Trump's Election Win Could Pose New Challenges for Trudeau

Photo : AFP

OTTAWA: The potential return of Donald Trump to the White House next year is stirring concern in Canada, as analysts warn that the political and economic fallout from his presidency could add further strain to Prime Minister Justin Trudeau's leadership. As Trudeau’s government faces political pressure and economic challenges, Trump’s victory could complicate matters for the Canadian leader, who is already grappling with significant domestic issues.

Trade tensions between Canada and the United States could escalate under a second Trump administration, with Canada heavily reliant on its southern neighbor for trade. Approximately 75% of Canada’s exports go to the US, making the Canadian economy especially vulnerable to potential trade disputes. With Trump’s rhetoric often focusing on tariffs and renegotiating trade deals, economists have warned that such policies could drive Canada into a recession.

Canada, the world’s fourth-largest oil producer, could also face direct consequences from Trump’s vow to introduce a 10% tariff on imports, which may significantly impact the Canadian economy. The country’s oil sector, in particular, could suffer from Trump’s push to boost domestic energy production in the US. Such policies could lead to declining investor confidence in Canada, adding to the uncertainty surrounding Canada’s economic prospects under a second Trump term.

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The political landscape in Canada is also shifting as polls show Trudeau’s popularity waning. With elections due within the next year, there is growing concern that Trudeau might lose to his Conservative opponent, particularly as issues like a slowing economy, a surging cost of living, and diplomatic tensions with China and India dominate the public discourse. These tensions have made it more difficult for Canada to diversify its trade relations, leaving it more exposed to the political winds coming from Washington.

Trump’s return to the presidency is likely to exacerbate the pressure on Trudeau, who has already had a strained relationship with the former president. In 2022, Trump called Trudeau “a far-left lunatic” for implementing vaccine mandates for truck drivers crossing the US-Canada border during the COVID-19 pandemic. In 2018, Trump also publicly criticized Trudeau during the G7 summit in Quebec, accusing him of being “very dishonest and weak” before walking out of the meeting.

Despite their contentious relationship, Trudeau congratulated Trump on his victory and expressed confidence that the two nations would continue to work closely together to strengthen the bonds between the two countries. “I know President Trump and I will work together to create more opportunity, prosperity, and security for both of our nations,” Trudeau said on X (formerly Twitter) following the announcement of Trump’s win.

Finance Minister Chrystia Freeland sought to reassure Canadians in the wake of Trump’s election, stressing that Canada would remain strong in its relationship with the United States. "A lot of Canadians were anxious throughout the night, and I want to say ... that Canada will be absolutely fine," she said. "We have a strong relationship with the United States, we have a strong relationship with President Trump and his team."

However, Trudeau himself had previously voiced concerns about a potential second Trump presidency. In January, he stated that another term for Trump would represent "a step back" for Canada, making the country’s relationship with the US more difficult. Trudeau’s government is also wary of the economic consequences, with analysts from Desjardins Economics predicting that Trump’s policies could reduce Canada’s gross domestic product (GDP) by 1.7% by the end of 2028 compared to the projections under a Democratic administration. Additionally, the Canadian Chamber of Commerce has warned that Trump's planned 10% tariff could decrease Canada’s real income by 0.9% annually, with labor productivity falling by nearly 1%.

Canada’s vulnerability to Trump’s trade policies is evident from his first term in office when he famously renegotiated the North American Free Trade Agreement (NAFTA) into the US-Mexico-Canada Agreement (USMCA). After 18 months of difficult negotiations, including the imposition of tariffs and sanctions, the deal was finalized. Trump’s threat to renegotiate the agreement again, this time in 2026, has raised further concerns about future trade relations between the US and Canada.

David Doyle, the head of economics for the Americas at Macquarie, warned that Trump’s potential policies could trigger an economic shock in Canada, possibly even leading to a recession. "It’s possible that it is a recession-inducing event because it’s on such an enormous scale that we really haven’t seen for almost 100 years," he said.

During Trump’s first presidency, Canada managed to weather the worst of the trade tensions by proactively engaging with US states and politicians to highlight the benefits of free trade. However, as Trump’s administration gears up for another term, Canada’s diplomatic strategy could once again be put to the test. Kirsten Hillman, Canada’s long-serving ambassador in Washington, emphasized that Canada has been working closely with Trump’s advisers to push back on his trade policies, particularly the proposed 10% tariff.

Despite Canada’s diplomatic efforts, Trudeau’s team has acknowledged that a second Trump presidency could be far more challenging than the first. In a meeting with senior Liberal officials, Trudeau reportedly expressed concerns that dealing with Trump a second time would present an even greater challenge for Canada. Policy clashes, both domestically and internationally, seem inevitable under such circumstances, especially if Trump follows through on his plan to deport millions of undocumented immigrants. This could lead to a large influx of migrants into Canada, which could place significant pressure on the country’s social systems and exacerbate homelessness.

Furthermore, experts like Kim Richard Nossal, a political science professor at Queen’s University, predict that Trump’s policies could isolate Canada even further, as the United States and Europe might retreat into competing economic and political blocs. “The implications for Canada are, in my view, dramatic,” Nossal said, noting that Trump might also demand that Canada increase its defense spending.

With Trump’s election adding to Trudeau’s existing political challenges, Canada is left facing an uncertain future. The relationship between the two countries, already strained by past disputes, could face further complications in the years to come. As Canada prepares for its own elections, the global political and economic landscape, heavily influenced by Trump’s potential return to power, promises to be a defining issue.