With a pandemic, a minority government in Ottawa and a crumbling energy sector, the Canadian economy is already in a period of great uncertainty. This week’s election in the United States only makes things more fraught.
Besides the butterflies in the tummies of those who fear the victory of one side or the other, Canadians trying to make economic, investment or even government policy decisions will likely find that not knowing the final outcome as our neighbours vote has an inevitably paralyzing effect.
For Canada, U.S. elections are always a period of flux. This time around, what seems like an extraordinary gulf between the outlook of Republicans under President Donald Trump and Democrats under Joe Biden is only one of the things that makes this election stressful.
Polls that show a Biden lead have been undermined by contradictory analysis that insists many of those who intend to vote for Trump have been shy about admitting it. For those of us who have always been suspicious of the pollsters’ dark arts, Trump’s surprise win against Hillary Clinton four years ago did not add to our confidence.
Canada’s economic recovery tied to U.S.
That a close election could lead to Trump calling on gun-toting self-styled militias to get involved, no matter how unlikely that is, adds an additional layer of uneasiness. But some sort of descent into chaos is unnecessary to make many in the Great White North nervous.
While there is evidence most Canadians have grown sick of Trump, including his Canada-bashing on trade, reasonable people may differ on whether his low-tax, pro-fossil fuel and prioritization of the economy over COVID-19 policies are the best path to economic success.
“Two parties are fighting for a majority in the [U.S.] Senate right now,” Don Plett, the Conservative leader in Canada’s Senate, said last week. “We can all hope that the right side will win that, and we will all send President Trump our congratulations when they do.”
A truck crosses the Blue Water Bridge into Port Huron, Mich., from Sarnia, Ont., in March. No matter which party runs the government south of the border, as our largest trading partner, the success of the U.S. economy is of crucial importance to Canada. (Paul Sancya/The Associated Press)
What is in little dispute is that no matter who runs the government south of the border, as our largest trading partner, the success of the U.S. economy is of crucial importance to Canada.
“The recovery in exports is going to depend on the recovering activity of the U.S.,” Bank of Canada governor Tiff Macklem reminded us in Wednesday’s Monetary Policy Report. “The U.S. has also rebounded strongly, but we expect the U.S. recovery is going to be considerably slower from here.”
The question is which party’s strategies will lead to success? Partisans are unlikely to be so open-minded, but in some ways, the difference between Biden and Trump might be seen as a contrast between seeking long-term or short-term solutions.
Delayed reckoning for energy?
In the case of energy, a Biden presidency will likely be unappealing to Canada’s oil- and gas-producing regions. Cheered by some in Canada, Trump disavowed the climate targets agreed to in Paris in 2015, and he rejects carbon pricing. But he may have been merely delaying the eventual reckoning for North American energy producers while impeding the competitiveness of green industries that are increasingly profitable.
While coal and oil may suffer from a change of administration in the U.S., many analysts see profits ahead for other Canadian minerals, including copper, aluminum and nickel — what Ed Crooks, vice-chair, Americas, at consultancy group Wood Mackenzie calls the “energy transition metals.”
For an oilpatch presiding over a long, painful decline despite Trump’s support, a Biden presidency might be like ripping off a bandage or cauterizing a weeping sore.
House Speaker Nancy Pelosi, left, Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer outside the U.S. Capitol building in Washington in July. Despite repeated attempts, Congress has been unable to hammer out a new stimulus package that independent experts say could scar the U.S. economy, hurting Canada. (Brendan Smialowski/Pool via Reuters)
The U.S. response to COVID-19 may also be an example of long- versus short-term benefit. Repeatedly we’ve seen that haste to reopen the economy has led to worse shutdowns.
And when it comes to bridging the bad patch before economic recovery leads to an anticipated new round of job creation, a clear win by one side may lead to a support package, so far delayed by disputes in Congress. Even Trump’s appointed Federal Reserve Chair Jerome Powell has said such a plan is essential to prevent evictions and foreclosures, “things that will scar and damage the economy.”
As Macklem implied, preventing damage to the U.S. economy is good for Canada and its exports. But when it comes to trade, even without the Trump bombast that many Canadians disliked, it is not at all clear Canada will get a free ride from a Biden administration.
It is easy to forget that Republicans have been the traditional free-trade champions and that the original NAFTA was negotiated between a Progressive Conservative prime minister, Brian Mulroney, and a Republican president, Ronald Reagan.
‘America First’ could be sticking around
In a world where both sides in the U.S. Congress feel as though they are losing out on trade, don’t expect “America First” to disappear, whoever wins — although under Biden, there are likely to be fewer surprising outbursts.
Whatever the eventual outcome of this week’s vote, there is little question that a continued wide division in the country’s polarized electorate will persist as a burden on the U.S. economy.
Even after one or the other party takes control of the White House, it is never clear exactly how election promises will turn out. Change, even if good for the economy in the long run, is always disruptive at first. Optimistic intentions are transformed by the realpolitik of deal-making and economic necessity.
But for Canadians holding their collective breath for the final result of Tuesday’s election — no matter how long those results take to arrive — having one leader firmly ensconced in the Oval Office will restart the clock on economic and business plans that depend on U.S. policy.
Then we can go back to worrying about Alberta jobs, a soaring deficit, a COVID-19 crisis that won’t go away and a minority government that could at any moment tumble us into an election of our own.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
