What a Kamala Harris victory would mean for Canada’s economy
Democratic presidential candidate and Vice President Kamala Harris is the hands-down Canadian favourite in the U.S. election, polls show. Only among Canadian Conservative voters does Donald Trump find meaningful support.
But a Harris victory doesn’t necessarily mean a status quo for Canada-U.S. relations. Don’t forget Harris voted against the CUSMA trade deal and would likely usher in new thinking around global trade. U.S. concerns about Canada’s anemic defence spending would also likely emerge under a Harris administration.
Here are a few things Canadians should be prepared for:
On trade
Harris was one of a handful of members in Congress that did not support the Canada-U.S.-Mexico free trade agreement, noted Steve Verheul, Canada’s chief negotiator for the agreement, in a recent episode of PPF’s WONK podcast. “She did it largely out of concerns about the agreement not addressing environmental issues sufficiently. So that’s somewhat positive because we would have liked to address environmental issues more fulsomely in the agreement as well.”
“But she’s also clearly following the path that most Republicans and Democrats are following in the U.S. these days, which is to move away from trade agreements and trade rules and towards protectionism and industrial policy.”
Harris has stated publicly that she would, as president, review CUSMA.
Tariffs could still be a concern for Canada, said Verheul. “I think it would be much easier to deal with because I think a Harris administration would be much more strategic in terms of where they would be raising tariffs, as Biden has done with China, in particular on electric vehicles and steel, aluminum and other products.”
America may expect a more thoughtful Canadian approach to managing the world’s biggest trading relationship. “The basis of what so much Canadian diplomacy is, is going around to the states and telling each governor, hey, here’s what I’m selling you. I don’t believe that that’s the right [approach],” said former U.S. Ambassador to Canada Gordon Giffin at PPF’s Fall Lecture. “I’d be a global partner with the United States on the principles and values that we agree on.”
Asked if a Harris administration would follow President Joe Biden’s shift away from free trade and towards subsidies, tax breaks and industrial policy, Giffin said:
“I think we have to look at free trade in a different matrix. I do think that there’s a real future in a Democratic administration for defining a new model for the North American experience. I think we’ve got to change the model. I don’t mean brick by brick. I think we have to change the model at a high level and then start filling in the bricks. I do think it’s going to be some sharing of new industrial policy, if new industrial policy means ‘made in North America’ and if that means that we work together in a way that we are sharing our ingenuity, our resources, our capital, for the advancement of our interests here, our mutual interests here. I think there’s a real opportunity for that.”
“There’s been a reticence in Canada to really join in a full-fledged collaborative experience within the United States, for feel of somehow ceding sovereignty. And I’m not talking about a political union, but I really do think we’ve got to take it to another level and quit talking about the review of CUSMA or USMCA, but do a new model.”
On defence
There is a view across party lines in the U.S. that Canada could be doing more on defence.
The Arctic, for instance, is “something the United States would like to see handled better than it is right now,” said Giffin, a Democrat. “We’ve got a lot going on and, you know, there’s nobody coming over the ice cap at the moment, so our attention is somewhere else. But if some of the policy thinkers in Washington could go to bed at night and say, ‘the Canadians have that,’ you wouldn’t have to then also be doing a 10th of what the United States does in Ukraine.”
What Canada can do
Giffin noted the need for more collaboration and deepening of ties in strategic areas like critical minerals. “We’re doing some trial projects, if you will, now where there’s real collaboration going on with respect to critical minerals of U.S. investment in the development of Canadian assets.”
Critical minerals are abundant in Canada and central to energy and military applications. “China controls more than 80 percent of the critical mineral trade and processing in the world,” said PPF President and CEO Edward Greenspon at PPF’s Fall Lecture. “That’s twice what OPEC controlled of oil at its height and so Western countries, the friends, are going to have to get together and become less dependent. Canada happens to be one of the great storehouses in the world of minerals. And we need to have a North America approach.”
A focus on critical minerals is one of the recommendations in PPF’s Matter More report on a new strategy for Canada’s relationship with the U.S., written by Greenspon, Janice Stein, Founding Director of the Munk School of Global Affairs & Public Policy and Munk professor Drew Fagan. The report laid out key areas where Canada should focus on deepening and broadening ties to its advantage, regardless of who wins the U.S. election.
One of the other areas of focus is defence spending on Arctic security — an increasingly important area where the United States is eager for Canada to play a larger role.
From the Matter More report: “Spending on northern security would move Canada a long way towards reaching the NATO objective of member countries spending a minimum of two percent of GDP on defence-related activities. Currently, Canada falls well short of that at 1.38 percent, which is the sixth lowest in NATO. Second, much of the infrastructure that must be built, expanded or modernized for Arctic security and surveillance also benefits communities in the North. Establishing road access, upgrading seaports and airfields, building high-speed communications and data connectivity, decarbonizing energy sources to minimize diesel generation of electricity, more extensive health and human services for personnel stationed in the North — all these changes would also significantly improve the lives of those living in the North.”
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