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Election Day and Implications for Canada

election2More than a year and a half after the 2016 race for the presidency began, Election Day is finally here. While there have been ample distractions from the issues of  policy over the course of the campaign, Hillary Clinton and Donald Trump are offering vastly different visions for America. Many of these proposed policies for the United States will be felt acutely in Canada, given the close relationship between the two countries. While it can be challenging to accurately predict what a candidate will do once in office, below is an assessment, based on the platforms and policy statements of the candidates, of what the next President of the United Sates will mean for Canada.

Security and Defence

Donald Trump

Donald Trump’s stated foreign policy is “America First,” likely meaning less American intervention in the world.1  He has put forward proposals to scale back U.S. commitments in Asia and with NATO, an alliance that he has called “obsolete.”2  On the other hand, Trump has called for a large military buildup, including increases in the size of the army, the amount of ships in the navy, and adding 100 fighter craft to the Air Force. Trump has also said that he would scrap the Iran deal and has called for more U.S. ground forces in Iraq and Syria.

What does it mean for Canada?

Trump has said that as President the United States may not come to the defense of an attacked NATO ally that has not fulfilled its obligation to make payments. Canada is potentially one of the NATO allies that Trump could be referring to, as it does not pay the full 2% of GDP on defense that it is require to by the treaty.3 While it is an unlikely scenario, this stance could spell trouble for Canada during a Trump presidency. Trump’s unpredictability in the field of foreign affairs may pose a challenge for Canada as it navigates an increasingly uncertain world.

Hillary Clinton

Hillary Clinton will likely continue much of Obama’s foreign policy, though she is considered to be more hawkish. She supports the reestablishment of relations with Cuba and the Iran deal, but has called for a more aggressive stance in the Middle East, proposing more U.S. airstrikes against the Islamic State and the establishment of a no-fly zone over parts of Syria.4

What does it mean for Canada?

Clinton’s national security plan calls for an intensified air campaign by coalition forces against the Islamic State, a mission that Prime Minister Justin Trudeau had pulled Canadian fighter jets from, though increased the number of trainers on the ground. Clinton may pressure Canada to increase defense spending, echoing a call that Obama had made during his visit to Ottawa in June.5 The fact that Clinton is a fairly conventional member of the U.S. foreign policy establishment will likely make her a more predictable actor in this area than Trump.

Trade and the Economy

Donald Trump

Donald Trump sees the U.S. economy as being in a dire position, and has proposed radical action. Trump has run on a largely protectionist platform, and has stated that as president he would withdraw from the Trans-Pacific Partnership (TPP), which he has referred to as “the death blow to American manufacturing”.6 Trump has also stated that he would renegotiate the North American Free Trade Agreement (NAFTA), and that if Canada or Mexico objects to this, then the United States would withdraw from the deal entirely.7 Trump’s tax plan features cuts across the board, meant to encourage individuals and businesses to invest. The personal income tax would see the current seven tax brackets collapsed into three, and the corporate tax rate would be lowered from 35% to 15%.8

What does it mean for Canada?

Capital Economic said in a June report that Donald Trump’s protectionist trade policies would result in the Canadian economy suffering as collateral damage.9 The perception that the United States might pursue protectionist policies would damage confidence globally and increase the risk of financial crisis.10 There is some uncertainty as to what happen if the United States withdrew from NAFTA, but some trade lawyers have suggested that Canada and the United States would simply revert back to their original 1987 free trade agreement.11  Canada is dependent on trade with the United States, and the potential end of free trade between the two countries under a Trump presidency would be disastrous for Canada, though it would be up to Congress to reintroduce tariffs.12 Canada signed on to the TPP earlier this year, and the government intends to continue to review the deal until it is ratified, but Canada’s Minister of International Trade Chrystia Freeland has acknowledged that whatever Canada decides to do regarding the TPP will be rendered moot if the next American President decides to cancel the deal.13 An RBC Capital Markets report argued that Trump’s proposed tax cuts could boost the American economy, which would have a positive impact on Canada. However, Trump’s proposed corporate tax cuts would make Canada’s own low rate less competitive, and the reduction in U.S. income tax rates may make it harder for Canada to attract top talent.14

Hillary Clinton

While Trump has strongly campaigned against free trade, Hillary Clinton has been less clear. Despite once calling it the “gold standard of trade deals,” she has announced opposition to the TPP. She has also attempted to distance herself from NAFTA, which was signed into effect by her husband in 1993,15 and has even indicated a desire to renegotiate NAFTA.16 Clinton may be warmer to free trade than she has publicly admitted during the campaign, as a leaked email has shown that in a 2013 speech to a Brazilian bank she said that it is her “dream” to have a “hemispheric common market, with open trade and open borders.”17 Even if she has a more moderate stance on trade once in office she may still face protectionist forces in Congress. Clinton has also proposed a range of targeted tax policies, including hikes on the highest earners, but has yet to say whether or not she supports a cut to the corporate tax rate.18

What does it mean for Canada?

The economic impact of a Clinton presidency on Canada largely depends on which trade stance she ultimately adopts. As has been mentioned above, Canada has signed on to the TPP, but the government has acknowledged that this will be rendered moot if the next U.S. president decides to scrap the deal. Clinton’s desire to renegotiate NAFTA is not ideal for Canada either, but she has not made the same threats as her opponent to potentially back out of the deal. There may be a historical precedent for Canada to benefit under a Clinton presidency, however, as studies have shown that whether or not there is a causal effect, the Canadian economy has generally done better under Democratic Presidents.19

Energy and Climate Change

Donald Trump

Trump has said that he views climate change as a hoax, and intends to withdraw from the Paris Climate Change agreement, end carbon emission limits on American power plants, and reinvest in coal, natural gas, and offshore oil drilling.20 He has stated that he will support American energy independence at all costs, and will end imports of oil from countries that he views as being hostile to American interests, including those belonging to OPEC. Trump has also voiced support for the Keystone XL Pipeline.21

What does it mean for Canada?

Joint environmental efforts between Canada and the United States would certainly end under a Trump presidency.22 While global efforts to reduce emissions would suffer as a result of Trump’s pro-fossil fuel energy policy, Canada’s energy sector would certainly benefit from the approval of the Keystone XL pipeline and the end of U.S. oil imports from OPEC countries.23

Hillary Clinton

Hillary Clinton has endorsed the scientific consensus that fossil fuels are warming the planet, and will likely maintain the course set by President Obama on climate change.24 Clinton intends to abide by the Paris Climate Change agreement, and wants to increase investment in renewable energy, stating that she wants to install half a billion solar panels, reduce energy waste by a third, and have half of U.S. electricity to be generated by renewable resources by the end of her first term.25 Clinton has also proposed cutting oil and gas subsidies, and wants to ban American offshore oil drilling in the Arctic. Clinton has also said that as president she would block any attempt to build the Keystone XL pipeline.26

What does it mean for Canada?

Hillary Clinton’s opposition to the Keystone XL pipeline and focus on ending America’s dependence on fossil fuels would be a negative for the Canadian oil and gas industry.27 However, her emphasis on renewable energy could present an opportunity for Canadian firms in that sector. Her clean energy platform bears many similarities to that of Canada’s governing Liberal Party, and a Clinton presidency would likely lead to discussion about how e United States and Canada can cooperate more on carbon pricing.28 Clinton has also proposed a new climate change agreement between the United States and Canada, something that the Trudeau government has voiced support for.29

 

Conclusion

Americans head to the polls today as an air of uncertainty hangs over the election, as polling has shown this to be a close race, particularly in a number of crucial swing states. Though the outcome is far from certain, it is assured that this election will have deep policy ramifications no matter who is elected. The choice between Donald Trump and Hillary Clinton will have a profound impact on the United States, but also on the rest of the world, including Canada.

 

References


  1. Michael Grunwald, “Clinton vs. Trump: The America They’d Build,” Politico, November 6, 2016.
  2. Michael C. Bender and Colleen McCain Nelson, “Donald Trump, Hillary Clinton on National Security Issues,” The Wall Street Journal, September 7, 2016.
  3. Nicholas Clairmont, “What’s NATO for, Anyway?” The Atlantic, July 26, 2016.
  4. Michael Grunwald.
  5. Laura Payton, “How a Clinton Victory Could Affect Canada.” CTV, October 23, 2016.
  6. Matt Lundy, “How a Trump Presidency Would Affect Canada’s Economy,” The Globe and Mail, August 23, 2016.
  7. Alexander Panetta, “Canada Preparing For All Outcomes of U.S. Election,” CBC, August 14, 2016.
  8. Evan Osnos, “President Trump’s First Term,” The New Yorker,” September 26, 2016.
  9. Matt Lundy.
  10. Evan Osnos.
  11. Ibid.
  12. Alexander Panetta.
  13. Karolyn Coorsh, “President Trump? Here’s What It Could Mean For Canada?” CTV, May 13, 2016.
  14. Jesse Ferreras, “A Donald Trump Presidency Could Mean Big Gains for Canada: RBC Report,” The Huffington Post, September 27, 2016.
  15. Jackie Dunham, “President Clinton? Here’s What it could mean for Canada” CTV, May 24, 2016.
  16. Matt Lundy, “How a Clinton Presidency would affect Canada’s Economy,” The Globe and Mail, August 23, 2016.
  17. Laura Payton.
  18. “Clinton VS. Trump: Where They Stand on Economic Policy Issues,” The Wall Street Journal,
  19. Michael Babad, “Donald Trump or Hillary Clinton: Who’s Better For Canada?” The Globe and Mail, May 12, 2016.
  20. Michael Grunwald.
  21. Jeremy Berke, “Here’s Where Hillary Clinton and Donald Trump Stand on Energy Issues,” Business Insider, September 25, 2016.
  22. Alexander Panetta.
  23. Jesse Ferreras.
  24. Michael Grunwald.
  25. Ibid.
  26. Jeremy Berke.
  27. Antonella Artuso, “What Would a Hillary Clinton Presidency mean for Canada?” The Toronto Sun, October 29, 2016.
  28. Laura Payton.
  29. Jackie Dunham.
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Andrew Aulthouse
Andrew Aulthouse is Canadian security policy student and practitioner. He has worked as a Junior Policy Advisor at the Permanent Mission of Canada to the United Nations in New York City, where he covered issues related to human rights, humanitarian crises, and the 2030 Agenda for Sustainable Development. He has also worked as a Research Assistant at the Queen's University School of Policy Studies, studying transnational criminal networks in North America. He is a Masters of Global Affairs Candidate at the Munk School of Global Affairs at the University of Toronto. He is interested in Canadian foreign policy, international security, and the impact of politics on economics.