The 2020 presidential race will be decided by voters in a dozen or so very competitive states. It just so happens that many of those battlegrounds like Michigan, Maine, Minnesota, Pennsylvania, Wisconsin, and New Hampshire, all heavily rely on imports from Canada. Both presidential candidates will frequently visit these swing-states in the next two months and host rallies with their supporters to promise tough action on trade issues in order to keep jobs in America and reduce the country’s dependence on foreign supply chains. Whether we like it or not, Canada will certainly be in Trump’s cross-hairs and even potentially Biden’s as both will want to appeal to voters subscribing to the America First populist movement.
What to expect from Trump?
Canada’s strategy this past year was to stay off Trump’s radar and let him focus on trade battles elsewhere (i.e. China). However, for the next two months, Canada likely will not be safe from the President’s bombast on so-called trade imbalances and unfairness. Canada’s manufacturingand natural resources sectors will need to pay close attention to what is being said by Trump while he campaigns south of the border. At this time, the steel sector in Canada is extremely vulnerable to potential new tariff threats – especially as Trump tries to win over Pennsylvania, where steel remains a crucial part of its economy. Expect him to say and do anything to convince his base that he is working hard for them. In fact, last time he campaigned in Pennsylvania, he took credit for reviving the steel industry thanks to the 25% tariffs he imposed on imported steel in March 2018.
Other Canadian sectors should also be on the lookout for surprise trade announcements by President Trump. For instance, the agricultural, softwood lumber, and fishingindustries will likely take a few hits during the campaign. Canada’s lobster fishing industryis already anxiously waiting to see what will happen to their exports if Trump decides to slap tariffs on its harvest. Make no mistake, it’s not by chance that the state of Maine is feeling the love from Trump recently. He’s desperately trying to win a key electoral college in Maine’s rural based second district and has promised tough action to revive their lobster industry, which will undoubtedly hurt our own harvesters.
That said, there might be a silver lining for some industries if Trump wins a second term, including the defence and security sector. Trump continues to take a hard stance on Canada for not contributing our fair share of defence spending on NATO missions. Expect him to reiterate this message during the election campaign and call for America’s allies to increase defence spending to at least 2% of GDP. The pressure from Trump’s administration could be good news for Canada’s defence and security companies that produce world-class goods, services, and technologies and rely on exports to bring in revenues.
What to expect from Biden?
If Joe Biden wins the presidential election, we can assume there will be a change in tone from the U.S. administration. Traditionally, newly elected presidents make Canada their first destination for official state visits. If Biden follows this tradition, it will give Canada an opportunity to be first out-the-gate to demand action on some of the unilateral tariffs that Trump has wielded, particularly for the aluminum sector.
But Canada should not expect the relationship with the U.S. to immediately go back to “normal” under a Biden administration. We must not forget that to win some of the key swing-states, he will need to show that he can be tough on trade and stand up for American workers. While his messaging may not be as obvious as Trump’s protectionist rants, he will undoubtedly focus on the importance of fair trade and bringing back supply chain manufacturing from Asia.
More troubling for Canada will be Biden’s stance on Canada’s oil and gas sector. If he wins, Biden has vowed to cancel the Keystone XL pipeline section that is to be built on U.S. soil. Biden’s policy director Stef Feldman recently said in a written statement sent to The Canadian Press that ‘’Stopping Keystone was the right decision then [under Obama] and it’s still the right decision now. In fact, it’s even more important today.’’
On the flip side, there will be lots of opportunity for Canada’s clean-tech sector if Biden is elected. He’s laid out a bold new vision under the Green New Deal framework to revitalize the U.S. energy sector and push America to become a clean energy superpower. Canada’s cleantech clusters have an enormous opportunity to export their knowledge, expertise and products to the U.S to help Biden achieve this vision. With Biden’s plan to get to a 100% clean energy economy and net-zero emissions no later than 2050, Canadian companies could have a real chance to penetrate a large and quickly growing market.
Mending the relationship post-election
No matter what the outcome on November 3, it’s safe to say that the relationship we once knew with the U.S. has evolved and may never be the same as it was pre-Trump. We can no longer solely rely on the U.S. market, so we will need to look at other potential partners around the world to expand our trade. More importantly, Canada must find ways to compete against emerging markets. History tells us that strong trading relationships are the foundation for wealth and prosperity, but this only works if trade agreements protect the interests of our businesses and workers here at home.
