Why Justin Trudeau Stepped Down

0:05Yesterday, Canadian Prime Minister Justin Trudeau announced he was stepping down after nine years in power. Last night over dinner, I told my kids about the decision that I'm sharing with you today. I intend to resign as party leader, as prime minister. How significant is this moment for Canada? I think in the current moment, it's extremely significant. That's our colleague, Vipal Manga. Justin Trudeau has been the dominant political figure in Canada for a decade. He is arguably the most recognizable Canadian in the world, a global standard bearer. Jim Carrey might take issue with that. There are many, but Justin Trudeau is up there.

0:55He's up there.

1:00But over the last few years, his popularity at home has diminished. A combination of scandals and his handling of the economy have made Trudeau the latest progressive world leader to fall. People have been waiting for it for a long time. His poll numbers have been in a huge slump. There have been growing calls from members within his own party for him to step aside for the good of the party and for the country, they say. And he had stubbornly refused to do so until last month when the floodgates opened. Welcome to The Journal, our show about money, business and power. I'm Kate Leinbaugh. It's Tuesday, January 7th.

1:52Coming up on the show, why Canada's Trudeau era is coming to an end.

2:12In his resignation speech yesterday, Justin Trudeau described himself as someone who doesn't back down easily. My friends, as you all know, I'm a fighter. Every bone in my body has always told me to fight because I care deeply about Canadians. He was calling back to a specific moment that helped launch his political career. It is now time for your main event. Please welcome, from the blue corner, weighing in at 100... One of the signature moments of his early political ascent, 2012. It was about a year before he became leader of the Liberal Party. He signed up for a charity boxing match against a senator who was a black belt in karate, a former Naval Reserve.

3:10Justin Trudeau! He's wearing liberal red, of course. I call him the shiny pony. He looks like he's in some sort of zen yoga trance, all that dance. And that guy thought Trudeau was a sucker and would go down in, like, the first round. But Trudeau fought him for two and a half rounds and won the match. And there you have it. The fight called for Justin Trudeau. And it's done. Did not even go to the end. Not even close. And at the end of it, it sort of created this impression of himself, I think, a sort of narrative of himself as a fighter. Someone who would beat all odds. And that was sort of supported in that first election of his in 2015.

3:58Trudeau and the Liberal Party won that 2015 election decisively, beating the Conservative Party for the first time in nearly a decade. So Trudeau came onto the Canadian political stage as a fresh face. He was elected prime minister after 10 years of conservative rule by Stephen Harper, who charitably could be described as nondescript. Trudeau had a lot of flash, good looking man. For a few months after he became prime minister, he photobombed people's pictures shirtless. Whoa. Caused quite a stir. Okay. And so he was a breath of fresh air for a lot of Canadians who had been tired of conservative politics.

4:43Was he popular? He was very popular at the beginning. Everyone liked him. He was a rock star. And Canadians aren't very flashy people by nature. So the fact that, you know, when he went to Davos, everyone was like hanging onto him. Canadians kind of liked that. They were quite intrigued by this guy who just showed up, you know, on the stage. And in some ways, he was a throwback to his father, former Prime Minister Pierre Trudeau, who also was debonair, had the same kind of flash and glamour. And Canadians wanted a bit more of that. Trudeau's vision for Canada was unapologetically progressive. He pushed measures to tackle climate change.

5:23Make no mistake, the Liberal Party will be putting a price on carbon. We'll invest in clean technologies. He wanted his cabinet to be 50 % women. I understand one of the priorities for you was to have a cabinet that was gender balanced. Why was that so important to you? Because it's 2015. And he embraced looser immigration policies. We need to once again be the open, generous country, not naive, making sure we're doing security right, but not using it as an excuse to do less than we should. So he wanted to really, as he said it, sort of drive Canada into this progressive future that everyone was awaiting.

6:05He was a globalist, if you want to use that term. But Trudeau's progressive policies lost their shine as Canada's economy worsened. The pandemic hit and there was a huge upsurge in inflation. In Canada, this was exacerbated by a major housing shortage. Definitely not enough homes here. And in order to boost anemic economic growth, Trudeau had pushed for more immigration into the country, which had the side effect of increasing rents and creating even more of a housing shortage. So an affordability crisis set in. And there was a lot of anger and antipathy towards his COVID era policies. So a lot of that combined to make him even more unpopular.

6:54It just added to the weight of, I guess, his personal unpopularity, which was growing at the time. Trudeau's popularity was falling, in part because of a variety of scandals. A few years back, an ethics watchdog ruled he meddled in a bribery investigation. Trudeau accepted responsibility, but disagreed with some of the details. And not long after, photos emerged of Trudeau wearing blackface when he was in college, something he apologized for. On top of that, he was struggling to maintain good relations with the U.S. under President Trump. Trudeau's historic relationship with Trump has been at times awful.

7:38There was a G7 summit in Quebec, after which Trump went on Twitter and called Trudeau dishonest and two-faced and meek, a weak leader. And I don't think it's too strong to say that at times they have detested Trudeau. He seems to represent everything that they hate about progressive politics. So Trudeau has been on shaky ground for a while. But what was it specifically that led to his downfall? So Trudeau had been holding on to power despite vocal calls by some of his backbenchers for him to step down. They read the poll numbers. There had been a string of major losses by the Liberal Party in by-elections in formerly safe seats for the party.

8:29It was looking really dire, but Trudeau was still holding on. And then he couldn't hold on anymore. What happened is after the break.

8:59After Donald Trump won the U.S. presidential election in November, he said if Canada doesn't crack down on illegal immigration and drug trafficking at the border, his administration would impose 25 percent tariffs on Canadian goods. As soon as the Trudeau administration heard about the tariffs, it was like a five-alarm fire for Canada. Something like 80 percent of Canadian exports go to the U.S. So a 25 percent tariff on all those would have been a huge economic blow to Canada. Basically, they can't afford for that to happen. So it was a big deal. How would you describe the state of the Canadian economy right now?

9:41It's not very good right now. Now, Canada has seen a decline in its GDP per capita in eight of the last nine quarters. I've seen some reports that Ontario, which is the largest province by population and the hub of its manufacturing base, has a GDP per capita that is similar to Alabama's. So there's a real sense of economic malaise in Canada and no idea of how the country will get out of it.

10:15Trudeau flew down to Mar-a-Lago to meet with Trump in late November. They had dinner, and according to Vipal's reporting, it seemed to go well. But after Trudeau left, Trump started making jokes and sort of leaked to Fox News that he had made a joke to Trudeau that if Trudeau was so worried about Trump's policies, that Canada should just join the U.S. as the 51st state. And he's taken to calling Trudeau a Canadian governor. As a joke. It's really an exercise in humiliation and humiliating Trudeau. How Trudeau was handling the tariff threat caused divisions within his government. And that culminated in the December resignation of one of his closest allies, his finance minister and deputy prime minister, Chrystia Freeland.

11:05She felt that Trudeau was instituting some very short-term policies for political gain. Things like sending$250 rebate checks to voters or giving them a break on the goods and services tax, the Canadian version of a value-added tax. And she felt that those policies would hurt Canada's fiscal situation and make it less able to fight Trump if he did, in fact, impose tariffs. She thought he was being physically irresponsible. And why was her resignation so bad for Trudeau? She was his right-hand minister in many ways. So she was his biggest booster and most loyal supporter for almost his entire tenure.

11:53So when that person turns against you, it leaves you with really no support in a government that was already on shaky ground. So I think it sent a message to everyone that even the stalwarts were losing faith in his leadership. How did he respond? Initially, he didn't. I mean, he kind of didn't address it directly. He said he was going to take the holiday break to reflect on his future.

12:23Trudeau's party, even with a new leader, is likely to lose the next election to the Conservative Party, which is led by a right-wing populist named Pierre Polyev. A career politician, Paliyev has promised to cut taxes, toughen law enforcement, and reduce climate change regulations. Why was Trudeau able to stay in power for nine years when he was so unpopular? In many ways, Trudeau's ability to stay on is a testament to his political skills. I've spoken with right-wing activists who despise Trudeau. This is a country where the F. Trudeau flag has been waved proudly across the country for almost two years now.

13:14And these right-wingers despise him. But they have come to me and said that they think that Justin Trudeau was the greatest campaigner they've ever seen. One person called him a genius campaigner. And I think his ability to connect with people in those moments served him really well, turned surefire losses into almost wins, which in a polarized system was enough to keep him around. What does this moment say about progressivism in Canada and on the world stage? I think it's clear by what we've seen over the past 18 or so months that progressivism is in serious retreat around the world. Now, a lot of this is a function of the post-pandemic environment, which has hurt incumbents all over, including some right-wing conservative governments in the UK, for example.

14:09But by and large, it's been a wholesale retreat of progressive governments. I think it says that that movement had its time and it's being replaced by something that is in many ways a polar opposite of what it espoused. What that means for the future is hard to tell. I think a lot of it depends, as many things do in the world these days, on where the U.S. goes. Canada, in many ways, is much more apt to follow the U.S., just given how close it is to the U.S. and how important the relationship that the two countries have.

14:55That's all for today, Tuesday, January 7th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Paul Vieira.

15:09Thanks for listening. See you tomorrow.