Donald Trump’s emphatic victory within the US presidential election has brought on jitters north of the border in Canada, an in depth ally with a buying and selling partnership value about $1.3tn a yr.
In his congratulatory message to the president-elect, Prime Minister Justin Trudeau reminded Washington that Canada and the US have “the world’s most successful partnership” and that they “are also each other’s largest trade partners and our economies are deeply intertwined”.
In the meantime Chrystia Freeland, the finance minister, advised reporters in Ottawa that whereas there have been a “lot of anxieties” after Trump’s victory, “Canada will be absolutely fine”.
Ottawa had first-hand expertise of Trump’s “America First” commerce coverage throughout his earlier administration. In 2017 the previous president insisted on renegotiating the two-decade previous North American Free Commerce Settlement, which he described as a “disaster” that, together with China, had hollowed out the US manufacturing sector.
Trump additionally accused Trudeau of being “two-faced” throughout tense 2019 talks on Nato defence spending, with Canada’s contributions to the alliance nonetheless under the minimal of two per cent of GDP.
Canadian defence spending is prone to stay a sticking level. Mélanie Joly, minister of overseas affairs, stated on Wednesday that Canada could be tripling its defence price range. “We want to strengthen the Nato alliance, and Canada will continue to contribute,” she stated.
However Trudeau advised a Nato summit in July that the two per cent goal wouldn’t be reached till 2032.
Agriculture is one other space that brought on issues between the 2 neighbours. Trump railed in opposition to Canadian protections on dairy merchandise throughout his presidency, tweeting in 2018: “Canada charges the US a 270% tariff on Dairy Products! . . . Not fair to our farmers!”
Canada’s Digital Companies Tax Act, which locations a 3 per cent tax on world expertise firms, largely primarily based within the US, may be an space of concern within the upcoming Trump administration.
Canadian officers are eager to minimize any doable friction, mentioning that the 2 nations together with Mexico signed the US-Mexico-Canada Settlement, which changed Nafta, throughout Trump’s final time period.
“Our trading relationship today is governed by the trade deal concluded by President Trump himself and his team. That’s really, really important,” Freedland stated this week.
She and different officers have additionally been assembly US counterparts all year long to bolster commerce continuity. Candace Laing, president of the Canadian Chamber of Commerce, on Wednesday issued a assertion mentioning that the 2 nations share “an impressive $3.6bn in daily trade” and “tariffs and trade barriers that will only raise prices and hurt consumers in both countries”.
Goldy Hyder, president of the Enterprise Council of Canada, stated Trump’s sturdy mandate gives Canada alternatives. “We can enhance energy security, drive economic growth, boost shared prosperity and establish ourselves as the global standard for innovation and economic co-operation,” he stated.
However there may be nervousness in Ottawa. Trump has threatened to impose duties of 10-20 per cent on imports from all buying and selling companions. With the USMCA settlement up for assessment in 2026, it may very well be topic to vary below his presidency.
Trudeau on Thursday re-established the cupboard committee on Canada-US relations to concentrate on “critical” bilateral points. After its first assembly on Friday, Freedland, its chair, stated the group would meet “often and early next week”, and added that Trump and his decide for commerce consultant, Robert Lighthizer, have described USMCA as a “model trade deal and I agree with them”.
“We know our trading relation is strong and mutually beneficial . . . We are the most important export market for the US by a long shot,” she stated.
If Trump have been to impose his proposed 10 per cent blanket tariffs, it will hit about one-tenth of US imports from Canada between 2026 and 2027, stated Tony Stillo, Canadian director of the Oxford Economics think-tank.
“A second Trump presidency will likely also lead to greater global uncertainty so it will be important to expect the unexpected, particularly when it comes to tariffs,” he warned.
Stillo added that if tariffs have been imposed, Canada would possible reply with proportional retaliatory and, in some circumstances, focused levies that will hit Republican state governors as a method to put stress on Trump.
Authorities officers are in the meantime eager to focus on areas wherein the US and Canada are co-operating, reminiscent of on China.
François-Philippe Champagne, minister of innovation, science and trade, stated Canada was now extra “strategically integrated” with the US on important minerals, the cross-border automotive trade and inexperienced power provide chains.
“Everyone [in Washington] is talking about security, that is the paramount topic. [Also] supply chain resiliency — they understand that we are their key strategic partner,” he stated.
This week Ottawa ordered Chinese language-owned social media firm TikTok to shut its Canadian workplace primarily based on “national security grounds” and “advice from partners”, Champagne added.
The Trump presidency is additionally excellent news for Canada’s oil and gasoline sector, which sends most of its merchandise to the US.
“Energy is the cornerstone of our trade relationship. That just got truer,” stated Heather Exner-Pirot, a coverage director on the Macdonald-Laurier Institute, an Ottawa-based think-tank.
After US President Joe Biden scrapped the $8bn Keystone XL pipeline in June 2021, sustaining an built-in North American power system and bidirectional power flows “is increasingly in focus”, stated a spokesperson for Enbridge, a Calgary-based multinational pipeline and power firm.
In the end, Canada’s relations with its extra highly effective neighbour would rely on Trump’s method to the rule of regulation, stated Errol Mendes, professor of regulation at Ottawa college.
“If it turns out to be a shift towards autocracy, Canada is in very deep trouble on trade, international security, migration and social conflict internally and externally,” he warned.
