Donald Trump’s landslide victory in the U.S. presidential election has sparked anxiety north of the border in Canada, a close ally with whom the United States has a trade partnership worth about $1.3 trillion a year.
In his congratulatory message to the president-elect, Prime Minister Justin Trudeau said Canada and the United States have “the most successful partnership in the world” and that “we are each other’s largest trading partners and our economies are deeply interconnected.” reminded Washington.
Meanwhile, Finance Minister Chrystia Freeland told reporters in Ottawa that while there was “a lot of anxiety” after Trump’s victory, “Canada is absolutely fine.”
Mr. Ottawa had first-hand experience with the “America First” trade policy of the former Trump administration. In 2017, the former president advocated renegotiating the 20-year-old North American Free Trade Agreement, which he called a “disaster” that along with China had hollowed out American manufacturing.
President Trump also accused Prime Minister Trudeau of being “two-faced” during tense negotiations over NATO defense spending in 2019, saying Canada’s contributions to the alliance were among the lowest in gross domestic product (GDP). Criticized that the figure was still below 2%.
Canada’s defense spending is likely to remain a sticking point. Foreign Affairs Minister Mélanie Joly said Wednesday that Canada will triple its defense budget. “We want to strengthen the NATO alliance, and Canada will continue to contribute,” she said.
However, Prime Minister Trudeau said at the North Atlantic Treaty Organization (NATO) summit in July that the 2% target would not be achieved until 2032.
Some content could not be loaded. Please check your internet connection or browser settings.
Agriculture is another area that has caused problems between neighbors. Trump slammed Canada’s dairy protections during his presidency, tweeting in 2018: “Canada imposes 270% tariff on dairy products on US!” . . It’s not fair to our farmers! ”
Canada’s Digital Services Tax Act, which imposes a 3% tax on global technology companies primarily based in the United States, could also be an area of concern for the incoming Trump administration.
Canadian officials have been keen to downplay the possibility of friction, pointing out that the two countries signed the U.S.-Mexico-Canada Agreement, which replaced NAFTA, with Mexico during President Trump’s last term.
“Our trade relationship today is governed by the trade agreements that President Trump himself and his team made. That’s really, really important,” Freeland said this week.
He and other officials have also met with U.S. officials throughout the year to strengthen trade continuity. Canadian Chamber of Commerce President Candace Raine issued a statement Wednesday, saying the two countries share “a staggering $3.6 billion in daily trade” and that “tariffs and trade barriers drive down prices in both countries.” It will only raise prices and harm consumers.” .
Goldie Heider, president of the Business Council of Canada, said President Trump’s strong mandate presents opportunities for Canada. “We can strengthen energy security, drive economic growth, foster shared prosperity and establish ourselves as the global standard for innovation and economic cooperation,” he said.
But there is a sense of tension in Ottawa. President Trump has threatened to impose tariffs of 10% to 20% on imports from all trading partners. The USMCA agreement is scheduled to be reviewed in 2026, and the agreement is subject to change under the president’s inauguration.
Prime Minister Trudeau on Thursday re-established the Cabinet Committee on Canada-U.S. Relations to focus on “critical” bilateral issues. After Friday’s first meeting, Freeland said the group would meet “frequently early next week,” and said President Trump and trade representative nominee Robert Lighthizer called the USMCA “a model trade agreement, and I believe that ” he added. I agree with them. ”
“We know that our trade relationship is strong and mutually beneficial… We are by far the most important export market for the United States,” she said.
Some content could not be loaded. Please check your internet connection or browser settings.
Tony Stilo, a Canadian director at the Oxford economic think tank, said President Trump’s proposed 10% tariff would hit about a tenth of U.S. imports from Canada in 2026-2027. He said he would receive the same.
“Mr. Trump’s second presidential inauguration is also likely to lead to increased global uncertainty, and it is important to plan for unexpected situations, especially when it comes to tariffs,” he warned.
Mr. Stilo said that if tariffs were imposed, Canada would likely respond with proportional retaliation and, in some cases, targeted taxes that would hit Republican governors as a way to put pressure on Mr. Trump. he added.
Meanwhile, government officials say they want to highlight areas where the U.S. and Canada are cooperating, including on China.
Francois-Philippe Champagne, Minister of Innovation, Science and Industry, said Canada is now more “strategically integrated” with the United States regarding critical minerals, the cross-border automotive industry and green energy supply chains. Ta.
“Everyone (in Washington) is talking about security, and that’s the top topic. (Also) supply chain resiliency – they understand that we are an important strategic partner.” he said.
Ottawa this week ordered Chinese-owned social media company TikTok to close its Canadian office based on “national security reasons” and “advice from our partners,” Champagne added.
Some content could not be loaded. Please check your internet connection or browser settings.
President Trump’s arrival is also good news for Canada’s oil and gas sector, which sends most of its products to the United States.
“Energy is the foundation of our trade relationship. That’s increasingly true,” said Heather Exner-Pilot, policy director at the Macdonald-Laurier Institute, an Ottawa-based think tank.
Recommended
Maintaining an integrated North American energy system and bidirectional energy flows is receiving “increasing attention” after US President Joe Biden decommissioned the $8 billion Keystone XL pipeline in June 2021. said a spokesperson for Calgary-based multinational pipeline and energy company Enbridge.
Ultimately, Canada’s relationship with its stronger neighbor will depend on President Trump’s approach to the rule of law, said Errol Mendes, a law professor at the University of Ottawa.
“If it turns out to be a transition toward authoritarianism, Canada faces very serious challenges in trade, international security, immigration, and internal and external social conflicts,” he warned.
