View From the Legislature

With the United States presidential election now concluded, political watchers on this side of the border are looking to Ottawa as plans begin for the return of President-elect Donald Trump to the White House. Regardless of who won the presidential election, trade with the United States was certain to move to the top of the agenda for Canadian lawmakers. Both the Republican and Democratic candidates made it clear that a more protectionist, buy-America, position would be taken under either administration.

The previous Trump administration demonstrated its seriousness in this regard by imposing tariffs on a host of goods and renegotiating the former North American Free Trade Agreement (NAFTA) and replacing it with the United States-Mexico-Canada Agreement (USMCA). The new agreement is do for review soon and President-elect Trump made it clear during the campaign he plans a new negotiation.

It is too early to say what those negotiations may all include, but during the campaign he vowed to impose wide sweeping tariffs on imports of up to 20%. While much of the U.S. concern on imports is focused on China, past experience shows that Canada often gets included in new tariffs either initially or permanently. Other issues, such as supply management for industries such as dairy, are always brought up as part of any U.S. led renegotiation of trade agreements.

The consequences of any potential new tariffs for Manitoba and Canada are very significant. The U.S. is by far the largest buyer of Canadian products with upwards of three quarters of all Canadian exports heading to the U.S. and Manitoba is no exception. The U.S. is Manitoba’s top agri-food trade partner, and the trade volume and percentages grows almost every year. Manitoba manufacturers have also felt the effect of protectionist U.S. policies in the past, sometimes having to move manufacturing plants across the border.

All of this means that our federal and provincial officials need to be active and engaged in ensuring that Canada is recognized as a preferred, reliable and aligned trading partner for the United States. While the U.S. may see it in their interests to exempt Canadian oil and gas from tariffs, as Canada is the largest importer of energy into the United States, the case needs to be made to ensure other industries are not negatively affected. Some economists have predicted that even a 10 percent general tariff on Canadian exports could cost the equivalent of $1,100 per Canadian and spark a recession.

Undoubtedly, the negotiations will extend beyond just pure country to country trade imperatives. The United States, including under the Biden administration, has considered it important that Canada’s trade policies related to China closely match those of the United States. Also, the U.S. has expressed for a number of years its frustration that Canada has failed to meet its NATO commitment of 2% spending of gross domestic product on defense. Border security has always been an area of concern and Canada’s approach to a secure bilateral border as well as from a North America perspective will be key to ongoing relations. Each of these and other issues will surely be at the forefront of discussions with a new Trump administration.

And, while Prime Minister Justin Trudeau’s government will begin this process, it still remains very likely that a new government under Conservative leader Pierre Poilievre will be tasked with maintaining the relationship longer term. From a Manitoba and a Canadian perspective, there is a lot at stake with the relationship between the governments of Canada and the United States. It is a friendship that is enduring, but that will need as much attention as ever in the months ahead.