Canada has a new prime minister-in-waiting. Following Justin Trudeau’s resignation in January, the governing Liberal Party elected Mark Carney as its leader in a landslide victory on Sunday.
Carney, a former governor of both the Bank of Canada and the Bank of England, is stepping into the political arena for the first time at a moment of global uncertainty, with trade tensions escalating and the looming prospect of an early election.
Carney acknowledged the urgency of the moment, stating, “We will have to do things that we haven’t imagined before, at speeds we didn’t think were possible.” His leadership will shape Canada’s economic and diplomatic strategy, defending Canadian interests while attempting to preserve ties with the U.S., offering democratic allies an alternative to China and Russia and positioning Canada as a key global player.
Carney dominated the race, winning 86 percent of the vote against Chrystia Freeland, Karina Gould and Frank Baylis. Freeland, a former deputy prime minister and finance minister, resigned in December after clashing with Trudeau over U.S. trade tensions. A key figure in renegotiating NAFTA under Trump, she had also grown frustrated with Trudeau’s approach.
Carney now faces an immediate decision: call a snap election or attempt to govern in a minority Parliament where opposition parties are eager to bring him down. With Parliament set to return on March 24, an early election seems likely as Carney leverages his victory to launch his campaign platform — one heavily shaped by responding to President Trump’s tariff threats.
The urgency of the moment is driven by the growing Canada-U.S. trade war, with tariffs threatening key industries and disrupting the highly integrated North American supply chain. The U.S. and Canada have two of the world’s most interconnected economies, with over $2 billion in daily trade flows between the countries.
Tariffs on Canadian goods — especially steel, aluminum, lumber and energy — will affect American jobs, particularly in auto manufacturing, construction and agriculture. Trump’s tariffs on Canada could put over 500,000 U.S. jobs at risk, and rising raw materials costs will force businesses to either pass the costs onto consumers or cut jobs, making everyday goods more expensive.
One immediate effect of the trade war will be a spike in energy prices. Canada is the largest foreign supplier of oil to the U.S., exporting over 3.5 million barrels per day. If tariffs disrupt this flow, American consumers will feel the pinch at the pump, exacerbating inflation. With global energy markets already unstable, any friction in energy trade will add strain to American households. In response to Washington’s 25 percent tariffs on Canadian imports, the government of Ontario imposed a 25 percent surcharge on electricity exports to Michigan, Minnesota and New York, although Ontario Premier Doug Ford later said he would temporarily suspend the tariffs after a conversation with U.S. Secretary of Commerce Howard Lutnick.
Carney’s approach will be particularly significant in the critical minerals sector, where security of the U.S. supply chain is a growing priority. Canada is a top global producer of essential minerals such as lithium, uranium, nickel, molybdenum and cobalt — key components in electric vehicle batteries, semiconductors and defense technologies. As Washington works to reduce dependence on China for critical materials, Canada plays a crucial role, supplying $47 billion worth of minerals to the U.S., over 50 percent of total American mineral imports.
Strengthening this partnership will be essential as the U.S. prioritizes domestic production for advanced manufacturing and national security. However, with ongoing tariff threats creating uncertainty, Canada cannot afford to rely solely on the American market. At the same time, Canada has introduced tougher regulations on foreign investment in the critical minerals sector, aiming to curb foreign state-owned influence, particularly from China. These stricter policies will serve as a bargaining chip in negotiations with Washington.
A Carney-led government will likely push for stronger investment in this sector. If Canada expands its role in critical mineral supply chains, American companies will need to navigate new trade dynamics and potentially higher costs for key materials. However, deeper U.S.-Canada cooperation in this area could also strengthen North America’s competitive edge against China’s mineral dominance.
Beyond trade, Carney has signaled that his government will move quickly on domestic economic reforms that will appeal to moderate voters. He has committed to scrapping the divisive consumer carbon tax, a lightning rod for criticism under the Trudeau government, particularly in energy-producing provinces like Alberta. He has also pledged to eliminate the planned increase to the capital gains tax, arguing that it discourages investment and stifles new housing development. These policy shifts will likely be central to his election campaign, as they contrast with Trudeau’s approach and position Carney as a moderate leader focused on economic growth and affordability.
For the U.S., Carney’s rise signals both continuity and change. His government will maintain Trudeau’s commitment to multilateralism and progressive social policy, but his background in international banking suggests a leader more willing to assert Canada’s economic interests aggressively. With a potential election weeks away, Canada is in a period of political and economic uncertainty. But with Trudeau out, Carney has the opportunity to reset the U.S.-Canada relationship and chart a new course. Whether his expertise translates into electoral success remains to be seen.
Mary Anne Carter is a principal at Earnscliffe Strategies, specializing in Canada-U.S. relations and trade policy.