Democratic control of U.S. Senate could be good news for Canada, expert says
TORONTO -- Democrats took back control of the U.S. Senate on Tuesday after winning two hard-fought runoff elections in Georgia, granting president-elect Joe Biden far greater leeway to turn his campaign promises into reality.
The victories by Jon Ossoff and Raphael Warnock give Democrats and Republicans each 50 seats in the U.S. Senate. That means any ties on the Senate floor will be settled by vice-president-elect Kamala Harris.
Biden and Harris campaigned on a platform that experts say could have wide-ranging impacts on Canadian industries and political relations. Now that Democrats have won full control of Congress, here’s a look at how the new political landscape could have ripple-effects north of the border.
DEMAND FOR CANADIAN EXPORTS
Senate control means Democrats will have an easier time passing additional stimulus money they’ve been pushing for. Speaking ahead of the Georgia runoffs, Biden said that $2,000 stimulus cheques would be sent out “immediately” should Democrats win both races.
More stimulus money could buoy the American economy and would “certainly benefit” Canadian exporters that rely on U.S. markets, according to Wayne Petrozzi, a professor emeritus from Ryerson University.
“That stimulus will increase the appetites of Americans for imports and keep American manufacturing facilities running that need raw materials. So I think that certainly impacts Canada in a positive way,” Petrozzi told CTVNews.ca on Wednesday.
Biden has also promised more funding for cities struggling with falling tax revenue amid the pandemic. A financial lift could be good news for Canadian manufacturers that make light rail, buses or other transit options.
“I think generally the stimulus, in terms of payments to individuals … will just have the effect of generally putting a floor under the American economy and increasing confidence amongst manufacturers to bring back staff in some cases or to increase production. And the demand for Canadian raw materials is going to be there.”
But Petrozzi also pointed out that the filibuster — a procedural way of delaying a vote on the Senate floor — could still be a serious procedural headache for Democrats. Because of this, he expects Biden to use plenty of executive orders, not unlike Trump did, to carry out his agenda.
HARD PIVOT ON CLIMATE CHANGE
Biden has promised to put the U.S. back into the Paris climate change pact and roll out a suite of domestic policies that cut back on emissions, a move that experts have previously said would be good news for Canadian industries currently competing against American companies with fewer environmental regulations.
Biden has also issued a US$1.7-trillion “Clean Energy Revolution” plan that includes investing heavily in green technology and aggressively pursuing making the U.S. power sector emissions-free by 2035. The goal is to position the U.S. as a leader in green tech and create thousands of new jobs.
Getting that high-budget plan through a Republican-controlled Senate would’ve been an uphill battle, but Democrats may now face fewer roadblocks in passing such legislation.
If the Biden administration makes good on those big-budget green promises, they could spur greater competition in Canada, according to Ryan Katz-Rosene, an associate professor at the University of Ottawa who researches environmental policy, in an earlier interview with CTVNews.ca. In particular, green hydrogen, a clean but costly alternative to fossil fuels, could see some healthy market competition.
“If the U.S. is pouring trillions of dollars into green tech, that changes the situation,” he said. "All of a sudden, Canadian producers of green hydrogen … they start saying, ‘Now we need to ramp things up.’”
TAXING BIG TECH
Biden has made clear that he wants to increase the overall corporate tax rate and make sure that big tech companies, such as Amazon and Netflix, pay their fair share.
“Let me be clear: Hardworking Americans should not be paying more in federal income taxes than Amazon or Netflix,” Biden tweeted four days before the election.
In Australia, the government has taken steps to force Facebook and Alphabet, the parent company of Google, to share advertising revenue with local media firms. The United Kingdom has passed a digital services tax in hopes of getting companies such as Amazon, Google and Facebook to pay higher domestic taxes.
The Canadian government has announced its own plans to require multinational companies like Netflix and Amazon to collect GST or HST on digital products and services in 2021.
If the Biden administration cracks down on big tech companies, it could inspire Canada to go even further with its own plans, Petrozzi said.
“The fact that the incoming administration is likely moving in a similar direction can’t hurt, it can only help us,” he said.
FIGHTING COVID-19, REOPENING BORDER
Biden has vowed to aggressively clamp down on the spread of COVID-19 in the U.S. by signing a mask mandate on his first day in office and by vaccinating 100 million Americans in his first 100 days in office.
Trump has not gone as far in pushing for universal masking and has, at times, encouraged anti-mask protesters who defied their state’s lockdown measures.
With Democrats controlling Congress, they could push through even tougher measures designed to mitigate the outbreak, Petrozzi said.
“I think the renewed and increased emphasis on coming to terms with and conquering the current pandemic in the United States will have very significant economic benefits,” he said.
He points to industries such as cross-border tourism or Toronto’s convention centres, which have greatly suffered due to the border shutdown. The sooner the U.S. flattens the curve and follows through on widespread vaccinations, the sooner life can return to normal, Petrozzi said.
“There is tremendous pent-up demand on the American side for travel. Canada has always been a favourite economic destination. Our government with the current Trump administration was never going to open those borders. You’d have to be out of your mind to open Windsor given what was happening in Michigan.”