Speaker 1: Bloomberg Audio Studios, podcasts, radio News. On Monday morning, Canada's
Speaker 1: Prime Minister Justin Trudeau stood outside his residence in Ottawa
Speaker 1: and made the announcement that after nine years leading the country,
Speaker 1: he'll be stepping down. I intend to resign as party
Speaker 1: leader as prime minister. The decision came after years of
Speaker 1: growing economic strains in Canada and months of political turmoil
Speaker 1: for Trudeau and the Liberal party he leads.
Speaker 2: For the past three weeks, everyone's felt that Trudeau was
Speaker 2: not going to survive this, and on Monday he made
Speaker 2: it official, calling our leadership race to replace him.
Speaker 1: Brian Platt covers Canada for Bloomberg and has been chronicling
Speaker 1: every twist and turn of Trudeau's fall. He's based in
Speaker 1: Ottawa and he was there at Rideau Cottage for the announcement,
Speaker 1: braving the negative fourteen degrees celsius chill that's about seven
Speaker 1: degrees fahrenheit.
Speaker 2: There was one little propane heater that we were all
Speaker 2: rotating around, and Trudeau came out and spoke to us
Speaker 2: for about forty five minutes. It was kind of understated
Speaker 2: the way that you would normally see Trudeau speak. There
Speaker 2: was moments where you could catch a bit of emotion
Speaker 2: to his voice, like he had the phrase he used
Speaker 2: a couple of times, always been a fighter. Every bone
Speaker 2: in my body has always told me to fight because
Speaker 2: I care deeply about Canadians.
Speaker 1: I care deeply about this country.
Speaker 2: And his voice caught a little bit. His eyes looked
Speaker 2: a little bit puffy, but maybe that was just because
Speaker 2: of the cold. But you know, he did not want
Speaker 2: to do this. I think that's the biggest thing that
Speaker 2: people should realize is Trudeau was fully preparing to fight
Speaker 2: the next election, and ultimately it just became untenable for
Speaker 2: him to hang on as leader, and so against all
Speaker 2: of his instincts and all of his intentions, he was
Speaker 2: forced into this position. And I think you could really
Speaker 2: see that in his speech yesterday.
Speaker 1: Today on the show, how housing costs, inflation and the
Speaker 1: looming threat of US tariffs helped force Trudeau into this position,
Speaker 1: and what Canada's right word shift and current leadership vacuum
Speaker 1: means for the country's economy and its position on the
Speaker 1: global stage. This is the big take from Bloomberg News.
Speaker 1: I'm Sarah Holder. Over the past few months, as Trudeau's
Speaker 1: polling numbers dropped, the Conservative opposition gained steam and Trudeau's
Speaker 1: allies and the Liberal Party started turning against him. But
Speaker 1: Brian says for a while he still didn't think Trudeau
Speaker 1: would actually resign.
Speaker 2: I mean I talked to him through news conferences, I
Speaker 2: talked to a lot of his inner circle. I was
Speaker 2: very convinced all the way through that Trudeau was not
Speaker 2: going to step down. Despite his bad polling numbers. He
Speaker 2: believed he could turn it around and win the next election,
Speaker 2: which is going to happen sometime in twenty twenty five.
Speaker 2: And right up until December sixteenth, I would have told
Speaker 2: you that same answer, Trudeau not stepping down.
Speaker 1: But then on December sixteenth, his Finance Minister, Christian Freeland,
Speaker 1: publicly quit and the tides turned. Freeland was also Deputy
Speaker 1: Prime Minister, pretty much the second most important person in
Speaker 1: the government, and she had been a long time Trudeau ally,
Speaker 1: so this split it was a grab the popcorn moment
Speaker 1: in Canadian politics.
Speaker 2: She published a letter criticizing Trudeau. Really it didn't directly
Speaker 2: call him out, but it Barry clearly criticized him and
Speaker 2: said he was not preparing seriously enough for the threat
Speaker 2: of tariffs under Donald Trump, that he was too focused
Speaker 2: on sort of populist measures, she called them political gimmicks,
Speaker 2: and not preparing for what might be a major trade war.
Speaker 2: In the moment that Christian Freeland quit, and quit in
Speaker 2: such a public way, it really changed everything. It kind
Speaker 2: of cut the legs out from under Trudeau and his party,
Speaker 2: I would say decisively turned against him after that happened, and.
Speaker 1: Says What happened to cause such a split between Freeland
Speaker 1: and Trudeau isn't completely clear, but we do know that
Speaker 1: he was planning to replace her as Finance Minister in
Speaker 1: an attempt to try to revitalize his government with fresh faces,
Speaker 1: a new narrative. His administration thought that might help improve
Speaker 1: their polling numbers. Trudeau offered Freeland a new job overseeing
Speaker 1: US Canadian relations.
Speaker 2: I don't want to put words in her mouth, but
Speaker 2: I think if you look at the tone of her letter,
Speaker 2: she saw this as a humiliating demotion, as she was
Speaker 2: no longer going to be running a government department. But
Speaker 2: I have to say the manner in which she did
Speaker 2: this was kind of calculated to inflict maximum damage on
Speaker 2: the Prime minister. And I know there are people around
Speaker 2: Trudeau now who were very taken by surprise with how
Speaker 2: Christia Freeland did this and are wondering if this was
Speaker 2: a play by her essentially to take out the prime
Speaker 2: minister and run for leadership herself. I want to be clear,
Speaker 2: I'm not reporting that that's why she did this, but
Speaker 2: there are people around Trudeau who are wondering that absolutely.
Speaker 1: Well, let's step back for a moment. Trudeau served for
Speaker 1: nine years. When he first took office, he was a
Speaker 1: pretty popular leader. He came to the role as the
Speaker 1: son of a beloved former prime minister. His cabinet featured
Speaker 1: an equal number of men and women, which is a
Speaker 1: first for Canada.
Speaker 2: I understand one of the priorities for you was to
Speaker 2: have a cabinet that was gender balanced.
Speaker 1: Why was that so important to you, because it's twenty fifteen.
Speaker 1: In his first few years in office, he declared Canada
Speaker 1: open for anyone fleeing persecution, terror and war, and initiated
Speaker 1: reconciliation with Canada's Indigenous people. Those are just a few
Speaker 1: of the things that he did. Can you just chart
Speaker 1: his rise and fall for us?
Speaker 2: When Trudeau became Liberal leader, the Liberals had suffered a
Speaker 2: devastating election fet in twenty eleven, they were in third place.
Speaker 2: They weren't even the official opposition party, you know, and
Speaker 2: this is a party that has governed Canada for much
Speaker 2: of the past one hundred years. So they were in
Speaker 2: a really bad place in many ways. They were in
Speaker 2: the worst place that they'd been in modern Canadian history.
Speaker 2: And Trudeau came in and absolutely reinvigorated and energized the
Speaker 2: party and really created a big youth movement. I mean,
Speaker 2: when he won the election in twenty fifteen, younger voters
Speaker 2: really propelled him into office. There was a huge turnout
Speaker 2: in that election, and he was promising things that appealed
Speaker 2: to younger voters. He promised to legalize recreational marijuana use.
Speaker 2: He promised a big tax cut that raised taxes on
Speaker 2: the highest income earners and cut them for everybody else.
Speaker 2: He also brought the Liberal Party, I would say, much
Speaker 2: further to the left, especially economically, than it had been
Speaker 2: a very centrist party. You know, it's maybe a little
Speaker 2: much to say he reinvented the Liberal Party, but he
Speaker 2: really did change it when he came in, and he
Speaker 2: won a big election victory in twenty fifteen and stayed
Speaker 2: on as Prime minister for nine almost ten years. But
Speaker 2: what happened after the pandemic, especially with inflation and the
Speaker 2: rise in housing prices in particular, really cut into him
Speaker 2: and that was when things really changed.
Speaker 1: Well, yeah, what were those issues that really brought Trudeau
Speaker 1: and the Liberal Party He leads to this inflection point.
Speaker 2: I remember the timeline when the polling started to change
Speaker 2: dramatically for Trudeau because it was the summer of twenty
Speaker 2: twenty three when the narrative really took over that nobody
Speaker 2: could afford a house in Canada anymore. Renz had exploded
Speaker 2: and housing prices had exploded, and interest rates were high
Speaker 2: because of well various global factors in particular around supply
Speaker 2: chains and so on.
Speaker 1: This is sounding familiar, Yes.
Speaker 2: Yes, this was not just in particular the Canadian problem, right,
Speaker 2: Although there's one thing that I think did exacerbate the
Speaker 2: problem in Canada, which is after the pandemic, Trudeau's government
Speaker 2: kind of lost control of the immigration system, especially on
Speaker 2: temporary foreign workers in the international students. So there's a
Speaker 2: few things I think that fed into it. But there
Speaker 2: was a huge surge Canada brought in I believe within
Speaker 2: twelve months. At one point the number was one point
Speaker 2: two million people in a country of about forty million people.
Speaker 2: The population growth rate exploded and it blew up the
Speaker 2: housing market. On top of the inflation problem around food
Speaker 2: prices and everything else. That the rest of the world
Speaker 2: was experiencing inflation in Canada, just like it did in
Speaker 2: every other developed country. I mean, it's killer for an
Speaker 2: incumbent government. And one thing I thought was interesting was
Speaker 2: that well into the summer of twenty twenty four, when
Speaker 2: inflation was actually pretty much under control in Canada, but
Speaker 2: if you looked at polling, conflation was either the number
Speaker 2: one or the number two issue for many many months
Speaker 2: after it had been brought back under control. And I
Speaker 2: do think that there is you know, along with the
Speaker 2: specific Canadian elements I mentioned, the global anti incumbent movement
Speaker 2: is specially around the inflation surge that came after the
Speaker 2: pandemic took a bite out of Trudeau absolutely, and so
Speaker 2: he was always going to be up against it to
Speaker 2: try to recover from that.
Speaker 1: Trudeau will stay in office until his Liberal Party chooses
Speaker 1: a new leader. What will the process look like. Who
Speaker 1: are the front runners to replace him and what vision
Speaker 1: for Canada's economic and political future are they promising that's
Speaker 1: after the break. Trudeau's resignation comes at the start of
Speaker 1: an election year for Canada. The country will hold its
Speaker 1: national election by October at the latest, which would have
Speaker 1: already been a tight deadline for a new political leader
Speaker 1: to gain support. But as Bloomberg's Brian Platt explained, when
Speaker 1: Trudeau resigned on Monday, he also asked to suspend the
Speaker 1: parliament to allow his Liberal Party some breathing room to
Speaker 1: choose a new leader. When parliament returns, there's a strong
Speaker 1: chance it'll be thrust into an election right away.
Speaker 2: There's a lot of parliamentary drama right now because the
Speaker 2: three big opposition parties here have all now promised to
Speaker 2: vote against the government at the next opportunity. So you
Speaker 2: have this election deadline hanging over everything right now, and
Speaker 2: parliament is suspended, but it will come back on March
Speaker 2: twenty fourth, and when it comes back, you will pretty
Speaker 2: quickly have a confidence vote, and if the opposition parties
Speaker 2: follow through on what they promised, they will defeat the
Speaker 2: government and that will trigger an election. So that's a
Speaker 2: pretty hard deadline to get a new leader in the place.
Speaker 2: You basically have two months, give or take a week
Speaker 2: or two.
Speaker 1: Well, so, who are the front runners that are kind
Speaker 1: of emerging right now as Canada searches for new leadership
Speaker 1: for its parties.
Speaker 2: Well, Freeland is probably the biggest name that everyone's talking
Speaker 2: about right now, Mark Carney. He's the former Central Bank
Speaker 2: governor of Canada and of England, and it holds many
Speaker 2: other positions right now, including the chair of Bloomberg ink
Speaker 2: we should disclose, but also the chair of Brookfield Asset Management,
Speaker 2: a very prominent and well established global figure. We wrote
Speaker 2: a story on Monday night, shortly after Trudeau gave a
Speaker 2: speech that Mark Carney is considering running for the leadership.
Speaker 2: But you've got a bunch of other cabinet ministers around
Speaker 2: Trudeau who may run, So there actually is a pretty
Speaker 2: big potential pool here.
Speaker 1: And all this comes at a time when President elect
Speaker 1: Donald Trump has threatened to impose steep tariffs of twenty
Speaker 1: five percent on Canadian experts to the US once he
Speaker 1: takes office. With Trudeau on his way out and his
Speaker 1: cabinet leader is potentially preparing to run for leadership themselves,
Speaker 1: Brian says the country's negotiating power with the US could
Speaker 1: be weakened.
Speaker 2: It's a very not ideal situation for a Canadian government
Speaker 2: dealing with a potentially economically devastating threat south of the border.
Speaker 2: Trump is all already been mocking Canada right and mocking Trudeau,
Speaker 2: calling Canada the fifty first state, calling Trudeau the governor
Speaker 2: of Canada, and now Trudeau will just be the absolute
Speaker 2: definition of a lane duck or a custodian leader at
Speaker 2: this point, because he has said he has resigned, but
Speaker 2: he's just staying in office until his successor is chosen.
Speaker 2: So he's already on his way out. And I think
Speaker 2: the only thing potentially that might help Trudeau in that
Speaker 2: situation is that he maybe has a bit more freedom
Speaker 2: to do some politically unpopular things because he personally will
Speaker 2: not be facing voters in an election.
Speaker 1: But as Brian mentioned, the outlook for Trudeau's Liberal Party
Speaker 1: in the upcoming election is gloomy. It's been trailing the
Speaker 1: Conservative Party led by Pierre Pauliev.
Speaker 2: You know, this sort of catch all term that people
Speaker 2: use for him is he's populist. He does have a
Speaker 2: very aggressive way of speaking, very blunt. He's also a
Speaker 2: pretty polarizing figure and there's a lot of Canadians on
Speaker 2: the other side who will be quite repelled by him,
Speaker 2: but he is in many ways, at least when it
Speaker 2: comes to policy, in his vision of government, just the
Speaker 2: total opposite of Justin Trudeau. If you go essentially from
Speaker 2: a Trudeau government to a Pierre Pouliev government, it will
Speaker 2: be a huge turn for Canada. The kinds of things
Speaker 2: Polyev is talking about doing are build more fossil fuel projects,
Speaker 2: unleash Canada's oil and gas sector, and reduce the size
Speaker 2: of government and cut taxes. If Polyev comes in with
Speaker 2: a large majority government so it controls most of the
Speaker 2: seats in parliament, you know, he potentially will come in
Speaker 2: and make some pretty big changes that will just be,
Speaker 2: you know, quite a sharp turn from what we've seen
Speaker 2: in the Trudeau era. And it's going to be very
Speaker 2: interesting to see if you take Justin Trudeau out of
Speaker 2: the picture, can a new Liberal leader eat into the
Speaker 2: commanding lead that Poliev has because at the moment it
Speaker 2: sure looks like he's heading for a huge victory and
Speaker 2: the Liberal Party you know, might be back in the
Speaker 2: world and is where it was before Justin Trudeau took
Speaker 2: over more than ten years ago.
Speaker 1: Well, as you said, a lot of this sounds a
Speaker 1: little bit familiar when you're looking at the global stage.
Speaker 1: Canada is just the latest country that's poised for this
Speaker 1: consequential change in leadership. It's seeing a right word shift.
Speaker 1: France AusAID its prime minister last month. Germany is headed
Speaker 1: for a snap election next month. Trump is about to
Speaker 1: take office in the US. How does this news from
Speaker 1: Canada fit into that global picture in your eyes? How
Speaker 1: should listeners be thinking about this moment of global political upheaval.
Speaker 2: It does fit into the narrative and the established track
Speaker 2: record that it's just a very bad time to be
Speaker 2: an incumbent government right now. And Trudeau spent last year
Speaker 2: watching a lot of his G seven counterparts get taken
Speaker 2: out in elections, and they wanted to delay an election
Speaker 2: as long as they could into twenty twenty five to
Speaker 2: try to avoid the faith that you had seen in
Speaker 2: a lot of these other G seven countries. And that
Speaker 2: was the hope, you know, survive this period of global
Speaker 2: instability and global back clash, especially related to inflation. Survive this,
Speaker 2: get through it, and you know, twenty twenty five, interest
Speaker 2: rates are lower, inflation is receding into people's memory. This
Speaker 2: is a chance to sort of turn things around. That's
Speaker 2: what Trudeau wanted to do, avoid the fate that he
Speaker 2: had seen around the rest of the world, and ultimately
Speaker 2: he has not been able to do it. Domestic political
Speaker 2: events eventually forced his hand.
Speaker 1: This is The Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 1: This episode was produced by Alex tie. It was edited
Speaker 1: by Tracy Samuelson and Laura Dylan Kane. It was mixed
Speaker 1: and sound designed by Alex Sugiura. It was fact checked
Speaker 1: by Adriana Tapia. Our senior producer is Naomi Shaven. Our
Speaker 1: senior editor is Elizabeth Ponso. Our executive producer is Nicole
Speaker 1: Beamster born Sage Bauman is Bloomberg's head of podcasts. If
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