How the outcome of the U.S. election could impact trade with Canada
Trade has been one of the biggest focuses of the Canada-United States relationship over the last four years, as the renegotiation and ratification of the new North American Free Trade Agreement played out. The election of U.S. President Donald Trump prompted that focus, as he initiated the talks to rework the deal, and then kept trade in the headlines as he issued tariffs and levelled personal attacks during the talks.
Then, in the midst of the ongoing COVID-19 pandemic the U.S. president once again levied tariffs on Canadian aluminum, only to be dropped hours before Canada was set to retaliate with $3.6 billion in counter tariffs.
So long as the Canada-U.S. border remains closed鈥攅ven with the exception of allowing commerce and trade鈥 on account of the ongoing pandemic, the business and economic relationship between the two countries is likely going to remain strained, as there remain outstanding and ongoing trade irritants and as more U.S. lawmakers push to loosen those restrictions.
During their time in office, both U.S. President Donald Trump and Democratic candidate and former Vice President Joe Biden have had things to say about big trade deals that involve Canada, including the original NAFTA deal. And they differ greatly. So much so, that Trump鈥檚 using 叠颈诲别苍鈥檚 past pro-NAFTA stance as an attack line during this campaign.
So, what can Canadians expect should Trump be reelected, or if the U.S. opts to elect Biden? CTV News.ca dug into what both candidates鈥 trade policies indicate, and spoke with trade experts about how Canada-U.S. trading relations could be shifting in the months ahead.
WHERE TRUMP STANDS
Trump鈥檚 record on trade as it relates to Canada has been one of tariffs, tense language, and threats of stronger action that to this day is keeping swaths of Canadian industry鈥攊ncluding carmakers and farmers鈥攐n their toes.
After taking office, Trump declared in 2017 intent to begin NAFTA renegotiation talks with Canada and Mexico, a campaign promise from his 2016 presidential run. Three years later the revised trilateral trade agreement between Canada, the United States, and Mexico has been ratified, but getting there did not come without bumps in the road.
And as the latest levelling of tariffs on raw Canadian aluminum imports indicates, even though the deal is done, it doesn鈥檛 mean Canada is out of Trump鈥檚 crosshairs.
In unveiling the latest round of aluminum tariffs, Trump accused Canada of 鈥渢aking advantage鈥 of the United States. He claimed that the American aluminum business has been 鈥渄ecimated鈥 by Canada, calling it 鈥渧ery unfair鈥 and accusing Canadian producers of flooding the U.S. with exports, which producers on both sides of the border disputed.
In response, Deputy Prime Minister and lead on Canada-U.S. relations Chrystia Freeland called the Trump administration 鈥渢he most protectionist administration in U.S. history,鈥 and cheered that common sense had prevailed when the administration walked away from the tariffs a month later.
However, Canada鈥檚 not out of the woods completely. In announcing the withdrawal of the tariffs, U.S. Trade Representative Robert Lighthizer鈥檚 office said they stand ready to re-impose the tariffs should they see what they consider a 鈥渟urge鈥 in imports, spelling out expectations for the cap on shipments of non-alloyed aluminum from Canada between September and December.
Freeland rejected suggestions that Canada has agreed to U.S.-imposed quotas, saying this is not a negotiated deal between the two countries, cautioning that should the U.S. decide to take up the tariff fight again, Canada will be ready to hit back.
Further, while the new NAFTA is good for 16 years, it includes a chapter that Canadian opposition parties have called a 鈥淭rump veto,鈥 which has thrown into question how this portion of the agreement could impact future trade deals Canada makes.
Chapter 32 of the new NAFTA states that the signatories are required to give notice to the other countries in the deal, if they intend to negotiate a free trade agreement with a 鈥渘on-market鈥 country that is not already in a free trade agreement with one of the three countries.
For the purpose of this deal, a 鈥渘on-market鈥 country is one that any of the parties to the deal have declared to be such and if one of the three countries wants to enter into a deal with a 鈥渘on-market鈥 country, the wording allows for one of the other countries to trigger the six-month pullout mechanism of the new NAFTA. So, should Canada pursue a new trade deal with a country that would fit this category, it could put the USMCA as the Americans now call it, in rocky waters.
A Trump continuation would mean a continuation of the protectionism, which is tailored specifically to key political audiences in the United States, said Adam Taylor, president of Export Action Global and former Advisor to a senior adviser to past federal trade minister Ed Fast.
Citing battleground states like Pennsylvania, Ohio, Wisconsin and Michigan, Taylor said the anti-free-trade audience is there and feeling like globalization鈥檚 hurt them, and Trump鈥檚 set to keep playing to those sentiments, as he did during the NAFTA talks with the dairy sector.
鈥淭his whole 鈥楢merica first鈥 policy, you know, this idea that 鈥楥anada we鈥檙e your best friend, we have such integrated, highly connected supply chains, and therefore, we have this special status鈥 in the United States has been completely destroyed,鈥 Taylor said.
鈥淲hat Trump did was basically鈥 and what he's continuing to do鈥 is create a managed trade environment where we're not talking about free trade anymore. We're talking about managed, very particular managed trade,鈥 said Earnscliffe Strategy Group's Sarah Goldfeder, who has previously worked as a special assistant to two former U.S. ambassadors to Canada. She gave the example of the dairy provisions in the new NAFTA as an example.
鈥淐anada has to basically not only disclose to the United States how much dairy imports are coming into the United States from Canada, but how much is exporting into everyplace else in the world?鈥 Goldfeder said.
WHERE BIDEN STANDS
Back in 1993 when he was a U.S. Senator, Biden voted in favor of the initial NAFTA, and gradually supported the idea that it needed updating. Also, as vice president he backed the Trans-Pacific Partnership, which Canada is party to.
When he鈥檚 been asked in the past whether he was a free trader, he鈥檚 stated that he is 鈥渁 fair trader.鈥
叠颈诲别苍鈥檚 contains an entire section on his planned approach to trade, and it鈥檚 centred around ensuring that 鈥渢he future is made in all of America.鈥
The policy plank pledges to focus on boosting American talent and innovation and maintaining manufacturing jobs in that country, giving small and medium-sized domestic companies the hand they need in competing internationally.
His trade plans also include a promise to bring back critical supply chains to not be dependent on other nations in a crisis; tighten domestic content rules; and 鈥渨ork with allies to modernize international trade rules and associated domestic regulations regarding government procurement to make sure that the U.S. and allies can use their own taxpayer dollars to spur investment in their own countries.鈥
Trump is going after Biden for his vote in support of the original agreement, saying he then spent 鈥渄ecades defending it鈥 while Americans lost their jobs. In exchange, Biden has classified Trump鈥檚 trade policy as 鈥渢rickle-down economics鈥 that hasn鈥檛 helped the average worker.
Should Biden be elected as the next president of the United States, Goldfeder said that Biden would be more likely to lean into the approach the Canadians have tried to take, of making trade deals do more than facilitate the movement of goods.
鈥淵ou see trade policy being asked to do things that aren't necessarily trade, like ensure that there's a fair playing field for workers, ensure there's environmental regulation that protects the planet, and ensure that there's some sort of level playing field and clear rules for the retention of ideas and intellectual property. And so those things aren鈥檛 really trade,鈥 said Goldfeder.
鈥淎 Biden administration would focus more on the things that are kind of outside trade policy that we ask trade to do,鈥 she said, adding that he鈥檇 likely look for a more nuanced trade conversation with a less punitive approach. Goldfeder also stated that should there be any outstanding Trump tariffs by January, Biden would eliminate them.
Taylor also suggested that under Biden the U.S. could try to re-enter the Trans Pacific Partnership, though he too will likely maintain a degree of protectionism.
鈥淚ncreasingly the anti-trade rhetoric that exists in the United States is going to increasingly become almost a bipartisan issue鈥 everybody's going to be preoccupied with appeasing an American worker,鈥 Taylor said.
THE EXPERT TAKEAWAY
Overall, the experts said that while the style and approach of the two men will likely differ, there isn鈥檛 a great deal of daylight between their focuses on protecting American jobs.
鈥淭he difference will be that Biden will say, rather than attack our allies, rather than take down the WTO, 鈥榣et's find paths forward on negotiating this, so that in the end it's in the United States鈥 best interest,鈥欌 Goldfeder said.
A Trump defeat also wouldn鈥檛 necessarily spell the end of trade action against Canadian goods either, Goldfeder said, though it would be done on a smaller-scale and not through using section 232 as justification as Trump has.
鈥淭here's still going to be trade actions, but it just won't be that kind of categorical blunt instrument,鈥 she said, citing the evergreen Canada-U.S. trade spats on issues like softwood lumber, as sources of tension that will remain regardless of who is in the White House.
鈥淭he problem is sometimes we think, 鈥榦h, we'll be better off if Trump鈥檚 gone, because at least we鈥檒l have more of a rational, sort of stable, predictable person in the White House.鈥 But at the end of the day, a lot of those issues I think will persist,鈥 Taylor said.
