What Contractors Can Expect from the Upcoming Canadian Federal Election

While all eyes have been on the recent U.S. presidential transition, Canada’s highest elected office is currently experiencing its own transfer of power. In a dizzying turn of events, Justin Trudeau resigned as Prime Minister and Mark Carney, ex-central banker and informal advisor to Trudeau, replaced him. However, Canadians will soon head to the polls to either give Carney and the Liberals a formal mandate or put a different party in charge. Factors like stagnant GDP growth and an all-out trade war with the U.S. are expected to heavily influence the outcome of the election. Indeed, Canada’s economic future is unstable, and the next government will play a critical role in shaping fiscal policy and managing Canada-U.S. relations.

With so much on the line and so many factors fluctuating each day, the next federal election is shaping up to be one of the most important in Canadian history.

Lead-up to Canada’s Election Day

While the deadline for Canada’s next federal election is not until October 20, 2025, one week into his tenure as Prime Minister, Carney triggered a snap election that will take place on April 28. Federal election campaigns must last between 36 and 50 days, with voting held on a Monday, resulting in the April 28 date. Carney’s actions came one day before Parliament reconvened after being prorogued, or suspended, since January. Key members of Parliament had vowed to bring down the government upon its return through a vote of no confidence, which won’t be necessary now that there is an official election date.

The race to the federal election began in early January, when Trudeau announced his resignation following months of declining approval ratings and calls to step down, notably from within his own party. Trudeau also prorogued Parliament until March 24 to give his party time to select a new leader. The Liberal leadership vote took place on March 9 and Carney came out on top over Chrystia Freeland, Trudeau’s former Deputy Prime Minister and finance minister, and three other candidates. Freeland has since been tapped to serve in Carney’s cabinet as Minister of Transport and Internal Trade.

Impacts of the Election on Government Spending and Contracting

A few weeks ago, political pundits believed a Conservative win was likely, given how the Liberal Party was struggling in the polls. However, a new face for the Liberals has improved its polling numbers and helped close the gap between the two parties. Tariffs and the ongoing trade war with the U.S. have also overshadowed other campaign issues and become more important for many voters. While it is impossible to predict the outcome of the election, what is certain is that the next few years in Canada will look very different depending on who wins, and suppliers should be prepared for either outcome.

Conservative Government

Led by Pierre Poilievre, a future Conservative government could impact the public sector in several ways. The core tenets of the Conservative platform include balancing the budget; boosting funds for public safety; addressing Canada’s housing crisis; and cutting bureaucracy, waste and consulting contracts. Budget cuts could open the door to more private-sector outsourcing and the use of technology to replace manual or human-intensive processes. The Conservatives are also looking to reduce the size of the federal civil service, which could spur AI adoption and innovation; AI could be used to enhance delivery of government services and increase civil servants’ output. Conservatives are opposed to increasing the capital gains tax, which they believe will stymie technology investments, and can be expected to review that tax and Canada’s broader tax policy.

A Conservative approach to procurement would likely include a review of all federal departments and agencies to find areas to optimize, a process which could be achieved several ways. Political commentators predict that Conservatives would approach purchasing like Alberta’s government has and use smaller vendors. They would like to see more suppliers entering the market and creating more competition. Procurement reforms could also be enacted, as the Conservatives have generally been critical of the contracting process for being too complex and lengthy, lacking transparency and favoring large incumbents. Overall, a Conservative approach to procurement would focus on democratization, cutting costs and reducing the number of big procurements. Enacting a government’s agenda is easier said than done, but should the Conservatives win, they will want to engage with suppliers who are in alignment with their goals.

Liberal Government

Now that Carney has been appointed party leader, the Liberal agenda is taking shape. The new Prime Minister is a career banker and climate activist with a globalist mindset. Carney is positioning himself as the candidate to strengthen Canada’s economy, citing his background with two central banks. He is a staunch supporter of green investment and committed to reaching NATO's military investment benchmark of 2% of GDP by the end of 2030. He kicked off his time in office by trying to distance himself from some of Trudeau’s controversial policies, like repealing a proposed hike to the capital gains tax.

Carney also repealed the consumer carbon tax but will keep the carbon pricing scheme for large industrial emitters. On the Conservative side, Poilievre has pledged to remove the carbon tax for both consumers and industry. Even with the changes to the carbon tax, Carney’s background in green investing suggests that his government would prioritize environmental sustainability in procurement, as well as other Environmental, Social and Governance (ESG) measures.

A Liberal government could see the continuation of policies designed to restore “generational fairness,” a core tenet of the last federal budget. It may also try to address some of its current critiques like escalating government expenditures and higher cost of living expenses.

As reported in our “2025 Canadian Government Market Outlook” report, accountability and transparency in government contracting is a key trend this year. To achieve those, the current Liberal government is making significant changes to how professional services contracts are acquired, a comprehensive review that could eventually extend to other sectors. Another Liberal government would likely move forward with these changes, impacting what types of opportunities are available and how they are sourced. For instance, more detailed information on pricing and past performance will now be required. A Conservative government would likely also support more accountability and transparency in purchasing but may elect to do their own review and interrupt the current process.

How Canada-U.S. Relations Factor into the Election

The biggest issues in this election will be tariffs and Canada’s relationship with the U.S. At the time of this blog’s publication, Canada and the U.S. had imposed 25% tariffs on select goods from the other country, plus an additional 25% U.S. levy on steel and aluminum products from Canada. Additional tariff and trade announcements are expected from both countries on April 2.

Previously, tariffs were paused on the condition that Canada bolster its border security. As a result, Canada appointed a federal “fentanyl czar,” sent 10,000 frontline personnel to the border and allocated $200 million to establish a “Canada-U.S. Joint Strike Force.” Trudeau also sped up the implementation of a previously announced $1.3-billion border security plan. Poilievre has said that a Conservative government would hire 2,000 additional Canada Border Services Agency (CBSA) agents and extend their operations along the border.

How this trade dispute is managed will have major implications for suppliers, who risk higher production costs and being barred from certain government contracts. In response to Trump’s tariffs, some Canadian provincial leaders announced they would cancel their contracts with American companies and instructed their governments to “buy Canadian”— directives which are now in varying degrees of implementation. Furthermore, the impact of a trade war on Canada-U.S. supply chains is enormous, forcing many companies to rethink how and where they do business.

Key Takeaways

As the election nears, suppliers should be flexible and ready to position themselves for doing business with either a Conservative or Liberal government. As Canada-U.S. relations continue to be redefined, suppliers should also take measures to prepare for a possible trade war. Canada is facing unprecedented political and economic challenges and keeping a pulse on current events and shifts in policy will be critical to being prepared for whatever comes next.