Canada’s Outlook Following Trump’s Election Victory

The United States and Canada share an exceptionally close relationship, marked by the world’s longest land border and a trade volume exceeding a trillion dollars. Canadian Prime Minister Justin Trudeau promptly extended his congratulations to President-elect Donald Trump on his electoral success. Despite this, their past interactions have been challenging, and future obstacles are anticipated. This analysis explores the potential ramifications of Trump’s victory for Canada, America’s northern neighbor. On Wednesday morning, Canadian political figures expressed cautious approval regarding Trump’s win. Trudeau personally congratulated “Donald” on what he termed a decisive victory, indicating his readiness to collaborate. He remarked, “The world is actually more difficult and more complicated than it was four years ago and I know there’s lots of work for us to do.” Trump and Trudeau have previously engaged as counterparts, notably collaborating with Mexico to successfully renegotiate the USMCA, the North American trade agreement. However, their relationship has also seen tense periods; Trump has previously labeled Trudeau a “far-left lunatic” and “two-faced,” while Trudeau appeared to mock Trump during a 2019 meeting of Nato leaders. Furthermore, Canada could potentially see a change in its leadership, as Trudeau’s Liberal Party is currently performing poorly in polls, raising the prospect of a snap election. This situation could complicate efforts to establish a renewed, robust relationship with the incoming Trump administration, at least in the near term, according to Louise Blais, a former Canadian diplomat. She stated, “It’s not an ideal situation to find ourselves politically at the moment.” Deputy Prime Minister Chrystia Freeland acknowledged on Wednesday that she understood “a lot of Canadians are feeling unsettled today.” Nevertheless, she highlighted the “enduring relationships – I would even say even friendships” that Canadian officials maintain with their American counterparts. Freeland affirmed, “Canada will be prosperous, Canadians will be safe and our sovereign identity will be secure as we work with this newly elected administration.” Canada and the US possess a deeply interconnected economic and commercial partnership. Canada directs 75% of its exports of goods and services to the US, and Trump’s proposed across-the-board 10% tariffs could significantly impact the Canadian economy. Trevor Tombe, a Canadian economist at the University of Calgary, expressed concern, stating, “I do worry about what an across-the-board tariff would actually look like.” He added, “This is where details are really important – and we unfortunately don’t have details for what these tariffs would actually look like.” In July, the Business Development Bank of Canada projected that such a measure could reduce Canada’s GDP by $7 billion in its first year of implementation, primarily due to a decline in business investment, and also depress the Canadian dollar. Mr. Tombe cautioned that Canada’s economic growth is already decelerating, leaving it ill-equipped to absorb economic shocks. The future of the USMCA also remains uncertain. The three signatory nations are scheduled to decide in 2026 whether to extend the agreement for an additional 16 years. John Dickerman, a US-based policy adviser for the Business Council of Canada, suggested that Canada could leverage its experience from renegotiating the trilateral deal six years prior to address this challenge. He advised Canada to maintain consistent communication on the matter, “reminding Americans that this deal has been good for them.” Analysts suggest that Canada might need to make concessions as it navigates this evolving relationship. One such area involves addressing policies already viewed unfavorably by the US, such as Canada’s new Digital Services Tax, a 3% levy on major foreign digital services firms like Google and Amazon. Dickerman noted, “The previous Trump administration took a really aggressive view on the Digital Services Tax.” He further predicted, “I wouldn’t expect that to change. If anything, I expect it to amplify a little bit.” Deputy Prime Minister Freeland addressed some of these concerns on Wednesday, asserting that Canada’s position as the largest single export market for the US provides the country with “leverage” in future negotiations. Canada has historically been perceived as lagging among its allies in Nato and defence spending. Trump is anticipated to exert considerable pressure on Canada regarding this issue. Trudeau has committed that Canada will meet the alliance’s minimum target of spending 2% of GDP on defence by 2032, an increase from its current 1.29%. In an interview with CTV News, Kelly Craft, who served as the US ambassador to Canada during the first Trump administration, deemed that timeline “not good enough.” She stated, “Donald Trump, when he says he expects people to pay their fair share, they will.” Ms. Blais suggested that Canada must “get creative” to accelerate this timeline, potentially by utilizing its abundant supply of critical minerals for defence purposes. She commented, “We don’t have huge fiscal wiggle room,” but added, “But at the same time, I think we can show a little more commitment.” Trump’s threats of mass deportations have prompted questions in Canada concerning their implications for the shared northern border. Terri Givens, a professor of political science at the University of British Columbia, indicated that even if such threats are not fully implemented, there exists “an issue of perception” that could motivate individuals to cross into Canada. In 2017, thousands of individuals began entering Canada via Roxham Road, an unofficial access point on the New York-Quebec border, seeking asylum. Their motivations were varied, but many cited concerns about their ability to remain in the US under the first Trump presidency and the belief that they would be welcomed in Canada. Since then, Canada and the US have closed a loophole in a border agreement that previously permitted crossings at unofficial points; however, US data indicates that people continue to attempt these crossings. When questioned about this concern, Freeland confirmed that a plan is in place. She stated, “I do want to assure Canadians that we absolutely do recognise the importance of border security and control of the border.” Resolving any potential issues will necessitate close cooperation between Canadian and US officials. The 5,525 miles (8,891km) border remains undefended. Julie Young, the Canada Research Chair in Critical Border Studies and an associate professor at the University of Lethbridge, questioned, “How do you actually enforce that border?” She also voiced her concern, saying, “And my concern is for the people whose lives will be endangered by how border policies are enforced.”