Trudeau Resignation Adds New Issues to North American Trade

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--North American trade relations may be faced with another test as Canadian Prime Minister Justin Trudeau resigned just days before U.S. President-elect Donald Trump takes office.

Outgoing U.S. Vice President Kamala Harris presided Monday over the congressional approval of the results from the November election that showed her Republican rival Trump secure a second, non-consecutive tenure as president.

While Washington D.C. stood quiet under a blanket of fresh snow, the federal Canadian government was upended Monday by a resignation announcement from Trudeau, now entering his tenth year as prime minister.

"I intend to resign as party leader, as prime minister, after the party selects its next leader through a robust, nationwide, competitive process," Trudeau announced early Monday.

Entering office while Trump was on the campaign trail for his first bid for elected office, Trudeau was a fresh new face from the Liberal party. His departure a decade later makes him the longest-tenured leader from the Group of Seven, after the likes of Germany's Angela Merkel and former British Prime Minister David Cameron left the scene.



Fast forward a decade, and Germany's government, now led by Olaf Shulz, is faltering while the British parliament has seen a bevy of names move to the premiership since Cameron's departure in 2016. Liz Truss stepped down as British prime minister in November 2022, after serving just 50 days in office.

For North America, Trudeau's departure could shake up the energy sector given Canada's role as a producer and exporter. Canada, rich in a heavy type of crude oil that many U.S. refineries are designed to process, is hands down the top crude oil exporter to the United States.

Over the seven-day period ending December 27, Canada delivered on average 3.7 million barrels of oil per day (BBL/d), representing 60% of total U.S. oil imports. In distant second is Mexico, which delivered 551,000 BBL/d over the same week.

In 2018, Trump helped broker the U.S.-Mexico-Canada Agreement, or USMCA, a trade deal that replaced the North American Free Trade Agreement. At the time, Trump said that USMCA was "the most modern, up-to-date, and balanced trade agreement in the history of our country."

On the campaign trail in 2024, however, Trump said he'd instead impose a 20% tariff on all imported goods from Canada and Mexico, including energy, in an effort to curb cross-border immigration and the flow of illicit drugs. With global economies just coming off a period of high inflation that followed the end of the COVID-19 pandemic, those tariffs would be passed down to the consumer by way of higher prices.

That tariff threat was a source of inner-turmoil in Trudeau's Labor Party. After expressing concern about "economic nationalism," Canada's deputy prime minister and finance minister Chrystia Freeland resigned on December 17 amid disputes over the response to proposed U.S. tariffs. Adding insult to injury, Trump had referred to Trudeau as the governor "of the Great State of Canada" after meeting with him at his Mar-a-Lago estate in Florida.

Statistics Canada, the government's record-keeping agency, finds the United States is the country's largest trading partner, with $675 billion in total trade as of 2022, the last full year for which data were published. That represented about 63% of Canada's total global trade value.

Energy products made up 33% of the trade, or around $420 billion. Whoever takes the place of Trudeau, however, could be inheriting a changing energy landscape for Canada by way of export arteries for crude oil and liquefied natural gas (LNG).

After years of deadlock in North America, Canada may be able to tap the energy-hungry markets in Asia by way of the expanded Trans Mountain crude oil pipeline. Approved in 2019, the expansion pushed the capacity on the 714-mile pipeline that runs from Alberta to 880,000 BBL/d.

Canadian midstream company Pembina Pipeline Corporation ( NYSE:PBA) (Calgary, Alberta) said in December, meanwhile, that it's Cedar Liquefied Natural Gas project in British Columbia would be a top priority for 2025. The facility will consist of a floating liquefied natural gas (FLNG) facility in Kitimat, British Columbia, with a nameplate capacity of 3.3 million tons of LNG per year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the project report.

Few in the energy industry had responded to Trudeau's announcement by Monday.

"I thank Justin Trudeau for his years of service to Canada and Canadians," his former deputy, Freeland, said Monday on the social media site X. "I wish him and his family the very best."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).