The noise and emotion surrounding Canada’s recent federal election were deafening. But wealth advisors must remind clients to think long-term.
With geopolitical uncertainty fuelled by U.S. President Donald Trump’s increasingly unpredictable policy moves—and Canada experiencing tension from a traditionally friendly neighbour—it may feel like an unsettled time in the Great White North. Yet, as the old saying goes: the more things change, the more they stay the same.
Trailing badly in the polls prior to Trump’s inflammatory “51st state” comments and the resignation of former prime minister Justin Trudeau, the Liberal Party managed a surprising comeback—securing a fourth consecutive term. The elevation of former central banking heavyweight Mark Carney as party leader proved crucial, with his reputation positioning him as a credible counterweight to Trump’s global influence.
Regardless of one’s political leanings, this has been an emotionally charged period—and emotion rarely pairs well with sound investing. The key takeaway: the Liberals’ re-election points to continuity in Canada’s political direction. While stability often provides reassurance, it also prompts key questions about policy evolution in areas like taxation, climate strategy, housing, and regulatory oversight.
Below, we break down what this outcome means across several critical areas.
Implications for Business Owners
Stability is generally welcomed by markets, and for many business owners, there’s comfort in knowing what to expect. Continued support for innovation, clean technology, and small business appears likely, particularly in light of earlier policy signals. In April, Carney announced several pro-business initiatives, including the deferral of corporate tax and GST/HST remittances from April 2 to June 30, 2025—providing up to $40 billion in liquidity.
Infrastructure investment and targeted stimulus are also expected to continue, with positive implications for sectors such as construction, cleantech, and public transit. However, business owners may also need to prepare for tighter regulatory oversight, particularly in energy, fintech, and healthcare. Labour policy shifts—such as minimum wage increases and expanded employee protections—could translate into higher operational costs.
Although Carney has pledged to accelerate a “middle-class tax cut,” corporate tax reductions appear unlikely. In fact, tighter scrutiny of deductions and credits could impact some companies’ tax positions.
Advisor insight: Encourage entrepreneurial clients to focus on sectors aligned with Liberal policy priorities—sustainability, tech, and inclusive employment. Reinforce the importance of proactive compliance and forward-looking tax planning.
Investor Sentiment and Market Outlook
While the final election result wasn’t a foregone conclusion, markets generally prefer predictability—and this return to the familiar may be seen as a stabilizing force. Early market sentiment appears cautiously optimistic, particularly in relation to the preservation of central bank independence and consistent fiscal policy.
Nevertheless, volatility may persist in sectors affected by ESG regulations—such as oil and gas—and in those influenced by housing affordability policies, including real estate investment trusts (REITs), construction equities, and mortgage lenders.
Foreign investors may view Canada as a relatively stable environment, backed by robust institutions. Yet concerns about fiscal discipline, budget deficits, and growing public debt remain front of mind.
Advisor insight: Recommend sector diversification, with close attention to shifts in energy and housing policy. Stay alert to inflation-sensitive investments as the government navigates stimulus versus tightening pressures.
Economic Outlook
The Conservatives have argued that “Carney is just like Justin.” That remains to be seen—but there are signs of distinction. While Carney aligns with broad Liberal values, he has asserted he is a “different person” with “a different approach to governing.”
So far, he’s shown centrist instincts—walking back the carbon tax and shelving proposed capital gains tax increases. The key question is whether Carney will exercise greater caution with public spending, something Trudeau was frequently criticized for.
Expansionary fiscal policy is expected to continue in the near term, supporting employment and social investments. Carney’s longstanding commitment to climate risk mitigation suggests green economic transformation will remain a priority—benefitting clean energy, EVs, and green infrastructure.
At the same time, mounting public debt may constrain future flexibility. Watch for potential tax changes targeting dividends or high-income earners, which could influence private investment strategies.
Advisor insight: Prepare clients for macro trends like green-focused investing, enhanced tax enforcement, and a more interventionist policy approach. Balance growth opportunities with risk management.
Final Thoughts
Ultimately, how one views the Liberals’ re-election depends on political perspective. But from an investment standpoint, it largely signals a continuation—with some meaningful shifts that advisors and clients must navigate.
In times of uncertainty, strategic planning trumps reactive speculation. That’s where professional guidance becomes invaluable. Advisors who stay ahead of policy shifts and maintain client focus on long-term goals—like retirement—can turn political change into opportunity.
