Canada Under Pressure for Early Federal Election
Investing.com – Canada is facing mounting pressure to conduct a federal election “sooner than later” this year due to the looming threat of US President-elect Donald Trump’s strict tariff plans, according to analysts at Jefferies.
Current Political Climate
Following Prime Minister Justin Trudeau’s announcement of his resignation earlier this month, the Canadian parliament has been prorogued (suspended) until March 24. This suspension suggests that a federal election is unlikely before May, placing a politically weakened Trudeau at the helm as Canada navigates an initial response to Trump’s trade policies.
Expected Election Timing
Jefferies analysts expect the election to occur in mid-May. They highlighted that investors are faced with the challenge of assessing potential election outcomes without official platforms from any major party.
“Objectively, the timing is quite poor as Canada faces an existential threat with the pending inauguration of President-elect Trump,” said the analysts in a note on Wednesday.
Economic Concerns
Trump, anticipated to return to the White House later this month, plans to impose a 25% levy on imports from Canada, raising concerns about a looming recession in the country. Canada exports about three-fourths of its goods and services to the US, according to Reuters.
Jefferies analysts noted, “Regardless of whether his announced 25% tariffs are real or simply an empty threat, Canada is entering into critical negotiations with its most significant trading partner effectively leaderless.”
Response from the Canadian Government
Trudeau’s office announced this week that he will hold a cabinet retreat to formulate a response to Trump’s possible tariffs, insisting that they will “protect and defend Canadian interests” while clarifying the mutually beneficial trade and security relationship between the two countries.
Should Trump implement the tariffs, Trudeau, who is expected to step down in early March, has promised countermeasures and called for a united response from Canadian lawmakers.
In a separate development, Foreign Minister Melanie Joly indicated that Canada is not ruling out the possibility of restricting energy exports to the US, although this proposal has faced criticism from the premier of Alberta, an oil-producing region.
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