The affordability crunch that has dominated Canadian politics for years will continue to percolate through the federal election campaign — but experts say U.S. President Donald Trump and his trade war are adding a new dimension to voters’ cost of living concerns.
The aftershocks from decades-high inflation levels and higher interest rates meant to tame price pressures have continued to put the squeeze on Canadian households as they try to bid up their wages.
Federal parties have focused their pitches in recent months on soothing those aftershocks. The Liberal government offered a temporary tax break on many household staples. The Conservatives promised a more lasting, sweeping tax cut. The NDP largely trained its arrows on the perceived greed of the corporate CEO class.
But the weeks preceding the election’s start saw the national conversation shift dramatically.
Trump’s return to the White House in January came with a costly trade war and his repeated claims that Canada should become “the 51st state.”
In early March, Leger polling showed that Canadians anxious about their personal finances had a major new source of worry. Trump, tariffs and U.S. aggression ranked as the No. 1 issue for 28 per cent of Canadians, overtaking inflation at 21 per cent.
That’s the first time since August 2022 that a Leger poll cited anything other than affordability as the top concern for Canadians.
Sébastien Dallaire, executive vice-president at Leger, said that affordability will still factor into the federal election campaign, but the U.S. trade war is going to add a new dimension to that unease.
“All this economic uncertainty is piling onto what was already a major issue for Canadians who are concerned about affordability,” he said.
Before Trump started issuing his tariff threats, inflation had been floating within the Bank of Canada’s target range of one to three per cent for over a year, allowing the central bank to trim interest rates.
Randall Bartlett, deputy chief economist at Desjardins Group, said that Canada’s economy was picking up speed heading into 2025 as consumers regained confidence.
Tariffs aside, he said, the year ahead was looking like a prosperous one for Canada. But a prolonged trade war with the U.S. will drive up unemployment in Canada and lead to more price hikes on goods vulnerable to trade disruptions, he added.
Desjardins predicts that if tariffs remain in place for an extended period, a recession could hit Canada as soon as the second quarter of this year.
While there’s currently broad public support for a counter-tariff response to Trump’s tariffs — which adds to the cost of U.S. imports just as the Canadian dollar is flagging — Bartlett said that feeling may shift when Canadians start to feel the effects of that retaliation on their wallets.
“I think the resurgence in patriotism in Canada has at least papered over, for right now, the real economic pain that the Canadians are going to be in for over the next couple of years if these tariffs stay in place,” he said.
Dallaire said every federal party leader will have a dual task in the campaign — to convince Canadians that they’re the right person to handle Trump and that they have a plan to help Canadians get through the trade war.
“It needs to be this double message,” he said.
“It cannot be strictly about trying to make Trump change his mind. It needs to be about how do we soften the blow for Canadians right now.”
This report by The Canadian Press was first published March 22, 2025
