational companies operating in Ireland are by far the biggest contributors to the state’s income and corporate tax bases, leaving the Emerald Isle highly exposed if American companies begin reshoring to avoid tariffs.
314: Research from Yale’s School of Public Health revealed on Tuesday that Russia took 314 children from occupied Ukrainian territories, stripped them of their Ukrainian identity, and put them in the custody of Russian families using the Kremlin’s aircraft and funds. The report asserts that the deportations were part of a systemic, Putin-backed program to “Russify” Ukrainian children.
12.5 billion: A Vietnamese court on Tuesday upheld the death sentence for Truong My Lan, a real estate tycoon convicted of embezzling $12.5 billion. It offered to downgrade the sentence to life in prison if she reimbursed $11 billion, but her lawyers argued she had already repaid the money. The scale of Lan’s deception rattled Vietnam’s economic outlook earlier this year, spooking foreign investors at a time when Vietnam was trying to position itself as an alternative for businesses moving their supply chains away from China.
India hopes Trump will lean its way
Last month, the Trudeau government expelled Indian diplomats after revealing allegations of assassination plots that Canadian officials linked to the highest levels of the Indian government. India denies the allegations and complains bitterly about a lack of security cooperation in dealing with what it sees as threats from Canadian Sikhs who are seeking an independent homeland in India.
On Wednesday, Canadian police confirmed that last month they arrested a man India calls a terrorist on gun charges.
The hostility between Canadian Sikhs and Hindus turned violent in the suburban Toronto community of Brampton earlier this month, leading to an angry denunciation from Indian Prime Minister Narendra Modi. India is now hoping Modi’s friend Trump will put Trudeau in his place and resolve the impasse in India’s favor.
But there is an active US prosecution of an Indian intelligence official over a plot to kill Sikh activists in both Canada and the United States. Trump is unlikely to turn a blind eye to that, says Jamie Tronnes, executive director of the Center for North American Prosperity and Security.
“Anyone who is looking for a foothold to do foreign interference that involves violence on citizens of a country on that country’s soil should be deterred strongly by the United States, particularly under Trump,” she says. “He is strong on national security, and he is not going to tolerate murder-for-hire plots on American soil.”
On the other hand, Trump tends to be motivated by transactional concerns, and India has a lot of leverage in the global chess match between China and the United States.
Trudeau’s former right-hand man thinks Trump 2.0 ‘will be harder’
When Donald Trump shocked the world by getting himself elected in 2016, Gerald Butts was the principal secretary to Canadian Prime Minister Justin Trudeau. He was also a key member of the Canadian team that managed the tumultuous but ultimately successful negotiation of the USMCA, sitting across the table from Trump, Peter Navarro, Steve Bannon, and Robert Lighthizer. He is now vice chairman and a senior advisor at Eurasia Group, which is the parent company of GZERO Media.
This interview has been edited for length and clarity.
You were in the Office of the Prime Minister the last time Trump was elected. How is this different?
Butts: On the positive side, it’s not as much of a shock. The most salient fact of the first Trump presidency was that it happened. So everybody had to have a plan for it happening again. That’s the upside. The downside is you’re going to be dealing with a much more emboldened Trump who’s got a broader electoral mandate and whose ambitions on the economy are much more comprehensive than they were the first go-round. He campaigned in 2016 basically saying to the Great Lakes blue-collar worker that he was going to bring their jobs back from Mexico, the jobs that the Clintons sold to Mexico. And this time he’s got a much more ambitious agenda. It’s rebalancing global trade and a mass deportation plan that will make labor more expensive in the United States.
If you add those two things together, along with probably increased defense spending on an already large deficit, it’s hard to see how those things don’t cause inflation.
It seems odd that inflation is what eroded Biden’s brand, but Trump’s two key promises are both inflationary.
They don’t see it that way, of course. I think that that’s the conventional economic view. And I do think that what will inevitably be an inflated defense budget beyond the PBO’s 3% estimate is also going to be part of this, part of the inflationary pressure that Trump brings to bear.
As policymakers have learned over the past couple of years, because most of them had never had to deal with it before, inflation is a government killer. It’s the grim reaper for incumbents, and it’s mowed down governments of all political stripes all over the world.
Speaking of which, the Trudeau government generally gets good marks for handling Trump the first time, which you had something to do with. A lot of people are worried that it’s going to be a little harder this time, in part because of the relationship between the president and the prime minister. Do you think that that’s important?
Its importance is overblown. I think you’re right that it will be harder. I think that has more to do with the relative political standing of the government and the time of the mandate. If you’re dealing with Trump at the end of your first year, when you’re in the 40s in the polls, with almost a 50% approval rating, that’s one thing, because those two things add up to political capital that you have to invest.
If you’re dealing with it in year 10, when you don’t enjoy those polling numbers, that means you have less political capital to invest. And by definition, Trump is a problem that requires political capital to solve.
They have a very difficult task ahead of them, don’t they?
They really do. I never like to tell my former colleagues how to do their job, because the truth is, when you don’t have all the information they have, it’s hard to make judicious calls. Only they know how prepared they are to deal with undocumented people showing up at a Canadian border point. I don’t know that. Unless you do, it’s hard to say how you would deal with that issue either in the public or in bilateral negotiations with the Trump administration.
I do think that’s potentially the biggest problem they’re going to have to deal with because I wouldn’t say the cross-partisan consensus on immigration in Canada is gone, but it has been weakened by recent events.
On trade, what’s the best guess on whether Trump is going to exempt Canada from a new tariff policy?
I think if the best predictor of future behavior is past behavior, then he will only grant exemptions in return for something. The question is, what can the government offer that he wants that will get that exemption? And I have no idea.
Cross-border trade is high frequency and very large. We’d feel the impact of tariffs sooner, and they’d cover more of our economy than any country except maybe Mexico.
Traditionally in Canada, all governments are afraid — because of the strength of our dairy lobby — to do much about the supply-managed dairy industry. (Canada’s politically powerful dairy farmers have long exerted political pressure to protect their industry from American imports.) In this situation, do you think that that’s the kind of thing the politicians may have to think about in a new way?
That’s definitely possible. I mean, my view is if you’re going to take that kind of risk, get some bigger economic reward for it. We’ve been simultaneously having this conversation yet again about Canadian productivity. And one of the big problems with Canadian productivity is that our firms and sectors like digital services face no competition. So the companies are big, bloated bureaucracies that deliver some of the most expensive services in the world. I’d be tempted to use the crisis presented by the Trump administration to fix some things about the structure of the Canadian economy that badly need fixing.
On the energy transition, all of these big bets on battery plants in the United States are legislated tax credits that Trump cannot get rid of, but the whole managed auto manufacturing sector is losing an enthusiastic ally for EVs in Biden. What does that do to the enormous subsidies Trudeau and Champagne have put on the table for EV manufacturers?
I think that may be literally a trillion-dollar question. That’s going to be a super-challenging file to manage with Trump. It’s coming at a time where the global industry is electrifying, and that process is being led by the Chinese. The Americans think the proper response to that is to create large tariffs that will keep the Chinese out of the American market because they’re kind of running the 1970s playbook. I think the response from the Chinese is going to be: “We don’t need to be in the American market. China is twice the size of the United States auto market, and we’ll take the rest of the world while you guys double down on inferior technology that the rest of the world is turning away from.”
It’s a very complicated situation. They’re already losing out to Chinese and Korean producers, and this could just accelerate that process.
So I’d be very worried if I were working on this part of industrial policy in North America because the companies have a weaker hand to deal with than the government seems to think they do.
And for Canada, there’s an extra challenge in that the Canadian economy is so integrated with the American economy that it may not be possible to set a different course.
That’s right. It may be that the American automotive market, like the American economy itself, is so large that subnational economies like California and New York — which together are larger than Canada — can keep going the way they’ve been going, and the Canadian industry basically follows them. But I think that’s challenging. It’s super challenging for a small but important producer like Canada, especially on the parts side.
Let’s close with a little optimism. What do you see as an upside of this election for Canada?
I think it’s the persistent structural problems in the Canadian economy that are not going to be solved in the absence of a crisis. Maybe Trump is the crisis that the Canadian economy needs to solve those problems.
Green fund controversy halts government business in Ottawa
The government has provided initial documents on the program, but the Conservatives want more handed over to the Commons so they can share them with federal police. The government argues sharing more documents would be illegal and prefers that the matter be studied by a House committee.
Why it matters? Since the Conservative demand falls under parliamentary privilege, most House business is on hold until it’s resolved. But the government can’t end the stalemate without the support of at least one other opposition party, the NDP or Bloc Quebecois, to join them in ending the showdown. But neither wants to do so.
The Conservatives are happy to let the scandal drag on, delaying the government’s agenda and painting them as crooked ahead of a federal election that’s due by October 2025. The showdown indicates an increasingly dysfunctional legislature and weak government, and it suggests that the coming months won’t be as productive as the Liberals would hope – and the country would expect.