Competitiveness, intensity and passion define election seasons. The heat was on higher than ever in the 2024 US presidential election.
Donald Trump’s win has sparked controversy and celebrations alike, with many pointing to his platform’s robust economic promises.
Meanwhile, others highlight significant concerns around Trump’s stance on human rights issues and his criminal record.
How voters chose
The economy was the top priority of voters in the election. Inflation, debt, taxes, and the deficit are only some of America’s ongoing problems.
Trump asserts that he will recover the American economy through tax cuts, reduced government regulations, tariffs on imports and a mass deportation of immigrants.
The extent to which his claims will become a reality is heavily debated.
Therefore, economists and political experts are weighing in on what his plans could mean for Canada. We have compiled a summary below.
This article specifically centers on Trump’s trade and tariff policies in relation to Canada.
Trading partners
Nearly US$2.7B in goods is traded between US and Canada every day. We are each other’s closest international trading partners.
In 2022, US goods and services trade with Canada reached approximately US$908.9 billion. Exports were $427.7 billion whereas imports were $481.2 billion
Trump promises to place 10-20% tariffs on imported items. In particular, goods from China could be taxed up to 60% and vehicles from Mexico could be taxed up to 200% (Reuters).
According to Trump, this will nurture the US economy, secure jobs and boost tax revenue. In his words to American audiences, these tariffs are “not going to be a cost to you, it’s a cost to another country” (Reuters).
Economists largely agree this statement is misleading to US consumers but the latter holds true.
Bank of Montreal chief economist Douglas Porter says Canada could benefit from stronger U.S. growth. However, Canada’s economy may also be among the hardest hit by Trump’s trade practices.
It could worsen Canada’s slowed productivity, stunt capital flows, and decrease domestic investment.
Economic Impact
Ian Lee is an Associate professor at the Sprott School of Business at Carleton University. He told CTV News: “The outcome is going to be overwhelmingly negative, and I say that analytically and empirically.”
“It is going to reveal itself through the dollar,” he said. “We not only export one-third of our GDP, we import one-third of our GDP. We import huge amounts.”
He added, “When that dollar tanks, as I am predicting it will, that is going to drive up the cost of food we import along with John Deere tractors, computers, et cetera.”
Prior to the election, Desjardins economists explained that a Republican sweep could cause a 1.7% drop in Canada’s real GDP by the end of 2028.
They also expressed that Trump’s second term could result in a lower global and US GDP, which, combined with larger tariffs on US imports, would reduce demand for Canadian non‑energy exports (Financial Post).
Ultimately, this could trigger inflationary effects, making the cost of living even higher in Canada and dipping corporate profits.
Opportunities ahead
In contrast, many see Canadian trade and energy sectors flourishing during Trump’s presidency.
U.S.-based policy advisor John Dickerman favours finding opportunities to unite the US and Canada in 2025.
“(Trade and the energy sector) are areas where friction exists between the United States and Canada, regardless of who’s in the White House,” he said. “But a way forward on negotiating opportunities is certainly possible” (CTV News).
In addition, he said “We need to wait and see exactly what the economic and trade team looks like. Will holdovers from the previous Trump administration fill specific roles?
I suspect the answer will be yes in some areas and no in others, and that will give us a very keen understanding of exactly what strategy we need to employ going forward.”
A potential oil boom
Some expect Canada’s energy sector will either avoid or endure the higher tariffs. However, if the US ramps up oil production as anticipated, the cost of oil will go down (Financial Post).
Therefore, Canadian oil companies will be impacted. For those working in the sector, household incomes will likely lower. Canadian producers would likely reduce the household incomes of those working in the sector.
Despite this, the opposite effect is possible. Diane Frances with the Financial Post writes that Trump’s prioritization of energy will boost the Canadian economy.
According to former U.S. Commerce Secretary Wilbur Ross, Trump will “carve out exemptions” for Canadian oil and gas. Not doing so would be detrimental to Canada’s cost of living and negatively affect Americans.
Frances explains grace will be given because Canada is the US’ largest energy supplier. Decades of cross-ownership and building mutual supply chains have interlocked each country’s resource sectors.
This is also true for the automotive industry. She asserts that “these binational oil and auto partnerships are the cornerstone of both economies” and that Trump will likely facilitate the construction of new oil pipelines between the US and Canada.
Empty threats
CIBC chief economist Avery Shenfeld believes some of Trump’s campaign points on trade and tariffs may never become a reality, citing events of his first term.
Back then, Trump threatened to end NAFTA but that translated into a revised trade pact. Also, tariffs placed on Canadian steel and aluminum were removed one year later.
Scott Bessent, one of Trump’s key economic advisors, called Trump’s tariffs “maximalist”. He said they would likely be negotiated down during discussions with trading partners.
Trudeau talks
Time will tell how Canada will be affected in the near and far future as Trump transitions into the White House.
Canadian Prime Minister Justin Trudeau, another controversial political figure, appears optimistic about working with Trump.
He said Canada and the U.S. worked together as “friends and partners” during Trump’s first term “and we’re going to do that again” (CTV News).
Trudeau added that Canada handled Trump’s previous trade threats before and will do so again.
He intends to “address unfair trading practices in the global economy” alongside Trump. The exact meaning of that and how it will manifest is yet to be determined.
Moving forward
Canadians have many mixed feelings about the direction of the Canadian economy and political landscape as well — especially with the next federal election on October 20th, 2025.
In the realm of politics, the one thing we can predict is that Trump’s forte will continue to be unpredictability.
What are your thoughts? How do you think Trump’s presidency will impact Canada?
Click here for more about this topic and here for CBC’s take on the benefits of Trump’s approach to trade.
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