Navigating Canada’s future: The implications of mark Carney’s election
As of March 9, 2025, Mark Carney has been elected as the Prime Minister-designate of Canada, taking the helm of the Liberal Party and poised to succeed Justin Trudeau.
This political shift arrives at a pivotal moment, with US tariffs threatening Canada’s economic stability and global trade tensions escalating.
As an avid observer of economic trends, I’ve been analysing what Carney’s leadership could mean for Canada.
Drawing on credible data, including insights from Investing.com and the Bank of Canada, this article explores his career background, the latest federal election polls, and the potential impacts of his proposed policy reversals on capital gains and carbon taxes.
Let’s dive into the numbers and implications.
Mark Carney’s career: A steady hand in turbulent times
Mark Carney brings a formidable resumé to Canada’s highest office. Born in Fort Smith, Northwest Territories, in 1965, Carney rose through the ranks of global finance.
After earning a bachelor’s degree in economics from Harvard University (1988) and a doctorate from Oxford University (1995), he spent over a decade at Goldman Sachs, honing his skills in investment banking. In 2003, he joined the Bank of Canada as deputy governor, becoming Governor from 2008 to 2013.
During the 2008 financial crisis, Carney’s steady leadership helped Canada avoid the worst of the global meltdown, earning him international acclaim.
He later served as governor of the Bank of England (2013–2020), navigating Brexit and early Covid-19 challenges with decisive rate cuts and quantitative easing.
Post-central banking, Carney chaired Brookfield Asset Management’s impact investing arm and served as the UN special envoy for climate action and finance.
His blend of private-sector savvy and public-sector crisis management positions him as a technocrat with a global perspective—qualities he now brings to Canada’s leadership amid trade wars and economic uncertainty.
Federal election polls: Carney vs. Poilievre
Carney’s victory in the Liberal leadership race on March 9, 2025, sets the stage for a federal election, which must occur by October 20.
Recent polls reflect a tight race with Conservative leader Pierre Poilievre.
A Nanos Research poll (February 2025) showed Carney leading Poilievre 39.6% to 26% as the preferred negotiator against U.S. President Donald Trump’s tariff threats.
Pallas Data’s March 2025 survey pegged Liberal support under Carney at 37%, neck-and-neck with the Conservatives at 37%.
Poilievre, a career politician advocating small government and tax cuts, has criticised Carney as “Carbon Tax Carney,” tying him to Trudeau’s unpopular policies.
With the NDP polling at 18% (Angus Reid, March 2025), Carney’s ability to consolidate progressive votes could determine the outcome.
US tariffs and global economy: Canada’s high-stakes challenge
Carney inherits an economy under siege. On March 4, 2025, Trump imposed 25% tariffs on Canadian imports, targeting US$450 billion in annual exports—75% of Canada’s total (Statistics Canada, 2024).
China retaliated on March 8, levying 100% tariffs on Canadian canola, pork, and beef, worth US$5.7 billion annually (Statistics Canada, 2024).
These twin blows exacerbate Canada’s $1.2 trillion debt burden (Department of Finance Canada, 2024) and is projected to reach US$2,3 trillion in 2024/25.
The Bank of Canada estimates a -0.5% GDP hit in year 1 from US tariffs alone (January 30, 2025), while Scotiabank projects up to 1.1% GDP drop from these tariffs or 0.8% drop without retaliation in 2025 (November 12, 2024).
Globally, the picture is mixed US Core CPI eased to 3.0% year-over-year in February (Bureau of Labor Statistics, 2025), hinting at Federal Reserve rate cuts from 4.25% (January 29, 2025), which could buoy the S&P 500 (down 1.1.68% YTD, Google Finance, March 7, 2025).
China’s CSI 300, up 3.24% YTD (Google Finance, March 8, 2025), reflects stimulus-driven resilience.
Canada’s TSX, however, is down 0.56% YTD (Google Finance, March 7, 2025), signaling vulnerability.
Carney’s strategy — dollar-for-dollar tariff retaliation and trade diversification — aims to mitigate these pressures.
Yet, with 77% of exports tied to the US, a prolonged trade war could shrink GDP by 1–2% long-term (Brookings, February 25, 2025), risking 50,000–100,000 jobs in 2025 (B.C. Government, January 15, 2025).
Capital gains tax reversal: Economic boost or fiscal risk?
Carney has pledged to reverse Trudeau’s capital gains tax hike, which was going to raise the inclusion rate from 50% to 66.7% for gains over $250,000 (Financial Post, February 5, 2025), if it had come into effect on January 1, 2026. Let’s model the impact:
Current revenue: For simplicity, let's assume that in 2024, capital gains tax generated US$20 billion based on projections from the federal government which had placed it at US$19.4 billion annually. If we projected to add US$6 billion annually though, actual collections would depend on taxpayer behavior, enforcement, and the short term implementation before deferral.
Reversal impact: Restoring the 50% rate could reduce revenue by $6 billion yearly. Assuming a US$2 trillion GDP (Statistics Canada, 2024), this is a 0.3% fiscal hit.
Economic stimulus: Lower taxes could spur investment. If business investment rises 2% (US$10 billion, based on TMX Group’s 2024 data), GDP might grow 0.5% ($10 billion), offsetting the revenue loss.
Stock markets could react positively. The TSX, heavily weighted in financials and energy (49.2%), might gain 2–5% as firms reinvest. However, a US$6 billion deficit increase could pressure the Canadian dollar (CAD), already weakened by tariffs, raising inflation by 0.3–0.5% (Bank of Canada, February 10, 2025).
Carbon tax Reversal: Relief vs. climate trade-offs
Carney’s plan to scrap the consumer carbon tax—US$65 per tonne in 2025 (CBC News, January 31, 2025)—and replace it with green incentives is a bold pivot. Here’s the breakdown:
Current cost: The tax costs households $1,000 annually but returns US$800 in rebates (Environment Canada, 2024), netting $200 per household. Total revenue: US$8 billion.
Reversal Impact: Eliminating it saves households $200, boosting disposable income by US$2.5 billion (12.5 million households, Statistics Canada, 2024). GDP could rise 0.13% ($2.5 billion ÷ $2 trillion).
Climate Cost: Emissions might rise 5% (35 MtCO2e) without the tax (Environment Canada, 2024), jeopardising Canada’s 443 MtCO2e target by 2030.
The TSX could see a 1–2% bump as consumer spending lifts retail stocks, but Carney’s carbon border adjustment risks trade friction, potentially offsetting gains if allies like the EU (implementing its own mechanism in 2026) push back.
Monetary Policy Outlook
Investing.com data shows the TSX sensitive to commodity prices (30% of index), which could drop 5–10% amid tariff wars. The Bank of Canada’s 3.00% rate (March 12, 2025) may ease to 2.75% (RBC, March 3, 2025) to cushion the blow, supporting equities. In the U.S., a softer JOLTS report (7.600 million forecast, March 11) could drag the S&P 500 further, amplifying Canada’s export woes.
My Take: Opportunities amid risks
Carney’s crisis management skills are a plus, but Canada faces a tariff triple-whammy — US, China, and potential retaliation. His tax reversals offer short-term relief but strain fiscal and climate goals. I see opportunities in defensive TSX stocks (e.g., utilities) and US. tech if Fed cuts materialise. This week, there is data in the US and Canada. I summarised the data from investing.com below. These are the data points that could cause market volatility.
Below is a table summarising the economic events, their timings, currencies, this week in the US and Canada as per investing.com economic calendar. For deeper insights, my latest video drops tomorrow, March 10, at https://tinyurl.com/mu9sk7cb — subscribe on YouTube to join the conversation!
Carney’s election as Prime Minister-designate signals a shift toward pragmatic leadership. Yet, with Poilievre looming, US tariffs biting, and global markets wavering, his policies must balance growth, stability, and sustainability. Canada’s path forward hinges on his ability to wield economic expertise in a storm. As usual, trade and invest wisely and may the markets be on your side. Stay tuned — I’ll keep breaking it down!
*Isaac Jonas is a Canada-based economist and principal consultant at Streetwise Economics. He is also a retail investor, retail trader and content creator, focusing mainly on the US and Canadian capital markets. He regularly shares insights via his social media handles and YouTube channel (Streetwise Economics). His website is www.streetwiseeconomics.com and can be reachable on isacjonasi@gmail.com. Insights shared in this article are based on current market conditions, which may be subject to change, hence this article does not amount to investment advice.