Donald Trump’s emphatic victory within the US presidential election has precipitated jitters north of the border in Canada, a detailed ally with a buying and selling partnership price 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, instructed 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 beneath the minimal of two per cent of GDP.
Canadian defence spending is more likely to stay a sticking level. Mélanie Joly, minister of overseas affairs, mentioned on Wednesday that Canada could be tripling its defence funds. “We want to strengthen the Nato alliance, and Canada will continue to contribute,” she mentioned.
However Trudeau instructed a Nato summit in July that the two per cent goal wouldn’t be reached till 2032.
Agriculture is one other space that precipitated issues between the 2 neighbours. Trump railed towards 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 based mostly within the US, may be an space of concern within the upcoming Trump administration.
Canadian officers are eager to minimize any doable friction, stating that the 2 international locations 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 mentioned 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 stating that the 2 international locations 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, mentioned Trump’s sturdy mandate affords 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 mentioned.
However there’s 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 evaluate in 2026, it may very well be topic to vary beneath 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, mentioned the group would meet “often and early next week”, and added that Trump and his choose 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 mentioned.
If Trump had been to impose his proposed 10 per cent blanket tariffs, it could hit about one-tenth of US imports from Canada between 2026 and 2027, mentioned 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 had been imposed, Canada would probably reply with proportional retaliatory and, in some instances, focused levies that will hit Republican state governors as a technique to put stress on Trump.
Authorities officers are in the meantime eager to spotlight areas by which the US and Canada are co-operating, akin to on China.
François-Philippe Champagne, minister of innovation, science and business, mentioned Canada was now extra “strategically integrated” with the US on essential minerals, the cross-border automotive business 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 mentioned.
This week Ottawa ordered Chinese language-owned social media firm TikTok to shut its Canadian workplace based mostly on “national security grounds” and “advice from partners”, Champagne added.
The Trump presidency is additionally excellent news for Canada’s oil and fuel sector, which sends most of its merchandise to the US.
“Energy is the cornerstone of our trade relationship. That just got truer,” mentioned 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”, mentioned 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 upon Trump’s strategy to the rule of legislation, mentioned Errol Mendes, professor of legislation 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.
