This transcript has been lightly edited for clarity.

John Milewski:

Welcome to the Need to Know podcast from the Wilson Center, a podcast for policymakers available to everyone. Always informative, nonpartizan and relevant. We go beyond the headlines to understand the trend lines in foreign policy. Welcome back to another episode of Need to Know. I'm your host, John Milewski. Need to know is brought to you by the Woodrow Wilson Center.

The center is congressionally chartered scholarship driven, and fiercely nonpartisan. Well, Justin Trudeau announced his resignation as Canada's prime minister back in January after a decade in office. On Sunday, the Liberal Party elected Mark Carney, a central banker turned centrist politician, as its new leader, and he garnered 86% of the party's vote. Carney will take office in the shadow of new US tariffs and ongoing rumblings from President Trump about Canada becoming the 51st state.

In his acceptance speech, Carney said Canada never, ever will be part of America in any way, shape or form. On tariffs, he said, we didn't ask for this fight, but Canadians are always ready when someone else drops the gloves. So the Americans, they should make no mistake in trade, as in hockey Canada will win. My guest is Xavi Delgado, a senior program associate for the Canada Institute here at the Wilson Center and research director for the Washington Forum on the Canadian Economy.

And sorry, I had to throw in that hockey reference just for you because, Mr. Carney also played goaltender for his Harvard team as a collegiate hockey player.

Xavier Delgado:

He did. And he was the I believe he was the third string goalie on that team. That's not to discredit him at all. He also actually played, for the Blues up in Oxford when he went there to get his PhD in Masters. So, he's not not kidding around when he says he's a big hockey fan. I know he's an Irish fan.

JM:

Yeah, but come on, goalie goalies. Goalies don't drop the gloves very often. Who are we kidding here?

XD:

But it's the best kind of fight when they do, John.

JM:

It is. It is a great time. So he also at least currently has triple citizenship Canada, Great Britain and Ireland. But I guess he's going to give up two of those. Guess which two before he takes the role of prime minister. So, well, he was the governor of the Bank of Canada. He ran the Bank of England, the first non-British citizen to do so.

What else, should we know about the new prime minister in waiting?

XD:

Well, a bit more context behind both of those appointments, John. So before he was governor of the bank of Canada, he was within the Ministry of Finance in Canada. And then when he became the Bank of Canada governor, that was during the 2008 financial crisis. So a period of intense stress for the global financial system. And then he was Bank of England governor during Brexit.

So part of the appeal of Carney, at least in the eyes of the liberals, is not only that he's a central banker. He understands markets and he understands finance, but that he has deep experience navigating modern economies through times of crisis, whether it be the 2008 recession, whether it be the UK during Brexit, whether it now be Canada during the fraying of trade relations with its closest trade partner, an ally, the United States.

JM:

So, a little crisis management might go a long way in these trying times.

XD:

That's the idea.

JM:

Could he be a short term PM? Explain to us. Explain to our American audience and our friends on the Hill, what the scenario is in terms of a possible election and the larger picture of Canadian politics and what this means at this moment.

XD:

Well, the Canadian electoral and government system is more similar to the UK parliamentary system than it is the US. So while there are days when elections must take place by, in this case, it's going to be October 2025, there is a chance that we have an earlier election, and that could either be called by the Prime Minister asking the Governor-General to dissolve parliament.

Or it could be instigated by the opposition parties voting in a motion of no confidence to bring down the government. At this time, it looks like the former is going to be more likely with all the momentum that Carney has in the polls, perhaps in a honeymoon period as the new prime minister. But also worth noting, John, he was not a member of Parliament before winning the Liberal leadership race.

So he's prime minister designate, but without a seat in parliament. And because of that, there's added expectation that he's going to call an early election so that he can then win a safe seat, but also secure a strong mandate for him to carry the party forward. But as you know, there's no guarantee he's going to win, right? Because the polling right now is actually quite close.

Between his Liberal Party and the Conservative Party, led by Pierre Poilievre.

JM:

Not holding a seat. How unusual is that, Xavi? And and what's the significance of not holding a seat? Does that make him more vulnerable in some ways?

XD:

No, it's not unprecedented, John. It's happened multiple times throughout Canadian history. It is worth noting Carney is the only prime minister now to have won the Premiership and held the office of Prime Minister without ever having been an elected member of Parliament. There have been some senators who were former members of Parliament who then became the leader of their party, and thus Prime Minister.

So Carney is unique in that way, but it's just one of those quirks of the parliamentary system that Canada has where this can happen. I don't think it's as scandalous as people are making it out to be, especially because he's committed and seems, dedicated to having an election in the near future, possibly called by the end of this month, possibly taking place as early as April or May.

JM:

And that momentum you mentioned in the polls for his party. How much of this is a reaction to the United States? Is this creating a galvanizing effect among Canadians?

XD:

It's certainly creating a galvanizing effect among Canadians. Polling shows that most Canadians, relative to how they felt about the country last year, still at least marginally, are much better. And their sense of nationalism than they were in 2024 or 2023. John, it's worth remembering that actually, Canadian sentiment and across the country was so low and morale was low.

Belief in the governing party of liberals was so low that Justin Trudeau had to resign barely over two months ago because the party was polling so poorly. It's a far cry to where we are today, where this, upcoming federal election looks like it could actually be really close, possibly swinging towards the liberals favor if momentum continues that way.

JM:

So talk to us about what the immediate priorities will be for the Prime Minister and how much of the agenda will be driven by addressing the negatives that ended up ending the career of Justin Trudeau?

XD:

Well, things have changed since Justin Trudeau left office. Notably, Donald Trump has come into office here in the United States. There's much more widespread talk of a trade war, tariffs being implemented between the historical allies and trading partners. That's going to be priority number one for Carney. It would have been priority number one for anyone who won that leadership race and assumed the office of prime minister.

It's worth noting that even in an election period, Carney maintains statutory authority as prime minister, so parliament is prorogued right now. Trudeau did that on January 6th when he announced that he was going to resign. Carney is going to maintain many other similar powers as Trudeau has maintained over the past few months, while Parliament hasn't been in session.

So Carney will be managing that while likely running a campaign, hoping to win back the office of prime minister and steer the liberals to an electoral victory. But as you noted, there are other concerns that force Justin Trudeau to resign a few months ago. The top three concerns that Canadian voters have, according to polls as of December 2024, were jobs last, the economy, inflation and housing.

So a lot of economic anxiety around Canada that preceded this tariff threat, which has now only been compounded by the risk of higher prices being driven by this trade war.

JM:

Now, there was this hot mic moment for Justin Trudeau where he was asking he was asked about President Trump's designs on Canada. And while it has been dismissed publicly as absurd or whatever other word that some have used, I guess Trudeau had said that. Well, it's this is being taken seriously, and there's a serious threat here. What can you tell us about the Canadian posture toward President Trump's?

You know, originally, President Trump is down for a bit of show biz, right? He's, he's a performer. And and he has been known to say some things that he wasn't particularly serious about when it came to actually policy initiatives. But he keeps bringing this up. So how are people in Canada processing this?

XD:

Well, that's the million dollar question. Or I guess if you're in Canada, $640,000 question. The Canadians are wondering right now how serious is all these talks about the 51st state governor of Canada? I think the challenge here, John, is that there's only one person in the US who knows for sure how serious this is, and he's setting out the Resolute Desk in the Oval Office.

Canadians have been trying to get a read on how serious these threats are. Is this just a negotiating tactic to secure a better deal? Perhaps in the review and renegotiation of the US Mexico Canada agreement? But all of this uncertainty has created a lot of fear north of the border, and it's actually cause Canadians to start antagonizing the United States.

A recent poll found that 76% of respondents actually see the United States as an antagonistic or adversarial power, which would have been unthinkable even a few months ago. Part of the risk here is that even if the United States is playing hardball, it's dredging up a lot of negative sentiment in Canada, not just with the liberals and the left wing of Canadian politics, but also amongst conservatives in the hard right, the hard liners on the right.

And that could be an issue for the United States going forward, regardless of who wins during the next federal election. They're going to be limited in how closely they can partner and work, friend, work with a friendly face towards the United States just because of public sentiment being so negative across the country.

JM:

Can you think of any historical precedent in recent times where these two friendly neighbors have been at each other's throats as they are today? I mean, I can't think of one, can you? You know, there was disagreement over the pipeline and things like that, but nothing that ever escalated to this level of rhetoric.

XD:

Maybe outside of hockey finals in the Winter Olympics. Not really something, John, but I think it's worth noting that there did used to be some serious anti-American sentiment north of the border. A lot of that went away after the signing and implementation of the North American Free Trade Agreement. I'm not saying that globalization is without flaws. Certainly the public referendum on that over the past few election cycles has shown that the gains of globalization haven't been distributed equally.

But if we're just looking at it, at the lens on how it made Canadians trust the US system more, open their arms to economic integration with the US, whether it be with supply chains or bilateral trade. When Canadians saw that trade with the United States didn't mean that their economy, culture and society, we're going to be dominated and taken over by the Americans.

That made a lot of the anti-American sentiment go away. What we're seeing now is the sense that because Canada is so vulnerable after decades of free trade with the US becoming strong partners and allies, there's a sense that even if Canada outlasts this period of tension with the United States and Washington, is there a need to diversify our trading base?

Is there a need to, to decrease its reliance on the US? And that's also playing into this anti-American sentiment that we're seeing nowadays.

JM:

Yeah, I think similar conversations being held in the EU, the relations with the United States, you know, obviously they're fraught in this moment. What do we know about Mr. Carney as a negotiator and his ability to to mend fences or to create a relationship with Donald Trump? He's been a vocal critic of President Trump as far as calling him Voldemort, referencing the villain from Harry Potter.

What are your thoughts on the ability of these two men to forge a relationship?

XD:

Well, Carney has been strong on Trump because Carney has to be strong on Trump. And that goes to the point I was making earlier regarding.

JM:

For the sake of Canadian politics.

XD:

For the sake for the possibly for the sake of Canadian politics. Also, I'm not saying that Mark Carney doesn't generally, genuinely believe what he's saying, but I am saying it's very difficult to operate in Canadian politics right now. If you don't come out strongly against the United States. But Mark Carney, again, is a central banker who knows how to steer an economy through crisis.

He understands Canadian economics and markets quite well. I think there could actually be grounds of similarity between President Trump and Prime Minister Carney. Carney was the head of Brookfield Asset Management. And Donald Trump is a very prolific real estate negotiator. And developer. So from a sense, they both come from a business and finance background that could be useful insofar as negotiating a trade agreement between the two countries, or at least bringing down the temperature in this trade conflict.

JM:

What about relationships, beyond the executive level of these two countries, the legislatures, the legislative branches? Are there deep ties or existing relationships that could help smooth over the rough spots that we're experiencing at this moment?

XD:

I mean, one of the great things, John, about Canada-U.S. relations is that it does extend to a great degree beyond just the federal level. It's lived every day by people in communities like Buffalo, Toronto, Vancouver, Point Roberts, Washington, Seattle, even, these border communities feel the Canada-U.S. relationship on a day to day basis. So I'd say yes. Governors talk to premiers, mayors talk to mayors, local residents talk to other local residents.

That is one of the strengths and long standing pillars of Canada-U.S. relations is the fact that we're not just great trading partners, we're not just historical allies, but we're also geographic neighbors. And there are ties that go both ways across the border that make sure that ensure that Canada's relations can continue to function even when we're arguing at the highest levels of government.

JM:

A final question, Xavi, is about timelines for all of this. You mentioned October elections. When will this all settle down? When will we have real clarity on what Canada's going to look like moving forward?

XD:

John, I expect we'll know probably by the end of the month when the next Canadian election is going to happen. If it's going to happen in the spring, that is, they're in a transition period right now. The Prime Minister has to formally Prime Minister Trudeau, that is, had to formally resign and submit his resignation to Governor General Mary Simon, at which point the Governor-General will invite Mr. Carney to a meeting where she'll ask him to form a government.

He'll have to select his cabinet ministers. But again, just because he does not currently have a seat in Parliament and because of the layout of his, electoral prospects, with all the momentum that the Liberal Party has right now, I expect an early election to be called likely before the end of March. And with a 37 to 51 day election period that could take place any time between April or May 2025.

JM:

Okay. Well, great. We'll be back to talk to you when things begin to get more clear. And as always, terrific insights into your the nation of your birth and not your birth, but where you move to. Correct.

XD:

No. I was born and raised. You were born in London. Raised. I'm a I'm unfortunately a devout Canucks fan, but, I think that, Well, quite some time. So I'm coming to embrace U.S. culture and, even U.S. sports go saying rough.

JM:

Rough times in international relations and in, hockey for some of us. Right. I'm a Ranger fan, so I feel your pain.

XD:

Well, if you're a Canadian hockey fan, you're feeling pretty good after the Four Nations.

JM:

So, Well, you'll always have that. Xavi Delgado is the senior program associate for the Canada Institute at the Woodrow Wilson Center. And if you're interested in learning more from Xavi and his colleagues, when you come to the Wilson center.org website, there's a programs tab at the top of the page where you'll be able to find the Canada Institute, and I'll find work and resources that that program offers.

We'll be back with another episode of Need to Know soon. Until then, for all of us at the center, I'm John Milewski. Thanks for your time and interest.