Economy

Donald Trump Wins US Election 2024: What It Means for Canada?

November 6, 2024November 6, 2024canada, economy, New US president, Republicans, Trump, Trump for president, Trump winns, US elections, USA

In a dramatic conclusion to the 2024 US elections, Donald Trump has reclaimed the presidency. His victory, four years after leaving office, signals potential shifts in the United States’ approach to foreign policy, economic partnerships, and trade. The reverberations of this political shift could be particularly impactful for Canada and the European Union, two of the United States’ most significant allies. Can Canadians expect economy boost and lower housing costs not that Trump is taking the office? Or, will it be rather business as usual and no relief for Canadians? Donald Trump will be the next US President: What does it mean for Canada?

Here, we explore how Trump’s win might reshape international relations, especially with Canada, and how it could affect the Canadian economy and housing market.

What Donald Trump’s 2024 Win Means for Canada-US Relations

Canada and the United States share one of the closest and most extensive trade relationships globally, making any shift in US leadership a significant event for Canadians. During his initial presidency (2017-2021), Donald Trump’s “America First” policy led to trade renegotiations, such as the update of NAFTA to the United States-Mexico-Canada Agreement (USMCA). Trump’s return could see a similar focus on American interests, which may bring new challenges—and opportunities—for Canada. Four years later, the World looks very different since Joe Biden took office! Two major wars started with potential of further escalations, covid is no more, but scars from years of closures and economy decimation has left significant scars for small businesses and the World economy including Canadian. Stock and crypto market have been devastated for months and the housing and food expanses have exploded. One can not sit down and look at Biden administration with just admiration! Not to many good things happened for the World and Canadians during last 4 years. Many have hoped for four more years of democrat ruling power, some have cheered for Trumps victory but also many fear what might come next. Can Canadians breathe easier now or will we need to tighten our belts even tighter? Surely we hope for the first option, don’t we?

Trade and Economic Cooperation

Canada is the largest trading partner for the US, with trade worth over $700 billion annually. In 2022, the expected value of U.S.-Canada commerce in goods and services was $908.9 billion. There were $427.7 billion in imports and $481.2 billion in exports. In 2022, the United States and Canada had a $53.5 billion trade deficit in goods and services.Trump’s past focus on reducing trade deficits and prioritizing American industries could lead to new tariffs or adjustments in USMCA terms. However, Trump has also highlighted North American cooperation, suggesting that Canada may remain a prioritized ally in trade agreements. Any new negotiations would likely focus on energy, automotive, and agricultural sectors, all key components of Canada’s economy.

The outcome could go either way. If Trump’s administration adopts a hardline approach, Canada might face pressure to shift trade policies and tariffs. On the other hand, Trump’s favourable view of energy could boost Canadian exports of oil and gas to the US, particularly if there is a renewed emphasis on North American energy independence. Canada and US are natural trade partners with resources so close to each other, it would benefit both countries if economic ties get strengthen even further.

US-EU Relations: Could They Impact Canada?

The European Union may face heightened tensions with the Trump administration, as was seen during his previous term. Trump was critical of the EU’s trade policies, often accusing it of unfair practices. A strained US-EU relationship could push Canada and the EU closer together as they both navigate a more assertive America.

For Canada, this could open opportunities. As an EU trade partner, Canada may find itself as an intermediary between the US and the EU in certain areas. The Comprehensive Economic and Trade Agreement (CETA) already positions Canada favorably for enhanced EU cooperation. In a scenario where Trump’s policies push the EU to seek alternative allies, Canada’s economic partnership with Europe might deepen, benefiting Canadian exports and international investment. But this could also be a double edged sword! If Canada tightens trade agreements with EU despite US will and agreements, Canada could face penalties from US administration. Last few years Canada has moved closer to EU than US in the means of trade and agreements. In this political games, Canada and Trudeau government can improve ties but could also worsen ties with US.

What This Means for the Canadian Economy

The Trump administration’s policies are likely to affect the Canadian economy in multiple ways. Trade is only one factor; US tax policies, interest rates, and market dynamics also play critical roles in shaping Canada’s economic environment. Here’s how Trump’s win could impact Canada’s economy directly:

Energy Sector Gains: Trump’s support for North American energy independence could benefit Canadian oil and gas. Pipelines and cross-border energy projects may receive favorable attention, boosting Canadian energy exports to the US. This could increase revenues and employment in Canada’s energy sectors, particularly in Alberta.
Taxation and Investment: Trump has traditionally favored lower taxes and business incentives. If the US implements more business-friendly tax policies, Canadian businesses may benefit from stronger consumer demand in the US. However, it could also mean that Canada needs to consider its corporate tax policies to remain competitive for investors.
Currency Fluctuations: Trump’s policies often create market volatility, which could impact the Canadian dollar. A stronger US dollar, for instance, could make Canadian exports more competitive in the global market. On the flip side, this volatility can also create challenges for Canadian businesses reliant on imports.
Supply Chain Resilience: Trump’s renewed focus on bringing manufacturing jobs back to the US could impact Canadian industries that rely on cross-border supply chains. This “reshoring” effort could create some disruptions, though Canada’s close ties may allow it to adapt better than other nations.

Could Trump’s Presidency Affect Canada’s Housing Market?

Housing is a critical issue in Canada, with high prices and demand posing challenges for many Canadians. Many Canadians especially young Canadians and new immigrants can only dream about having their own home. Extreme high rents also contribute to poverty and cost of living in Canada. Everyone knows that this is not sustainable and a swift change needs to be done. Trump’s win could impact this in indirect ways.

Interest Rates: US fiscal policy can affect global interest rates, including in Canada. If Trump’s economic policies lead to inflationary pressures, the Federal Reserve might raise interest rates, which could influence the Bank of Canada’s decisions. Higher interest rates could help cool Canada’s overheated housing market, potentially bringing down prices, though it could also make mortgages more expensive.
Foreign Investment: Trump’s America First policies might make Canada a more attractive option for international investors, especially those from Europe and Asia. This increased demand for Canadian real estate could keep prices high, even if domestic demand softens.
Job Market and Housing Affordability: The Canadian economy might benefit from Trump’s policies if they lead to increased demand for Canadian exports. A stronger economy often translates into a robust job market, which can help Canadians afford housing. However, any significant economic uncertainty could have the opposite effect, leading to instability and impacting housing affordability.

Key Takeaways for Canadians on Trump’s 2024 Election Win

Donald Trump’s victory in the 2024 US election presents both opportunities and challenges for Canada. While Trump’s policies may prioritize American interests, they could also offer Canada certain advantages:

Enhanced energy exports could benefit Canada’s oil and gas sector.
Possible tax competition could encourage Canadian policymakers to rethink corporate taxes to remain competitive.
Trade and investment adjustments may be necessary as Trump focuses on reshoring and manufacturing, though Canada’s close trade ties could buffer against extreme shifts.
Housing market impacts could stem from interest rate changes and foreign investment trends, potentially easing or exacerbating the housing crisis.

For Canada and Canadians, Trump’s win is a complex development with both risks and rewards. As 2024 unfolds, the world will watch closely to see how Trump’s policies shape the future of US-Canada relations, the broader North American economy, and global markets.

In conclusion, Donald Trump’s return to the White House sets the stage for a dynamic period in international relations. For Canada, the impacts will likely be nuanced, affecting everything from trade and energy to housing. The path forward will require careful navigation by Canadian leaders to maximize benefits and minimize challenges as North America enters this new chapter. As we have seen from the Trudeau government in the past, many disputes with US will remain open and what worries mostly Canadians will stay here further. Hope remains that Trump administration will eliminate some of the roadblocks for a peaceful resolution in Ukraine and the Middle East, lowering housing cost while improving Canadian and US economy.