With a Canadian federal election due next year, voters seem set to return the Conservative Party of Canada to power after a decade in the wilderness. International investors are enthused by Conservative leader Pierre Poilievre, who blends blue-collar populism with a market-driven agenda. S-RM Americas associate director Felix Cook examines the outlook for Canadian business and politics, and whether anything could derail Poilievre’s path to power.
In late October, voters in three Canadian provinces went to the polls in bellwether legislative elections. The results suggest that the resurgent Conservatives are likely to defeat the incumbent Liberals in the national federal election due next year. Since Pierre Poilievre became Conservative leader in 2022, CEOs and voters alike have warmed to his blue collar, market-oriented libertarianism, but unseating the Liberals is never an easy task under Canada’s system. Poilievre has a long tightrope to walk before he can realize his ambitions for a less statist, business-friendly Canada.
The Liberals in the penalty box
For a country that values its reputation for sensible moderation, Canadian politics can be fractious. This reflects Canada’s vastness, with cultural and economic differences between the provinces of the west, the plains, the east, and Francophone Quebec. Canada is one of the world’s most decentralized federal states, with its ten provinces and three territories enjoying broad autonomy over policy. At the federal level, where the national government is elected through first-past-the-post constituencies, this has long benefitted the moderate Liberal Party of Canada, which is centered in the populous east, and has a broad voter coalition. As a result, the Liberals have governed for 69 of the last 100 years. The opposition is focused in the less populous plains and western provinces, split between right-leaning conservatives, who align with the Conservative Party of Canada (or Tories), and a social democratic ‘farmer-labor’ tradition represented by the New Democratic Party (NDP). Historically, the opposition comes to power whenever the electorate grows exhausted with the Liberals and seeks to punish them for a period – a pattern often compared to ice hockey’s penalty box. Canada may be entering such a period now and forecasters widely expect the revitalized Conservatives to win the next election with a crushing majority.
The incumbent Liberal government is broadly unpopular, and Prime Minister Justin Trudeau seems increasingly anachronistic...Over his long tenure, his approval ratings have gradually inverted from +65 percent in September 2016 to -65 percent in September 2024.’’
A PM in waiting
The Conservatives chose 45-year-old Poilievre as their standard-bearer in 2022. Born to a 16-year-old mother in Calgary, Alberta, Poilievre was adopted by two high school teachers and raised in a modest suburban home. He is the Tories’ first Francophone leader, and his humble plains upbringing contrasts with that of Trudeau, who grew up in Ottawa as the son of a former prime minister. Poilievre has been described as a libertarian and blue collar populist, distancing himself from the Conservatives’ unpopular previous social policies while advocating a pro-business, market-driven agenda. International investors and Canadian businesses have welcomed his proposals to cut government spending, tighten monetary policy, lower individual and corporate taxes, and deregulate, especially in oil and gas. Poilievre has pledged to roll back climate policies he blames for higher costs and red tape, and repeal Trudeau’s unpopular carbon tax. He has also supported right-to-work legislation, called for more restrictive immigration policies, and promoted greater use of cryptocurrencies – a platform some have termed ‘polite Trumpism.’ So far, it is chiming with voters. In October, the plains province of Saskatchewan re-elected its conservative provincial government for a fifth term in office, driven by strong rural turnout. This is the sort of pattern Poilievre would need to prevail nationally, and is reminiscent of Donald Trump’s victory over Kamala Harris in the US. In British Columbia, the local conservative party surged over the course of the campaign, winning 44 seats to become the official opposition on a swing of 41 percent. On this basis, the Conservatives would win 224 seats nationally, and the Liberals would be reduced to just 56 from their current 160.
Poilievre has been described as a libertarian and blue collar populist...International investors and Canadian businesses have welcomed his proposals to cut government spending, tighten monetary policy, lower individual and corporate taxes, and deregulate, especially in oil and gas.’’
Staying power
Previous opposition leaders have entered elections seemingly well-positioned, only to be undone by the Liberals' famous staying power. October’s results also raise warnings for Poilievre. In New Brunswick, the Liberals defeated the provincial Conservative party in a landslide, after local issues outweighed national frustrations; in British Columbia, the Conservatives’ overperformance still fell short of displacing the governing NDP, despite widespread dissatisfaction with seven years of NDP government; and in Saskatchewan, the NDP reduced the local Conservatives’ majority from eleven seats to three by dominating urban areas. The divided opposition will remain a hurdle for Poilievre: in a close federal election, many NDP voters may switch to the Liberals, or the NDP could form a supply-and-confidence agreement to prop up a Liberal minority government, as it did in 2022. Poilievre also faces the same electorate-management challenge that plagued his predecessors: how to consolidate anti-Liberal voters without alienating others or energizing Liberal opposition. In New Brunswick, some analysts credited the Liberals’ victory to a messy, public rift among local Conservatives over LGBTQ issues, while in British Columbia, the Conservatives’ denial of climate change and promises to repeal laws benefitting Indigenous peoples likely mobilized NDP voters as much as it galvanized their base.
The wildcards
For better or worse, Canada rarely escapes the gravitational pull of the US, and Donald Trump's return to the White House is a major wildcard in the upcoming election. The campaign will unfold against the backdrop of Trump’s first year in office, and Poilievre will need to carefully manage his posture towards a US president that he is often ideologically aligned with, but whose personal political incentives may conflict with his own. Trump is unpopular with Canadians, and has already promised a 25-percent tariff on Canadian goods, putting his base and Poilievre’s on a collision course. Under Joe Biden, the Canadian right benefited from an infusion of cross-border energy, embodied by the 2022 ‘Freedom Convoy’ protests against COVID mandates. Now, Canadian reaction to the US may shift in the other ideological direction. At the same time, having observed Biden step down, many Liberals now believe that a leadership change could turn an inevitable rout into a survivable defeat, or even an outside shot at victory. Growing numbers of Trudeau’s MPs are calling for his resignation and for new leadership to take the party into the election. Though Trudeau has resisted, the prospect of a new, energizing Liberal leader, or a Trump squeeze on Canada, could thwart or diminish a Conservative victory.
Conclusion
Poilievre’s pro-business policies have enthused corporate leaders and investors in Canada, and October’s results suggest he is strongly favored to form the next government. Still, there are signs that the Liberals retain their usual structural advantages, and Trump’s reelection imposes significant unpredictability on Canada’s politics and economy. Businesses with exposure to Canada should continue to hedge for uncertain outcomes. Poilievre will need to deploy considerable political skill and agility to maintain his current advantage.
