America’s trading partners are bracing for the impact after Trump’s win

Article content

America’s trading partners are headed for trouble now that Donald Trump has been elected president of the United States again – and for good reason. He is a protectionist and isolationist who will use the threat of tariffs to negotiate favorable trade terms for the US.

Trump will want to renegotiate the agreement with Canada and Mexico when the free trade agreement between these three countries will be updated in 2026. Both countries must be ready to give concessions to “Buy America” ​​supporters and special interest groups. Quebec’s insistence that asset management remains in place so Canadians continue to overpay for milk, chicken and eggs will not go down well with American farmers, who have called for greater access to the Canadian market.

Article content

In 2023, Mexico surpassed China and Canada as the largest exporter to the United States, in part due to the presence of new Chinese-owned auto parts manufacturing facilities designed to take advantage of duty-free access to the US and Canada. Trump has already indicated that such practices by China will not be allowed and has threatened to impose a 60 percent tariff on all exports from China. He is also proposing an across-the-board tariff of between 10 and 20 percent on all exports to the United States.

Such tariffs could violate the United States-Mexico-Canada Agreement, the existence of which is under threat from Trump’s trade team. They want firm prices or great deals. They hope to strengthen “Buy America” ​​requirements in government procurement contracts that exclude competitors from Canada and Mexico.

However, the three economies have integrated their economies since the signing of the North American Free Trade Agreement in 1994 and Canada will be somewhat immune from Trump’s tough proposals. Given the reliance of many U.S. industries on trade with Canada, a strong U.S. lobby is in a position to prevent disruptions to their supply chains, a fact that could mitigate protectionist damage.

Article content

On the other hand, China is facing a difficult journey. The country is facing the mistakes made by its government. These include allowing real estate speculation to run rampant, allowing local governments to borrow heavily to build lavish infrastructure and spending $1 billion on China’s Belt and Road Initiative around the world. Beijing has built ports, railways, roads, airports and other infrastructure for struggling countries to gain political favor, but many of these countries cannot afford them.

China will be hit hard, but Canada has little to fear from Trump’s trade policies for two reasons: we are interdependent and economically integrated; and Canada remains America’s most important customer and economic partner.

However, Trump’s plans to deport millions of undocumented immigrants will cause chaos in Canada, as many will flee here because we are separated by the world’s longest unsecured border. Border control and surveillance measures should be developed in anticipation of this.

But so far, the biggest threat is Trump’s dislike of Prime Minister Justin Trudeau. This is because Trudeau was caught on the mic at the conference mocking Trump and other world leaders. The fact that Trudeau remains in office will invite trouble for Trump.

Financial post

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletter here.

Share this article on your social network