Investing.com – Canada is facing pressure to hold a scheduled federal election “sooner than later” this year as threats from US President-elect Donald Trump’s strict tariff plans loom, according to analysts at Jefferies.
Following Prime Minister Justin Trudeau’s announcement that he will resign from the role earlier this month, Canada’s parliament has been prorogued — or suspended — until March 24.
However, this means that the federal election will likely not take place until May at the earliest, placing a politically-weakened Trudeau potentially in charge of overseeing Canada’s initial response to Trump’s trade stance.
The Jefferies analysts said in a note to clients that they expect the vote will be held in mid-May, flagging that investors face the dilemma of “assessing the potential outcomes” of the ballot without having official platforms for any of the major players.
“Objectively, the timing is quite poor as Canada faces an existential threat with the pending inauguration of President-elect Trump,” the Jefferies analysts said on Wednesday.
Trump, who is set to return to the White House later this month, has vowed to slap a 25% levy on imports from Canada, sparking concerns among economists over a possible recession in the country. Canada sends roughly three-fourths of its exported goods and services to the US, Reuters has reported.
“Regardless of whether his announced 25% tariffs are real or simply an empty threat […], Canada is entering into critical negotiations with its most significant trading partner effectively leaderless,” the Jefferies analysts said.
Trudeau’s office said this week that he will hold a cabinet retreat to determine a response to Trump’s possible tariffs, adding that the leaders will “protect and defend Canadian interests” and “make unequivocally clear the mutually beneficial trade and security relationship the two countries share.”
Should Trump follow through with the imposition of the duties, Trudeau, who is set to step down in early March, has promised to issue countermeasures. He has also called for a united response from Canadian lawmakers.
Separately, Foreign Minister Melanie Joly has said Canada is not ruling out restricting energy exports to the US, although the proposal has received criticism from the premier of oil-producing region Alberta.