We know that during the first Trump administration, an aggressive trade policy was implemented. Tariffs and trade wars were the terms most used during that time. One trade battle was fought with our closest neighbors, Mexico and Canada. The old North American Free Trade Agreement (NAFTA) was replaced with the United States – Mexico – Canada Agreement (USMCA). There have been more than a few disputes within the new agreement in the past few years; an agreement that is up for analysis during the second Trump Administration.
So, what is Canada’s reaction to the situation?
Prime Minister Justin Trudeau was quick to send a congratulatory message to President-Elect Trump. He knows that having a good relationship between the countries is essential.
Interestingly, Trudeau is also facing a re-election bid next year. He has been facing criticism from the conservative opposition for his economic policies and his controversial carbon tax.
Businesses in Canada are going to be watching Trump’s economic plans very carefully. He has proposed a ten percent tariff across the board for all goods entering the United States. Canada’s Chamber of Commerce says that would shrink their nation’s economy by 30 billion dollars. The concern is that this could undo everything that was gained by the USMCA, which was negotiated by President-Elect Trump in his first term.
USMCA has boosted trade by 46% between the U.S. and Canada since 2020. Kirstin Hillman is the Canadian Ambassador to the United States, and she says that the trade agreement is a success.
Economists in both countries are warning that these across-the-board tariffs could lead to more inflation and eventual recession.
Another topic that the Canadians are watching is President-Elect Trump’s statements on deportations and immigration. Ambassador Hillman says that Canada has stepped up their cooperation with U.S. officials across our border already.
While messages of congratulations have been coming to President-Elect Trump from around the globe, many countries are anxiously watching what the first few days and weeks are going to bring.
