The Top Line
Just over a year ago, Mark Carney announced his intention to replace Justin Trudeau as Liberal Party Leader and Prime Minister. In accomplishing those goals, he drove an unprecedented revival of the federal Liberal brand, which was severely damaged at the end of the Trudeau era.
U.S. President Donald Trump’s return to office and the need to protect Canada from his threats and actions, particularly tariffs, was foundational to Mr. Carney’s political appeal and has been a constant during his Prime Minister-ship. The political test in 2026 is if the Prime Minister and his government can fully meet voters’ belief that they were the best choice to safeguard Canada’s interests against an America-first agenda.
So, as Parliament reconvenes today, there is pressure (both self-imposed and external) for Prime Minister Carney to deliver nation-building results while addressing the ongoing effects of U.S. tariffs and expansionism. To do so, the Prime Minister has so far focused on facilitating major natural resources development, making investments in trade, transport and national defence, and relentlessly expanding global trade relationships. Stakeholders should expect those themes to remain his priorities.
However, as with all minority governments, time has now become the Prime Minster’s enemy. Notably, all the aforementioned areas of action require time to bear fruit. Likewise, the Liberal minority government ate up time struggling to pass legislation over the course of 2025, absent any opposition collaboration. How the Liberal government deals with those challenges and moves to more substantial delivery of its agenda this Spring will be a major determining factor in the Government’s political success and the length of time until the next election.
A Deeper Dive
Trump, Trump and More Trump
The one constant for Mark Carney last year was reacting to President Trump, and that will not change this year with the looming renegotiation of the Canada-United States-Mexico Agreement (CUSMA).
What hasn’t been constant is the Prime Minister’s shifting reaction strategy, which evolved from “elbows up”, to trying to cultivate a strong leader-to-leader relationship, to studied indifference, to taking a global stage to implicitly call out Trumpism, all in less than a year. Picking and sticking with a successful approach for CUSMA negotiations – and defining with voters what success looks like for those negotiations – will be a major challenge for the Carney government this year.
For now, the Prime Minister is minimizing leader-to-leader contact with President Trump, intensely focusing on Canadian economic growth, and seeking to assume a mantle of global leadership for how middle powers should respond to Trumpism. In a speech at the World Economic Forum in Davos last week, which antagonized President Trump, Mr. Carney called for reduced global reliance on the U.S. and a new network of relationships amongst Canada and its peers. However, just how much time and effort the Carney government is prepared to invest in leading the creation of such a world is unclear.
Governing with a Minority
Even as the Liberal caucus grew through the floor-crossing of two Conservative MPs late last year, it remains a minority – at least as of this writing. Unless that changes, passing legislation will be a major challenge for the Carney government, as no opposition party has been willing to let key Bills pass quickly or partner with the Government to do so. Moreover, in Committee, the Conservatives and Bloc Québécois have a functional majority that can control agendas and amend legislation.
In the House of Commons, the immediate priority for the Government will be to complete the Committee Study and 3rd Reading of Bill C-15, the Budget Implementation Act. Passing the Government’s legislation on criminal justice reform (sentencing, bail reform, gender-based violence, etc.) is also a big political priority in a policy area on which the Liberals feel vulnerable.
Bill C-15 will pass, but the Government may be hard-pressed to get it through the House in February without accepting some amendments from the Opposition. Once passed, the Government will want to rapidly implement spending measures related to natural resources development, housing and infrastructure, and trade. Already, stakeholders and departmental officials have been delayed in working on such new programs.
Late last Fall Prime Minister Carney became increasingly frustrated by his government’s inability to pass legislation, and that feeling will only grow if legislation flounders during this session of Parliament. As such, the Liberals will continue to seek floor-crossers from both the Conservative and NDP. However, with one by-election already required due to the resignation of Chrystia Freeland, and others expected as the Prime Minister seeks to fill diplomatic postings in London, Paris and the European Union from within his caucus, the path to a majority is uncertain. By-elections in relatively safe Toronto, Scarborough, and Vancouver seats are expected to take place before the end of March, which, in combination with some well-timed floor-crossings, may allow the Liberals to secure a majority.
Nonetheless, stakeholders that need legislation for action on their priorities during this session of Parliament should be prepared for delays. Solutions leveraging regulation-making and existing Federal programs should also be pursued.
The Opposition
Stakeholders should expect a deluge of election brinksmanship during this Parliamentary session, but it’s unlikely to lead to a Spring election, due to a variety of opposition political considerations as well as an imperative for the Carney government to deliver results and be seen as focused on governing in an unstable time. An examination of the opposition dynamics reveals conflicting circumstances.
Conservatives: Pierre Poilievre is facing a mandatory leadership review at the Conservative Party Convention in Calgary this weekend. He is expected to pass the review with strong majority support from party members. In that context, Poilievre’s main, immediate challenge is to stop the flow of floor-crossings to the Liberals. Poilievre will maintain his aggressive political approach, which works well with Conservative audiences but has demonstrated mixed results with the electorate. In a nutshell, he needs time before an election to try to once again drive voter fatigue with the Liberals and create disappointment in Prime Minster Carney’s record.
Bloc Québécois: The Bloc will increasingly focus on supporting the Parti Québécois – leading in provincial polls as of now – in the Quebec election this October. Any attempt to cause a federal election will be viewed through that lens. Conversely, the Carney government may need to spend an increasing amount of time building a strategy for a sovereigntist Quebec government by end of year.
NDP: The NDP’s leadership election concludes in late March. Regardless of which of the major candidates – Edmonton MP Heather MacPherson, former journalist Avi Lewis, or Labour leader Rob Ashton – wins, the NDP is perhaps too indebted to fund an election in the near term. Nonetheless, the new leader may see value in fighting an election sooner rather than later against a Liberal government that has moved significantly to the right from the left-leaning Trudeau government, thereby alienating some progressives.
Natural Resources and Environment
In late November, the Federal and Alberta governments signed a Memorandum of Understanding (MOU) on “infrastructure, including pipelines, rail, power generation, a strong and integrated transmission grid, ports and other means that will unlock and grow natural resource production and transportation in Western Canada” – in practice, the MOU was all about a new oil and gas pipeline from Alberta. The MOU calls for further bilateral agreements by April on industrial carbon pricing, methane emissions, and a major oil sands carbon capture and storage project, building towards a proposal by Alberta to the Major Projects Office for a new pipeline.
The negotiations towards the MOU agreements will be time and resource-consuming for the Government and will be difficult to realize in a manner that satisfies the full Liberal coalition. Nonetheless, natural resources exports are a top priority for the Carney government, as it seeks trade markets outside the U.S., and the Prime Minister views the MOU as essential to national unity – so the Government will not flinch from this course.
Meanwhile, perhaps in response to criticism that it has abandoned serious action on environmental protection and global climate targets, the Government is pursuing national clean electricity and nature strategies. The Government believes that these will form key planks of an appeal to progressive stakeholders.
What’s Next
Budget Cycle
This is the first year there will be a Spring Economic Update and a Fall Budget. As such, pre-budget consultations conducted by the House of Commons Committee on Finance and Finance Canada will begin no later than May. TSA does not expect the Government to present a full “mini budget” through the Spring Update (as had become the norm with the Trudeau government’s Fall Updates). But that could change if urgent issues (e.g., U.S. tariffs) require immediate legislative action.
Trade
While successful CUSMA renegotiations will be a priority, the Carney government will continue to pursue a trade agenda of “any and all diversification is good diversification”. Agriculture, natural resources, and manufacturing will be important components of any trade deals.
What It Means for Advocacy
Advocacy efforts should remain laser focused on government priorities. Trade, major projects, and housing affordability will continue to receive significant attention from this government. Other opportunities exist in which the Government faces reputational risk as it turns to economic growth over social platforms, but such asks will need to be communicated in politically compelling ways. While it is unclear when the next election will take place, continuing to build and maintain relationships with opposition members engaged on priority files remains important, especially as the Conservatives hold major sway at the Committee level.
