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—even with the exception of allowing commerce and trade— 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’s using Biden’s 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’ 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’s 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—including carmakers and farmers—on 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’t mean Canada is out of Trump’s crosshairs.
In unveiling the latest round of aluminum tariffs, Trump accused Canada of “taking advantage” of the United States. He claimed that the American aluminum business has been “decimated” by Canada, calling it “very unfair” 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 “the most protectionist administration in U.S. history,” and cheered that common sense had prevailed when the administration walked away from the tariffs a month later.
However, Canada’s not out of the woods completely. In announcing the withdrawal of the tariffs, U.S. Trade Representative Robert Lighthizer’s office said they stand ready to re-impose the tariffs should they see what they consider a “surge” 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 “Trump veto,” 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 “non-market” country that is not already in a free trade agreement with one of the three countries.
For the purpose of this deal, a “non-market” 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 “non-market” 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’s hurt them, and Trump’s set to keep playing to those sentiments, as he did during the NAFTA talks with the dairy sector.
“This whole ‘America first’ policy, you know, this idea that ‘Canada we’re your best friend, we have such integrated, highly connected supply chains, and therefore, we have this special status’ in the United States has been completely destroyed,” Taylor said.
“What Trump did was basically— and what he's continuing to do— is create a managed trade environment where we're not talking about free trade anymore. We're talking about managed, very particular managed trade,” 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.
“Canada 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?” 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’s been asked in the past whether he was a free trader, he’s stated that he is “a fair trader.”
Biden’s campaign platform contains an entire section on his planned approach to trade, and it’s centred around ensuring that “the future is made in all of America.”
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 “work 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.”
Trump is going after Biden for his vote in support of the original agreement, saying he then spent “decades defending it” while Americans lost their jobs. In exchange, Biden has classified Trump’s trade policy as “trickle-down economics” that hasn’t 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.
“You 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’t really trade,” said Goldfeder.
“A Biden administration would focus more on the things that are kind of outside trade policy that we ask trade to do,” she said, adding that he’d 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.
“Increasingly the anti-trade rhetoric that exists in the United States is going to increasingly become almost a bipartisan issue… everybody's going to be preoccupied with appeasing an American worker,” Taylor said.
THE EXPERT TAKEAWAY
Overall, the experts said that while the style and approach of the two men will likely differ, there isn’t a great deal of daylight between their focuses on protecting American jobs.
“The difference will be that Biden will say, rather than attack our allies, rather than take down the WTO, ‘let's find paths forward on negotiating this, so that in the end it's in the United States’ best interest,’” Goldfeder said.
A Trump defeat also wouldn’t 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.
“There's still going to be trade actions, but it just won't be that kind of categorical blunt instrument,” 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.
“The problem is sometimes we think, ‘oh, we'll be better off if Trump’s gone, because at least we’ll have more of a rational, sort of stable, predictable person in the White House.’ But at the end of the day, a lot of those issues I think will persist,” Taylor said.