A second Trump presidency likely means more tariffs, and Canada's energy and forestry sectors will feel the impact.
As the passing of former Prime Minister Brian Mulroney was reported, we thought back to his ratification of the North American Free Trade Agreement (NAFTA) with the United States and Mexico.
The question now is: If Donald Trump becomes the next President of the U.S., what happens to the U.S.-Mexico-Canada Agreement (USMCA) of 2020? The USMCA came after Trump threatened to pull out of NAFTA in 2018.
On Monday, the Supreme Court of the United States recently overturned a ruling from the Colorado Supreme Court that barred Trump from appearing on the ballot during the 2024 presidential election, clearing a major obstacle in his goal of once again winning the presidency in November.
If Trump does win again in November, stand by for round two of the “America First” campaign of his first term.
“After decades of the status quo, President Trump has made it clear that Americans will no longer take back seat to the rest of the world,” said Ken Farnaso, who was a deputy national press secretary during Trump's ultimately unsuccessful 2020 re-election campaign.
So prepare, for starters, for a 10 percent tariff on imports into the U.S. — and Canada is the second largest source of those imports.
Trump’s promised tariffs would hammer Canadian exports to the U.S. In 2021 (the latest figures we see), those exports were worth $355 billion, including oil ($78.8 billion), automobiles ($26.4 billion), and natural gas ($13.4 billion).
What would Trump do about increased exports of Canadian oil to the U.S. through the Trans Mountain Expansion Project? What about our natural-gas exports, which have helped the U.S. become the world’s biggest exporter of liquefied natural gas (LNG)?
And a Trump presidency would undoubtedly mean more trouble for Canada’s forestry sector. It has long been fighting “entirely unwarranted,” U.S. tariffs on our softwood lumber — and now has been told that America will soon boost the border-crossing charges to 13.86 percent, up from 8.05 percent.
(Under the U.S. Tariff Act, the Department of Commerce determines whether goods are being sold at less than fair value or if they're benefiting from subsidies provided by foreign governments. U.S. producers insist that provincial stumpage fees are so low as to amount to an unfair subsidy.)
And on foreign affairs, note Trump’s tough promise for China: tariffs of 60 percent or higher on imported Chinese goods. And, he has added, “Maybe it’s going to be more than that.”
This comes after the trade war he triggered during his first term as president when he imposed $250 billion in China tariffs. That disrupted the global economy, hammered consumers, and hit stock markets.
U.S. stock-market watchers have shuddered at this new promise. Nikki Haley, who suspended her campaign for the Republican nomination on Wednesday morning, has said: “What Donald Trump’s about to do, is he’s going to raise every (American) household’s expenses by $2,600 a year.”
Trump has said nothing about current U.S.-Canada relations, but has in the past declared:
- “We lose with Canada — big-league. Tremendous, tremendous trade deficits with Canada.”
- “Canada has been very difficult to deal with. . . . They’re very spoiled.”
-
“Canada, what they’ve done to our dairy farm workers, it’s a disgrace.”
Roland Paris, a Canada-based associate fellow of the U.S. and the Americas Program writes:
“ Canada is not the only country bracing for Donald Trump’s possible return to the White House – but few have more at stake."
“Three-quarters of Canada’s goods exports, accounting for more than one-quarter of the country’s gross domestic product, go to the U.S. Given Trump’s impulsiveness and deeply protectionist instincts, Canada’s business and political leaders are understandably nervous.”
Prime Minister Justin Trudeau told business leaders in Montreal: “It wasn’t easy the first time, and if there is a second time, it won’t be easy either.”
Indeed. If the second time begins with Trump being elected on November 5, and sworn in on January 20, 2025, it could be a nasty case of “Oh, Canada.”