Canadian Manufacturing

Trudeau projects calm on eve of U.S. election, but much is at stake for Canada

A clearly protectionist tilt to this U.S. election highlights Canada's vulnerability on a number of policy issues, including climate change, the never-ending softwood lumber dispute, Buy American provisions, NAFTA and TPP



OTTAWA—Friendly and even-tempered is not how anyone would describe the 2016 presidential election race between Democratic hopeful Hillary Clinton and Republican nominee Donald Trump.

This thrashing nightmare of an election year has long since alarmed Mexico, Canada’s other partner in the North American free trade bed and a primary target for Trump’s sharp anti-trade, anti-immigration elbows.

But unlike Mexican President Enrique Pena Nieto, who has made no secret of his concern about a Trump presidency, Justin Trudeau remains above the fray.

“Any responsible government is looking at what various consequences could be for Canadians, for the Canadian economy, of various measures or various policy positions that the potential next president of the United States—our largest trading partner—might take. That’s simply responsible,” Trudeau said late last week while waving off a question about Tuesday’s outcome.

“I’m going to have faith in the American political process and reassure Canadians that I will work with whomever gets elected to continue to defend Canada’s interests and grow our economy.”

Bruce Heyman, the U.S. ambassador to Canada, was similarly sanguine Monday in an interview with The Canadian Press.

“First of all the headline is I’m confident, no matter who occupies the White House, the United States and Canada will continue to be engaged neighbours, prosperous partners, stalwart allies, best of friends,” Heyman said.

Trudeau and Heyman both offered safe, predictable responses to an election that doesn’t feel safe or predictable.

The president of the Canadian Chamber of Commerce is far less reassuring.

“There’s a great deal that’s at stake here,” Perrin Beatty said in an interview.

“I would like us to be in a position where the discussion is going to be (about) how rapidly and how imaginatively can we deepen our partnership. Instead, what I think what we’ll be looking at is, how do we maintain the progress we’ve been making?”

And it’s not just about whether Clinton or Trump prevails to win the White House.

Tuesday’s voting also will determine the composition of the Republican-dominated House of Representatives and of the Senate, which could conceivably see a majority of Democratic senators elected. Both will in large measure bind the hands of the new president.

Beatty said there’s a clearly protectionist tilt to this U.S. election season, and he doesn’t discount Clinton’s tough talk on NAFTA and the proposed Trans-Pacific Partnership as mere posturing.

Canada is vulnerable to any thickening of U.S. border security, a constant Trump theme. Canada requires policy collaboration on climate change, especially given the looming national carbon price starting in 2018. The country will need to find some U.S. goodwill to resolve the never-ending softwood lumber dispute and Canada must also fend off any new Buy American provisions—to name just a few bilateral issues.

Craig Alexander, chief economist at the Conference Board of Canada, said financial markets “would unambiguously prefer a Clinton victory and a Republican Congress”—thus ensuring the greatest likelihood of policy continuity.

Trump is the wild card. “The financial market reaction would likely be enormously negative in a knee-jerk fashion.”

Bilateral issues are not Canada’s sole concern, Alexander noted. The hangover from the deeply divided electorate and the trash-talking of America’s democratic institutions will make U.S. governance more difficult.

“From a Canadian point of view, we actually want America to make progress on key issues,” said Alexander. “We are tied together.”

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