Canada-US Tariffs 2025, Canadian Economy, Canadian politics, government spending, Pierre Poilievre, Spending Cuts, tax cuts, Trade Policy
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William Watson: Let's hope Poilievre 'cuts, cuts, cuts.' Someone’s going to have to

The familiar Liberal line is that Conservatives favour austerity. But Canadians understand the Trump tariffs mean some things have to go

The Conservatives are said to be having trouble pivoting away from the shooting-fish-in-a-barrel fun of campaigning against Justin Trudeau to the more difficult challenge of beating Mark Carney, who may not be a natural politician but who is a person of substance and achievement. I’ve never run an election campaign so maybe this is all more complicated than it seems, but don’t you pivot by figuring out Carney’s downsides, including in his policies, and going after them until you find something people respond to?

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Whatever troubles the Conservatives are having, the Liberal leadership “debates” last week suggest their plan for Poilievre is set: he’s a lifelong politician (as opposed to lifelong technocrat); he worships Donald Trump; and if he gets into power he’ll “cut, cut, cut.”

That Poilievre has been in Parliament since he was 25 years old is not such a problem. Winston Churchill became an MP at 25 and spent 62 years in all in parliament. I know: Poilievre is no Churchill. But the point is: political experience can be a good thing. If you’ve spend your adult life in Ottawa, you probably have a nose for deadwood.

That Poilievre has been an attack-dog politician most of his career is a bigger problem. Attack-dog is not the normal style of prime ministers. PMs hire people to do their attacking for them. Poilievre needs to find his own Poilievre. (An email to Conservative party members from Stephen Harper this week suggests maybe he’s it: “Let me be very clear: the hard calls during the 2008-2009 global financial crisis were made by Jim,” i.e., the finance minister, the late Jim Flaherty, not Mark Carney.)

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Of course, what’s “normal style” in prime ministers is under challenge these days. The Americans have an attack-dog president who may be changing the norm for democracies. And yet most Americans I talked to on a recent trip like him in spite of the canine parts of his character.

As hyperbole, the Liberal claim that Poilievre “worships” Trump is in fact Trump-ish. Like many conservatives, Poilievre clearly sees positive things in Trump: his bias to action, his disdain for woke and DEI, his search for waste, his willingness, even eagerness, to slaughter sacred cows. (Everyone should agree the end of the U.S. penny makes perfect, ahem, sense. But it has made sense for years, and it took Trump’s felt-tip pen to sweep it away in an executive order.)

Poilievre is hardly an acolyte, however. Trump himself has been saying disapproving things about him, including that he’s a non-MAGA tough-talker who will fold. If you’re on the left, Trump dissing Poilievre is all part of a plot to make Canadians like the Conservative leader more. But if Trump really wanted Poilievre elected, he wouldn’t be going on so about the 51st state. As The New York Times’ Ross Douthat wrote last week, his pointless “war of words” with Justin Trudeau risks resurrecting and re-electing the Liberals, which he surely will not enjoy.

The idea that Poilievre is going to come in and “cut, cut, cut” is a dog-eared page from the ancient Liberal playbook. This time round, though, it’s hard to see it working. Most Canadians realize that Trump’s tariffs, if they last more than months, mean hard times ahead. When our way-biggest customer taxes what we’re selling, that makes us poorer. When uncertainty generated on purpose means our access to the U.S. market is up in the air, investing in Canada becomes less attractive.

Yes, the trade diversification everyone’s pushing will replace some U.S. sales. But if appreciable chunks of what we’ve been doing in the integrated North American market move to the U.S., that will hurt. Studies of the Canada-U.S. Free Trade Agreement say it brought us a six per cent increase in manufacturing productivity, which is big. And that was with an average tariff reduction well below Trump’s 25 per cent barrier. As Adam Smith said: “The division of labour is limited by the extent of the market.” Turn that FTA effect around and losing access to the gigantic U.S. market will hurt. If we are poorer as a nation, and we will be, somebody’s going to have to cut, cut, cut. We simply will not be able to afford everything we have splurged on in the past decade.

Plus: we’re going to have to cut taxes on businesses to offset the rise in uncertainty owing to Trump. And we’re going to have to get serious about investing in hard power, i.e., a military that can do serious damage to potential aggressors against us and actual aggressors against our allies. A Labour prime minister of the United Kingdom has just raised the ante on defence spending to 2.5 per cent of GDP and his Conservative counterpart wants three per cent. At the same time, Liberal leadership candidate Frank Baylis is right to caution that turning on the money pumps will waste billions of dollars. But we need a credible path to a stronger military — pork be damned — and we need it now.

The dumbest way of cutting would be to leave it to attrition. A plan to cut spending where the average age of federal employee is highest, which is what attrition amounts to, is dodgier than DOGE. So we need someone who will cut, cut, cut. Fat first. But then, yes, valuable stuff we can no longer afford. Mostly, we need politicians who understand that.

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