Canada braces for trade shocks as Trump wins second presidential term

Canada is bracing for potential economic challenges following the possibility of a second term for Donald Trump in the U.S. presidency. Experts predict significant disruptions, particularly in trade relations and currency values, as Trump’s policies could drastically alter Canada’s economic landscape.

A re-election victory for Trump could lead to the introduction of higher tariffs on U.S. trading partners, including Canada. The threat of a 10% tariff on all imported goods could strain the already delicate bilateral trade relationship. Canada’s exports, which heavily rely on the U.S. market, could face increased costs, causing uncertainty among investors and economic instability. Canada’s Ambassador to the U.S., Kirsten Hillman, has already engaged with Trump’s advisors to seek an exemption from these proposed tariffs.

Trump’s "America First" agenda would likely fuel a protectionist approach, undermining Canada’s exports, which account for over 80% of the country’s goods traded with the U.S. Additionally, Trump’s plan to lower corporate taxes in the U.S. could make American companies more competitive compared to Canadian firms, widening the economic gap between the two countries.

Another potential challenge for Canada is Trump’s energy policy, which prioritizes domestic energy production. This could lead to lower oil prices, negatively impacting Canada’s oil-dependent economy. The weaker Canadian dollar, anticipated as a consequence of these policies, could also pose risks, potentially pushing the exchange rate to C$1.50 to US$1.

In response to these challenges, Canada’s leaders are preparing for the economic fallout of a second Trump term. Diplomatic efforts to secure exemptions from tariffs are underway, as officials look for ways to mitigate the risks posed by the policies that could disrupt trade and financial markets.