Canada at a Crossroads: How Will Trudeau’s Exit Shape Cross-Border Ties?

The prime minister’s departure ends a decade of progressive leadership and positions Canada’s Conservative Party favorably in the runup to the October 2025 elections.

For much of the last decade, Canadian Prime Minister Justin Trudeau had been the face of both Canada’s Liberal Party and the nation as a whole. In a surprise announcement last week, Trudeau announced his resignation from the prime ministership “after the Party selects its next leader through a robust nationwide competitive process.” 

Unless ousted by the Party’s national executive earlier, he will continue to serve until March 24, 2025. The next leader—who will hail from the Liberal Party—would then hold the position for a shortened term; until the next federal general election on October 20, 2025; at which point the opposing Conservative Party, led by Pierre Poilievre, will have a shot at the prime ministership.

Trudeau’s resignation comes after a series of scandals and challenges that severely eroded his public support. While he remained a dominant figure in the Liberal Party, Trudeau faced harsh criticism over his handling of domestic issues, ranging from a growing affordability crisis to a failure to reform Canada’s election process, the latter of which Trudeau called his “one regret.” His cabinet’s reputation was also tarnished by dramatic, sudden, high-profile resignations from beloved figures like former Deputy Prime Minister and Finance Minister Chrystia Freeland, who stated that she and Trudeau no longer agreed “about the best path forward for Canada.”

Regardless of what one thinks of Trudeau and his leadership, there is little doubt that in Canada today, the pendulum is swinging away from the progressive politics he once championed. Polling data from two years prior showed that the Liberal Party and Conservative Party stood nearly neck-and-neck at roughly 32% favorability each (with all other parties constituting the remaining 34%. The day before his resignation, the Liberal Party had fallen to 20% while the Conservative Party had risen above 44%. That’s a staggering lead going into a federal election year.

Trudeau was also scrutinized for his handling of tariff threats from President-elect Donald Trump—tariffs which Canadian Chamber of Commerce Chief Executive Candace Laing insists “would plunge Canada into recession by mid-year.”

While there has of course been a great deal of speculation over what Trudeau’s resignation means for Canada, it’s also worth considering what the decision means for the United States and the future of Canada-U.S. relations.

There is, naturally, continued concern over security at the Canada-U.S. border. This is evidently so important to Trump that he has gone on record saying he would reconsider his tariff threats if Canada were to improve in this arena. Days after Trudeau visited Trump in Mar-a-Lago last November, the Prime Minister announced a nearly $1 billion plan to tighten up Canada’s border security and immigration systems. The two agree this is necessary to slow the flow of illegal fentanyl and other illicit substances.

“At the NATO summit in July 2024 Trudeau promised to increase Canadian defense spending to 2 percent of GDP by 2032, but did not announce a plan to reach this goal,” writes Christopher Sands, Director of the Wilson Center’s Canada Institute. “Will Canada honor these promises under a future leader?”

Sands goes on to suggest that a future leader from either Party may orchestrate a new trade agreement to replace the United States-Mexico-Canada Agreement (USMCA), which is set for review in 2026. The agreement—dubbed “NAFTA 2.0”—was a (somewhat) rare instance of cooperation between then-President Trump and P.M. Trudeau negotiated back in 2018. Since its signing, both Canada and the U.S. have changed their tune on Chinese trade and investment—such that they are no longer in alignment with Mexico. As a result, there is a non-zero chance the next rebound of negotiations could “leave Mexico out.”

While the U.S. and Canada have up until now enjoyed an amicable relationship over trade, it is worth considering what position a new leader will take with regard to energy policy. Despite Trump’s comments undermining the degree to which the U.S. and Canada rely on one another for energy, Canada remains one of the largest trading partners of the U.S. and continues to supply nearly a quarter of its gas. 

While Trump has endorsed the slogan “drill, baby, drill” to signal his support for offshore drilling, Canada’s leftwing voices argue louder than ever before to phase out its own fossil fuels. Trudeau’s approach was at times tempered, and at other times contradictory. While he was a consistent voice in the battle to combat climate change, his administration also approved the much-needed Trans Mountain pipeline expansion to bolster Canada’s oil production, global exports, and supply chain resilience.

If a more conservative prime minister takes office, Canada might see a return to a more transactional, business-oriented relationship with the United States. Poilievre has, for his part, has continued to advocate for “unleashing free enterprise and having a massive boom in (Canada’s) energy and resource production.” A more liberal leader could seek to deepen the partnership on progressive issues like climate action and Indigenous land rights. One can see how the latter could complicate Canada’s relationship with the U.S. and Trump’s administration. 

On the subject of trade, it’s worth coming back to tariffs. While economists differ on the degree of severity the tariffs represent, most agree that the threat of a trade war would be disastrous for both nations—especially Canada.

“As an exporting nation, with over 75% of our exports destined for the U.S., new tariffs could hit the Canadian economy hard—impacting jobs, household incomes, and thereby reducing affordability for retail goods,” said Karl Littler, Senior Vice President of Public Affairs for the Retail Council of Canada. “We are particularly concerned that, in the event of a trade war, a broad range of retaliatory measures from the Canadian government could target U.S.-sourced grocery items, due to our heavy reliance on U.S. food imports, as well as other consumer goods. So from our perspective, a trade war should be avoided at almost any cost, though this is hardly news to the Canadian government.”

It should be obvious that the U.S. and Canada are bound by deep economic ties and mutual security concerns. That shared future will be shaped by the next Canadian prime minister, how they work with President-elect Trump, and how the Liberal Party performs in the months between Trudeau’s departure and the October elections. 

And as for the prospect of Canada becoming the 51st U.S. state, there isn’t a proverbial "snowball's chance in hell," according to Trudeau. 

Then again, he is vacating the position in only two months’ time. Perhaps a better adage would be “only time will tell.”