First Reading is a Canadian politics newsletter that throughout the 2025 election will be a daily digest of campaign goings-on, all curated by the National Post’s own Tristin Hopper. To get an early version sent directly to your inbox, sign up here.
TOP STORY
If the Conservatives win the April 28 election, expect an immediate surge in the value of the Canadian dollar, according to a
new foreign exchange analysis by the Dutch financial firm ING
.
However, the report concludes that such a thing is unlikely, and that world financial markets are already planning for the lower Canadian dollar that would be yielded under another four-year Liberal term.
“A Conservative win would be a surprise for markets, and we think (the Canadian dollar) would rally on the view that (U.S. President Donald) Trump may be more lenient in trade negotiations towards another conservative leader,” reads the report, published Tuesday by a team of ING analysts based in London and New York City.
The report notes that both the Conservatives and the Liberals have similar strategies for dealing with Trump, writing “all Canadian parties are firmly condemning U.S. tariffs: Trump is a deeply unpopular figure in Canada.”
Nevertheless, they still conclude that a Conservative win, however unlikely, would be greeted positively by investors as a signal for an “earlier de-escalation in Canada-U.S. trade tensions.”
Although the report briefly touches on the two parties’ differing approaches to taxes, deficit spending and military preparedness, it highlights the U.S. trade war as the most immediate threat to Canada’s economic situation, as “even a modest drop in exports to the U.S.” could plunge the country into recession.
“Whoever wins the elections, the challenges ahead for the Canadian economy are huge,” it reads. Layoffs are poised to increase, and given Canada’s
extremely high rates of personal debt
, they write that this “could exacerbate the pain and lead to an even steeper slowdown in spending.”
The Canadian dollar is currently trading at 72 cents of a U.S. dollar; one of the lowest it’s been over the last 20 years. As recently as 2021, a Canadian dollar could buy 82 U.S. cents. In 2013, the currencies were briefly at par.
Prior to Trump’s election, the long-term assumption among investors was that Canada’s next government would be Conservative. But based on aggregated polls and bookmakers’ odds, ING is now citing an “85-95 per cent probability of Liberals winning.”
“We can safely assume the market’s baseline scenario is a majority win by the Liberals,” reads the ING report.
ING was not the only foreign financial analyst this week to weigh in on the likely impact of the Canadian election.
A Thursday report by the U.K.-based AXA Investment Managers also concluded that a Liberal win was most likely, but that “the direction of fiscal policy looks set to be relatively similar regardless of which of the main parties enter government.”
And whoever wins, AXA said that the next government is set to face “a deteriorating economic environment.”
Not only is Canada poised to suffer from the fiscal uncertainty imposed by the U.S. trade war, but the U.S. is itself
lurching towards recession
as a result of Trump’s tariff policies, with knock-on effects for Canada.
Wrote AXA, “we see a direct hit of around 1 per cent to Canadian GDP and a further 0.5 per cent hit from weaker U.S. growth.”
One of AXA’s only positive notes was that Canada’s debt burden isn’t quite as bad as everyone else’s — at least at the federal level.
When you tally up combined provincial and federal debt, Canada’s “general government” debt ratio is among the h
ighest in the developed world
at 107 per cent of GDP.
However, the $1.4 trillion in federal debt currently held by the Government of Canada works out
to about 42 per cent
of GDP, well below the G7 average. “The Canadian government starts from a place of relative stability enabling it to borrow more without spooking capital markets,” AXA wrote.
LAST APPEARANCES
Conservative Leader Pierre Poilievre has conspicuously avoided sitdown interviews with mainstream outlets throughout the campaign, preferring independent outlets. On Wednesday, Poilievre and his wife Ana were
interviewed by conservative YouTuber Jasmin Laine
, and it was heavier than usual on Poilievre’s central philosophy that he wants to stay out of people’s business. “If I was starting a political party from scratch I would call it the ‘mind your own damn business party’ … I don’t want to run your life, I want to run a government,” he said.
Meanwhile, Liberal Leader Mark Carney served poutine at a Quebec fast food outlet, where he compared the appearance to a McDonalds campaign stop made by U.S. President Donald Trump last year. “I’m a bit like Trump. Trump at McDonald’s,” said Carney. When a reporter asked him what sound the cheese made, he said “squish, squish” … which is the wrong answer. Cheese curds are supposed to squeak.
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