What Canada Can Expect From a Second Trump Presidency

Canadian Prime Minister Justin Trudeau is greeted by U.S. President Donald Trump as he arrives at the White House in Washington on June 20, 2019. The Canadian Press/Sean Kilpatrick

A number of U.S. President-elect Donald Trump’s focus areas could have major ramifications for Canada, and as America’s northern neighbour and closest ally, Canada could be witness to significant U.S. foreign policy changes and global alliance implications.

In his third presidential campaign, Trump focused on promises around boosting the U.S. economy and reducing inflation, whether through renegotiating free trade in North America, imposing tariffs, or cutting taxes.

Trump has also taken a hard line against illegal immigration, promising massive deportations. Increasing U.S. oil production and negotiations with OPEC nations could also affect global oil prices and by extension Canada’s energy-rich provinces. Trump’s insistence on allies’ defence spending commitments will have major financial impact on Canada as well.

While both the Trump administration and the Liberal government under Prime Minister Justin Trudeau had been supportive of the Canadian cross-border Keystone XL pipeline project cancelled by the Biden administration, the company behind the project, TC Energy, has said the project is officially cancelled and that it has sold its related assets in South Dakota.

Trade

Chrystia Freeland led the North American Free Trade Agreement (NAFTA) renegotiations for Canada as foreign affairs minister starting in 2017. Now, as deputy prime minister and finance minister, Freeland could potentially have a role in renegotiating NAFTA’s successor, the Canada-U.S.-Mexico Agreement (CUSMA), which the three countries signed in 2018. The Liberals would first have to retain power in the next election to be held at the latest in October 2025.

CUSMA, which came into effect July 1, 2020, contains a clause that says it is to undergo a formal review every six years, starting on its sixth anniversary of entry into force, which falls in 2026.

Trump said on the campaign trail that he will formally notify Canada and Mexico of his intent to invoke the six-year renegotiation clause upon taking office. He said he was behind the clause and that it was the “hardest thing I had to get,” as “they didn’t want that.”

“They wanted to have it long, but I wanted [six years], because there’s always like little tricks they want to play,” Trump told the Detroit Economic Club in October. “I said ‘nope.’ I want to be able to renegotiate in six years, otherwise we’re not making the deal.”

Canadian and American flags fly near the Ambassador Bridge at the Canada-U.S. border crossing in Windsor, Ont., in a file photo. The Canadian Press/Rob Gurdebeke

Trump said he would seek stronger protections on transshipments so that countries like China cannot “smuggle their products and auto parts into the United States tax free through Mexico.”

In the initial CUSMA negotiations during Trump’s first tenure as president, his administration was highly critical of Canada’s supply management system, and Canada had to ultimately make some concessions and reduce barriers to American dairy producers.

Tariffs

The other déjà vu the Canadian government is likely to face is Trump’s appetite for tariffs as he seeks to reduce his country’s trade deficit and bolster its industrial base.

Trump said he will consider imposing at least 10 percent tariffs on all imports to the United States and 60 percent on China-made goods.

“To me, the most beautiful word in the dictionary is ‘tariffs,’” he told Bloomberg News in October. “It’s my favourite word.”

Washington had slapped tariffs on Canadian steel and aluminum in 2018 during Trump’s first term, leading to retaliation from Ottawa. The two parties reached a deal on the issue almost a year later.

An analysis from TD Economics says across-the-board tariffs of 10 percent on Canada, followed by retaliation, would result in the Canadian economy being “hit hard,” with real GDP falling around 2.4 percentage points over two years. However, the report added that since the move would also hurt the U.S. economy, it’s unlikely that broad-based tariffs would be imposed on America’s northern neighbour.

“We are optimistic that Canada will ultimately avoid blanket tariffs,” wrote TD economist Marco Ercolao in a report released on Oct. 24. “The likelihood that tariffs drag down the U.S. economy, disrupt supply chains, and stoke inflation are enough of a reason to forgo tariffs on Canada.”

Foreign Affairs Minister Mélanie Joly said on Nov. 5 that her government will “always be ready” to defend Canadians’ interests.

Along with the looming issue of tariffs, a U.S. administration under Trump could take a more aggressive stance against Canada’s new Digital Services Tax. The 3 percent levy applies to large companies, both domestic and foreign, such as Netflix, that earn revenue through online services in Canada, starting in the 2024 tax year and retroactive to include all such revenue earned since Jan. 1, 2022. The Biden administration says it discriminates against U.S. companies, and in August requested dispute settlement consultations under CUSMA.

Tax Cuts

Another economic measure promised by Trump that could impact Canada involves cutting taxes. He has said he wants to lower the corporate tax rate, and his platform mentions implementing “large tax cuts for workers” and removing tax on tips, along with pursuing additional non-specified cuts.

Conservative Leader Pierre Poilievre, in congratulating Trump on his win, identified these promised tax cuts as a threat to Canadian jobs.

“We must axe taxes. Bring home our paycheques. Save our jobs. Stand up for Canada,” he said in a Nov. 6 post on X.

Poilievre has said the path to return to affordability is through lowering taxes and reducing government “inflationary” spending. The Liberal government has taken a different path, imposing for example a new tax on capital gains to help pay for programs meant to help Canadians cope with the high cost of living.

Immigration

Along with the economy, addressing illegal immigration has been a key plank of the 2024 Republican Party platform under Trump. The platform’s first two core promises are “seal the border and stop the migrant invasion” and “carry out the largest deportation operation in American history.”

A Canada Border Services Agency patch is seen on a CBSA officer’s uniform in Tsawwassen, B.C., in a file photo. The Canadian Press/Darryl Dyck

If these promises kick into gear, it will take place at a time when the Canadian government has also significantly modified the way it approaches immigration, amid a crunch in housing and services.

At the beginning of the last Trump presidency in January 2017, Trudeau had said Canada was open to refugees fleeing persecution and war. “Diversity is our strength #WelcomeToCanada,” he posted on social media at the time.

Canada has now reduced new permanent resident targets for the coming years after earlier aims to bring in 500,000 annually, but still the target remains significantly higher than in the past. Temporary residents are also being reduced by tightening the labour program and increasing the requirements for international students. Visa requirements for Mexican citizens were reinstated in February this year after bogus asylum claims started to bog down the refugee stream.

Asked about the potential for illegal immigrants to cross into Canada after Trump’s win to avoid deportation, Freeland said “Canadians expect us to control our border.”

“Canadians quite rightly believe that it needs to be a decision of Canada and Canadians [as to] who comes to our country and who doesn’t, and that is something that we absolutely have a plan to ensure,” she told reporters on Nov. 6.

The RCMP says it’s been actively preparing for the impact on migration flows stemming from Trump’s potential return to the White House.

“Obviously, we’re not wishing for this, but if it does happen, we'll be ready,” Sgt. Charles Poirier from the Mounties’ C Division in Montreal told The Epoch Times.

Defence

While Canada and its allies have vowed to support Ukraine until victory, Trump has advocated for an end to the war and has said the invasion would never have happened had he remained in the White House in 2021.

With the United States being the world’s strongest military power and Ukraine’s main backer in the conflict, Trump’s return could alter current plans. He has said several times that if elected, he would quickly end the war, hinting at his intention to broker a peace deal.

Freeland, who has been at the forefront of Canadian and international efforts against Russia, said Canada’s position would not change regardless. “We are here for Ukraine today. We’re going to be here for Ukraine tomorrow,” she said.

Trump has said when it comes to the NATO military alliance, member countries shouldn’t expect to be defended if they don’t pull their own weight in defence spending.

The Canadian government has been under pressure to meet NATO’s guideline of 2 percent of GDP spending on defence. In July, Ottawa announced it would meet the target by 2032, but without fleshing out how it would specifically do so.

National Defence did not indicate the goal to reach the 2 percent target in its updated defence policy released in April. The Parliamentary Budget Officer, in a report issued on Oct. 30, said Ottawa will need to double its current military spending in order to meet the NATO target.

Minister Joly was asked by reporters on Nov. 5 whether her government would try to reach the deadline before 2032 to avoid the issue being an obstacle to Canada-U.S. trade negotiations. “We are investing more than ever in defence starting next year,” she said. “Of course we will abide by our obligations towards our NATO allies.”

The International Media Centre during the 2024 NATO Summit in Washington on July 9, 2024. Madalina Vasiliu/The Epoch Times

Trump-Trudeau Rocky Relationship

Pressure on defence and other issues could come bearing down from Trump, who is not known for holding back on public criticism. He and Trudeau clashed several times during Trump’s first term.

After Trump won the Nov. 5 election, top Canadian ministers struck an optimistic tone in public even though they could face stronger headwinds in their relationship with the United States.

Trudeau congratulated Trump on his “decisive victory” and said he looks forward “once again” to growing the two countries’ economies.

“On our side, we’ve been preparing for this. We’re looking forward to doing this work,” he told reporters in Ottawa on Nov. 6.

Freeland also congratulated Trump on his “truly historic election victory,” but added that she knows “a lot of Canadians who are feeling unsettled today.”

“I want to say to all Canadians that I am absolutely confident that Canada will be prosperous,” she said on Nov. 6.

“We had some very intensive times together,” she added about Trump during the NAFTA renegotiations. “We had some tough moments, but at the end of it, working with President Trump and his team, we renegotiated our trade agreement with the United States.”

She told the House of Commons in September that she had “stood up to Trump” in a response to what she characterized as “insults” from Conservative MPs about the state of the Canadian economy.

“Juvenile playground insults from the wannabe MAGA, ’maple syrup' Conservatives do not frighten me at all,” Freeland said, in reference to Trump’s Make America Great Again slogan.

Trudeau, while testifying before the Foreign Interference Commission on Oct. 16, said that with Trump’s first election there had been “big threats” from the “rise of right-wing populism around the world.”

“It was very much the moment we were living in, in 2015, 2016, 2017, and grappling with as a responsible, progressive rule-of-law democracy that believes in facts and evidence as the basis for policy decisions, as we are as a government.”

Strong words were exchanged in the past as well.

In 2018, after a G7 meeting hosted by Canada in Quebec, Trudeau said at a press conference that he wouldn’t hesitate to take retaliatory measures in response to U.S. tariffs. Trump reacted by saying that Trudeau “acted so meek and mild” during the meeting and that the prime minister had made the remarks after Trump left.

A year later, at a NATO summit in London, England, Trump called Trudeau “two-faced” after Trudeau was caught on a hot mic appearing to mock Trump in front of other world leaders for having a lengthy press conference.

After the Jan. 6, 2021, Capitol Hill riots, Trudeau issued a statement saying they were “incited” by Trump.

Following the first assassination attempt on Trump in July, Trudeau was quick to call him to wish him well and condemn the attack.