Trudeau Call’s TimeTrudeauTrudeau Call’s Time

Yesterday afternoon Justin Trudeau resigned as leader of the Liberal Party, saying that he will also resign as the country’s prime minister when his successor is found.

Following a tumultuous week in Ottawa, Trudeau – who has been Canada’s PM for close to ten years – also outlined how parliament will be prorogued until March, thereby stopping normal parliamentary proceedings including debates and votes.

Before yesterday, the political tumult reached its climax when Canada’s deputy prime minister and finance minister, Chrystia Freeland resigned on 16 December. Here, she cited disagreements over the PM on issues including tax breaks and disbursements. The resignation was particularly problematic for Trudeau given that Freeland’s resignation came just hours before she was due to deliver one of the office’s most important set pieces, the Fall Economic Statement. While Dominic LeBlanc took over as Finance Minister shortly after, calls for Trudeau to resign grew increasingly loud with the Cabinet showing signs of being in disarray.

During his resignation speech, Trudeau said that Canada deserves “a real choice in the next election and it has become clear to me that if I’m having to fight internal battles, I cannot be the best option in that election”.

Continuing, he also used the opportunity to criticise the leader of the Conservative Party of Canada, Pierre Poilievre saying that his path was “not the right one for Canadians”.

Whoever takes over the office of the Prime Minister, they will have to address a number of domestic political and economic headwinds including dampened growth, unemployment at its highest level since September 2021 and a housing affordability crisis. Moreover, the next PM will also have to consider how Canada manoeuvres the incoming President Donald Trump.

In December the President-Elect gave perhaps his strongest indication that a string of tariffs will be pushed through on day one. Writing on Truth Social, Donald Trump said that “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders”.

Attention now remains on Ottawa as the challenge to find Trudeau’s successor gets underway.

Yesterday, US PMIs indicated that the private sector saw further growth over December with business experiencing the greatest rise in output and new orders since March 2022.

Though marginally softer than expected (with the composite figure coming in at 55.4 vs forecasts of 56.6) the print indicated that there had been further growth across the world’s largest economy as a whole. Here, the survey cited how there was “a greater willingness among customers to spend following the Presidential Election result” feeding into a rise in new orders and overall activity. This helped feed into an environment which saw business confidence rise to its highest level in a year and a half.

That said, the overall expansion was driven by a rise in output across the services sector, which helped offset a marginal fall in manufacturing.

On inflation, the data showed that the pace of inflation eased for the third consecutive month, falling to its lowest rate since last February. Nevertheless, it cited how businesses were continuing to feel inflationary pressures from staffing and transportation.

Regarding the labour market, the survey suggested that employment increased for first time in five months, though it noted that this rise was “modest”.

Following the print, the Chief Business Economist at S&P Global Market Intelligence said that “the strong service sector PMI reading for December sets the US economy up for a good start to 2025 but, with growth as strong as this, it’s understandable that policymakers are taking a more cautious approach to lowering interest rates”.