As Canadians recall the shock of Donald Trump’s first presidential victory, the news of his recent return to the White House has stirred both anxiety and anticipation. Trump’s re-election is undeniably a pivotal moment, and this time, Canadians may approach it with more reservation, reflecting on the changes his first term brought to our shared economy and agri-food trade.
During Trump’s first administration, Canada performed reasonably well economically, even amid intense political rhetoric and policy shifts. Our GDP per capita grew by 6.3 percent, far more robust than the stagnant growth we are experiencing today. The agri-food trade between Canada and the U.S. also flourished, growing by almost 20 percent from 2016 to 2020. Despite the “America First” focus, our food sector benefited from stronger cross-border trade – a trend that may continue, though with potentially higher stakes.
However, Canadian farmers now face a more challenging landscape. Trump’s campaign promises include measures to reduce costs for American farmers to enhance their competitiveness, while agricultural costs in Canada have steadily increased. Since 2019, wholesale food prices in Canada have risen nearly 40 percent more than in the U.S., placing Canadian producers at a disadvantage and making it harder for them to compete. A second Trump administration could deepen this gap, increasing the pressure on Canada’s agricultural sector.
Environmental policies could also become a major point of contention. During his first term, Trump reversed over 100 environmental regulations, many of which President Joe Biden later reinstated. With Trump back in the Presidency, Canada’s already controversial carbon tax could put additional strain on cross-border trade. Since 2019, the carbon tax in Canada has increased from $20 per tonne to an expected $95 per tonne by 2025, drastically raising the cost burden on Canadian agriculture. Trump’s less restrictive environmental approach could give American farmers a cost advantage, leaving Canadian agriculture facing higher operational expenses.
Trump will also likely support an updated almost US$2 trillion Farm Bill, bolstering U.S. crop insurance, subsidies, and agri-food research to counter China’s global influence. With China tensions simmering, Canada may have to carefully navigate this increasingly competitive and politically fraught landscape. The likelihood of higher ethanol production and a continued hard line on Chinese tariffs, policies that the Biden administration largely upheld, underscores that Canada’s alignment with U.S. agricultural strategies will be critical to avoid potential trade disruptions.
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