Welcome to Need to Know, The Hub’s roundup of experts and insiders providing insights into the political stories and developments Canadians need to be keeping an eye on this week.
Canada has survived a lot worse crises without a unity government
By Howard Anglin, former deputy chief of staff to Prime Minister Stephen Harper
Trudeau’s speech announcing Canada’s response to Donald Trump’s tariff war was fine—not great, awful, and delivered in that breathily theatrical tone that he mistakes for gravitas—but he never should have been in a position to give it.
If Trudeau wanted to lead the defence against Trump, he should have called an election in November or January. Instead, he walked away from the fight. Now in his last days in office, what he says hardly matters, least of all to Trump.
Sometime next week, Mark Carney will be prime minister, at least in name. Like Trudeau, he will have no parliamentary majority; unlike Trudeau he won’t even be able to claim that his new ministry has the confidence of the House, which he has never met.
To get around this problem, expect to hear grave calls from Official Canada for opposition parties to rally around Carney under the (conveniently Liberal) banner of a “unity government.” It’s a silly idea, so I expect the NDP will leap at it. But it would only delay the election we need and which we should have had months ago.
Canada’s last “unity government”—Robert Borden’s Union Government of 1917—was more than a century ago. Since then, we’ve weathered a World War, several lesser wars, the Depression, the October Crisis, the Global Financial Crisis, and COVID-19 without one. We don’t need one now. We need a fresh government endorsed by Canadians in an election.
Canada needs more than mottos now
By David Polansky, a Toronto-based writer and research fellow with the Institute for Peace & Diplomacy
An interesting thing happened Tuesday: Prime Minister Trudeau said several true things while making a forthright statement of Canadian patriotism. He is correct that the Trumpian tariffs are foolish and mutually destructive, and also correct that their pretextual justifications are mostly bogus. And he is finally right to declare his country worth fighting for, as any leader should. It is perhaps unfortunate that he waited until after announcing his resignation to embrace that position.
The trouble is that, having come to this realization so late, it rings hollow—and more importantly lacks the scaffolding of any concrete set of policies that might support it. Even now, we see vague talk of government support for individuals and businesses—echoes of the pandemic. There is little recognition that the resources of Canada—or any country—to weather hardship must derive from its own political economy, and this government has spent too many years tying itself to various abstract ideological commitments, unmoored from any true consideration of the country and its citizenry.
Yesterday, the front page of The Globe and Mail was emblazoned with the traditional words: “STRONG AND FREE.” It’s a fine motto, but as with all political matters in the end, it is nothing without practice.
How might a trade war recession compare with past recessions?
By Livio Di Matteo, professor of Economics at Lakehead University
With the onset of tariffs and a trade war with the United States, the expectation is that over the next 6 to 12 months, the Canadian economy will tip into recession. However, the exact size of that recession seems to be the focus of a range of estimates.
For example, Edward Jones suggests that a sustained 25 percent tariff may result in a 2.5 percent to 3.5 percent decline in GDP. The Bank of Canada has estimated that in the first year of a tariff, real GDP growth could decline anywhere from 2.2 percent to 3 percent. The Canadian Imperial Bank of Commerce estimates a hit to GDP of 5 percent from long-lasting tariffs of 25 percent and 1 percent on energy. And an earlier Scotiabank forecast that under 25 percent tariffs Canada could see a GDP hit ranging from 3.8 percent to 5.6 percent. The larger declines in these forecast ranges are generally associated with full retaliation by Canada in response to the initial U.S. tariffs.
So, given that Canada has announced it will retaliate, an important question is: how do these upper-end tariff-induced GDP declines stack up against past Canadian recessions? Data from Finances of the Nation was used to calculate annual real GDP growth rates for Canada from 1868 to 2024 (with 2023 and 2024 being estimates). Over the course of these 157 years, there was negative real GDP growth—a recession—in 27 years. The accompanying figure plots the real GDP declines of these recession years along with the upper-end GDP declines of the forecasts. Annual real GDP declines in recession years have seen quite a wide range going from -0.4 percent in 1920 to a high of -9.5 percent in 1932.
Graphic credit: Janice Nelson.
The four forecasts of upper-end GDP decline are approximately in the middle of this distribution with the Bank of Canada and Edward Jones estimates at the lower end and CIBC and Scotiabank at the upper end. The Scotiabank upper-end tariff recession estimate lies between the 2009 financial crisis recession and the tail end of the First World War recession in 1918 which coincided with the Spanish Flu. CIBC’s upper-end estimate would put us somewhere between the second year of the Great Depression real GDP drop of -5.2 percent and the 1982 recession drop of -4.9 percent.
The Bank of Canada and Edward Jones estimates are somewhere between what happened in the 1990 to 1991 recession years where real GDP growth was -1.2 percent and -4.6 respectively. Note that 1991 was about as bad as the last year of real GDP declines during the Great Depression. The Great Depression saw four consecutive years of real GDP decline from 1930 to 1933 for a cumulative drop of 27 percent.
Ontario Premier Doug Ford, wearing a ‘Canada Is Not For Sale’ hat, speaks as he arrives for a first ministers meeting in Ottawa on Wednesday, Jan. 15, 2025. Justin Tang/The Canadian Press.
Can Doug Ford translate his tough talk into meaningful action?
By Samuel Duncan, a vice president at Wellington Advocacy
It is clear right now that Canada stands weak, exposed, and without federal leadership because Prime Minister Justin Trudeau chose to put party before country. His decision to cling to power while proroguing Parliament and calling a Liberal leadership race has left Canada without an effective national leader to advocate for Canadians or defend our national interests. Reportedly, it was Trudeau himself who, through miscalculation and weakness rooted in desperation to retain power, gave President Trump the idea to threaten Canadian sovereignty.
While Trudeau has fumbled, Premier Doug Ford is seizing the moment to fight for Canada in the absence of a functioning federal government. Whether his emotional policy responses to the Trump tariffs will prove effective remains to be seen, but his historic third consecutive majority government demonstrates his deep understanding of the emotional pain Ontarians are experiencing. Premier Ford’s clear, direct, and honest interviews on U.S. television have effectively conveyed to Americans how Canadians feel in the face of President Trump’s attacks. He has proven he is at his best when speaking on behalf of all Ontarians and Canadians against existential threats. With a renewed mandate to fight this threat and build a strong and resilient Ontario economy, the question now is whether he can transition from aggressive communication to bold policy action.
