Trump Could Bring Back “America First”. What Could Happen to Canada’s Natural Resource Exports?

A second Trump presidency likely means more tariffs, and Canada’s energy and forestry sectors will feel the impact.

As the passing of former Prime Minister Brian Mulroney was reported, we thought back to his ratification of the North American Free Trade Agreement (NAFTA) with the United States and Mexico.

The question now is: If Donald Trump becomes the next President of the U.S., what happens to the U.S.-Mexico-Canada Agreement (USMCA) of 2020? The USMCA came after Trump threatened to pull out of NAFTA in 2018.

On Monday, the Supreme Court of the United States recently overturned a ruling from the Colorado Supreme Court that barred Trump from appearing on the ballot during the 2024 presidential election, clearing a major obstacle in his goal of once again winning the presidency in November.

If Trump does win again in November, stand by for round two of the “America First” campaign of his first term.

“After decades of the status quo, President Trump has made it clear that Americans will no longer take back seat to the rest of the world,” said Ken Farnaso, who was a deputy national press secretary during Trump’s ultimately unsuccessful 2020 re-election campaign.

So prepare, for starters, for a 10 percent tariff on imports into the U.S. — and Canada is the second largest source of those imports.

Trump’s promised tariffs would hammer Canadian exports to the U.S. In 2021 (the latest figures we see), those exports were worth $355 billion, including oil ($78.8 billion), automobiles ($26.4 billion), and natural gas ($13.4 billion).

What would Trump do about increased exports of Canadian oil to the U.S. through the Trans Mountain Expansion Project? What about our natural-gas exports, which have helped the U.S. become the world’s biggest exporter of liquefied natural gas (LNG)?

And a Trump presidency would undoubtedly mean more trouble for Canada’s forestry sector. It has long been fighting “entirely unwarranted,” U.S. tariffs on our softwood lumber — and now has been told that America will soon boost the border-crossing charges to 13.86 percent, up from 8.05 percent.

(Under the U.S. Tariff Act, the Department of Commerce determines whether goods are being sold at less than fair value or if they’re benefiting from subsidies provided by foreign governments. U.S. producers insist that provincial stumpage fees are so low as to amount to an unfair subsidy.)

And on foreign affairs, note Trump’s tough promise for China: tariffs of 60 percent or higher on imported Chinese goods. And, he has added, “Maybe it’s going to be more than that.”

This comes after the trade war he triggered during his first term as president when he imposed $250 billion in China tariffs. That disrupted the global economy, hammered consumers, and hit stock markets.

U.S. stock-market watchers have shuddered at this new promise. Nikki Haley, who suspended her campaign for the Republican nomination on Wednesday morning, has said: “What Donald Trump’s about to do, is he’s going to raise every (American) household’s expenses by $2,600 a year.”

Trump has said nothing about current U.S.-Canada relations, but has in the past declared:

“We lose with Canada — big-league. Tremendous, tremendous trade deficits with Canada.”
“Canada has been very difficult to deal with. . . . They’re very spoiled.”
“Canada, what they’ve done to our dairy farm workers, it’s a disgrace.”

Roland Paris, a Canada-based associate fellow of the U.S. and the Americas Program writes:

“ Canada is not the only country bracing for Donald Trump’s possible return to the White House – but few have more at stake.”

“Three-quarters of Canada’s goods exports, accounting for more than one-quarter of the country’s gross domestic product, go to the U.S. Given Trump’s impulsiveness and deeply protectionist instincts, Canada’s business and political leaders are understandably nervous.”

Prime Minister Justin Trudeau told business leaders in Montreal: “It wasn’t easy the first time, and if there is a second time, it won’t be easy either.”

Indeed. If the second time begins with Trump being elected on November 5, and sworn in on January 20, 2025, it could be a nasty case of “Oh, Canada.”

Related Topics:#CanadianForestry #EnergyNow.CA #ResourceWorks #TrumpAmericaFirst canadianenergy

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Ottawa’s new ‘climate disclosures’ another investment killer

Published on November 3, 2024

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From the Fraser Institute

By Matthew Lau

The Trudeau government has demonstrated consistently that its policies—including higher capital gains taxes and a hostile regulatory environment—are entirely at odds with what investors want to see. Corporate head offices are fleeing Canada and business investment has declined significantly since the Trudeau Liberals came to power.

According to the Trudeau government’s emissions reduction plan, “putting a price on pollution is widely recognized as the most efficient means to reduce greenhouse gas emissions.” Fair enough, but a reasonable person might wonder why the same politicians who insist a price mechanism (i.e. carbon tax) is the most efficient policy recently announced relatively inefficient measures such “sustainable investment guidelines” and “mandatory climate disclosures” for large private companies.

The government claims that imposing mandatory climate disclosures will “attract more private capital into Canada’s largest corporations and ensure Canadian businesses can continue to effectively compete as the world races towards net-zero.” That is nonsense. How would politicians Ottawa know better than business owners about how their businesses should attract capital? If making climate disclosures were a good way to help businesses attract capital, the businesses that want to attract capital would make such disclosures voluntarily. There would be no need for a government mandate.

The government has not yet launched the regulatory process for the climate disclosures, so we don’t know exactly how onerous it will be, but one thing is for sure—the disclosures will be expensive and unnecessary, imposing useless costs onto businesses and investors without any measurable benefit, further discouraging investment in Canada. Again, if the disclosures were useful and worthwhile to investors, businesses seeking to attract investment would make them voluntarily.

Even the government’s own announcement casts doubt that increasing business investment is the likely outcome of mandatory climate disclosures. While the government says it’s “sending a clear signal to corporate boards and shareholders, at home and around the world, that Canada is their trusted partner for putting private capital to work in the race to net-zero,” most investors are not looking to put private capital to work to combat climate change. Most investors want to put their capital to work to earn a good financial return, after adjusting for the risk of the investment.

This latest announcement should come as no surprise. The Trudeau government has demonstrated consistently that its policies—including higher capital gains taxes and a hostile regulatory environment—are entirely at odds with what investors want to see. Corporate head offices are fleeing Canada and business investment has declined significantly since the Trudeau Liberals came to power. Capital per worker in Canada is declining due to weak business investment since 2015, and new capital per-Canadian worker in 2024 is barely half of what it is in the United States.

It’s also fair to ask, in the face of these onerous polices—where are the environmental benefits? The government says its climate disclosures are needed for Canada to progress to net-zero emissions and “uphold the Paris climate target of limiting global warming to 1.5°C above pre-industrial levels,” but its net-zero targets are neither feasible nor realistic and the economics literature does not support the 1.5 degrees target.

Finally, when announcing the new climate disclosures, Trudeau Environment Minister Steven Guilbeault said they are an important stepping stone to a cleaner economy, which is a “major economic opportunity.” Yet even the Canada Energy Regulator (a federal agency) projects net-zero policies would reduce real GDP per capita, increase inflation of consumer prices and reduce residential space (in other words, reduce living standards).

A major economic opportunity that will increase business investment? Surely not—mandatory climate disclosures will only further reduce our standard of living and impose useless costs onto business and investors, with the sure effect of reducing investment.

Author:

Matthew Lau

Adjunct Scholar, Fraser Institute

Business

Premiers fight to lower gas taxes as Trudeau hikes pump costs

Published on November 1, 2024

Todayville

From the Canadian Taxpayers Federation

By Jay Goldberg

Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.

You read that right. That’s not the overall fuel bill. That’s just taxes.

Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.

Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.

Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.

Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.

While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.

Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.

In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.

It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.

Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.

When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.

Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”

“Our government will always fight against it,” Ford said.

But there’s some good news for taxpayers: reprieve may be on the horizon.

Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.

With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.

Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.

Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.

Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.

While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.

The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.

That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.

Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.