Photo: Quebec voters eliminated the governing CAQ after Christine Fréchette made Donald Trump a central campaign issue, while the sovereigntist Parti Québécois won government. The result comes as Canada continues to face long-running problems with business investment and regulatory costs. Source: X

Canada’s weak business investment and regulatory burden were problems long before Donald Trump’s trade threats. Quebec’s Oct. 5 election has now added another political question: whether making Trump the central opponent is enough when voters are focused on problems closer to home.

Quebec Premier Christine Fréchette entered the campaign asking voters to return her Coalition Avenir Québec government to manage economic uncertainty created by Trump’s tariffs and trade threats. She described Trump as her “real opponent.”

The strategy ended in a historic defeat.

The CAQ, which won 90 seats in 2022 and had governed Quebec since 2018, failed to win a single seat. Fréchette also lost her race in Trois-Rivières.

In its place, Quebec elected the sovereigntist Parti Québécois. Paul St-Pierre Plamondon’s PQ won 59 of 127 seats, five short of a majority, and will form a minority government. St-Pierre Plamondon has maintained his commitment to another referendum on Quebec independence, although he has said it would take place after Trump leaves office.

The election was not itself a referendum on separation. However, the result is significant because Quebec has elected a government whose longstanding objective is independence and whose leader intends to pursue another referendum.

It also raises a broader question for Canadian governments. External threats can dominate political messaging, but voters can still judge governments on economic conditions, affordability, public services and their record in office.

For Canada, one of those domestic problems is weak business investment.

Research from the C.D. Howe Institute shows total non-residential capital per available worker peaked in late 2015. By the third quarter of 2025, it was nine per cent below that level.

Machinery and equipment per available worker were down 20 per cent, non-residential buildings were down 12 per cent, engineering construction was down six per cent and intellectual property products were down four per cent.

Governments influence taxation, competition, project approvals and regulation.

The Canadian Federation of Independent Business estimated Canadian businesses spent $51.5 billion complying with federal, provincial and municipal regulations in 2024. It classified about $18 billion as red tape that could be reduced without compromising the public interest. The smallest businesses faced regulatory costs per employee more than five times those of larger businesses.

Environmental assessments also became a source of federal-provincial conflict. Parliament enacted the Impact Assessment Act in 2019. In 2023, the Supreme Court of Canada concluded much of the designated-project assessment scheme exceeded federal constitutional authority. Ottawa amended the law in 2024.

For investors, lengthy approvals and changing requirements can mean spending heavily before knowing whether a project will proceed.

Trump did not create Canada’s long-running investment problem, regulatory costs or internal economic barriers.

Quebec’s election adds another reminder that political attention directed at Washington does not make domestic problems disappear. Fréchette entered the campaign identifying Trump as her principal opponent. Five weeks later, her party held no seats and Quebec had elected a sovereigntist government.