TRUMP 2.0 - IMPACT ON CANADA?

Daniel Brock is one of Canada’s top government relations practitioners, having held several senior advisory positions with federal Ministers of Environment, Justice, Finance, and has worked as Principal Secretary to the Leader of the Official Opposition. He focuses on advisory services, policy analysis, strategic planning, political intelligence gathering, coalition-building and government advocacy.

We are delighted to have a few moments of Daniel Brock’s time to answer questions about the impact of the new administration for Canadians and Canadian businesses.

Thank you very much for your time, Daniel.

Thank you.  It’s a real pleasure to be invited.

As Canadian businesses and governments try to understand and prepare for the upcoming market shifts and economic uncertainty that the 2nd Trump Administration is likely to create, they are seeking the advice and counsels of experts who can help them navigate what most believe will be rough seas ahead.

Fasken Partner Daniel Brock, Chair of the Fasken Government Relations & Strategy practice, has been spearheading efforts by providing the firm’s lawyers and its clients with detailed analyses of the political and economic environment on both sides of the border and critical insights into government policy development, and political decision-making.

How has the Canadian government been preparing for Trump 2.0?

The (re)election of Donald Trump to the White House will have far reaching implications inside and outside America. And, we know from experience, a Trump presidency will dramatically impact not only the way the federal government manages the Canada-US relationship but also how Ottawa organizes the operations and machinery of government to mitigate risks and maintain a positive working relationship with the new and better prepared (than 2017) US administration.

Immediately following the re-election of Donald Trump as President of the United States on November 5th, 2024, Prime Minister Trudeau announced the re-establishment of the Cabinet Committee on Canada-US relations, which had initially been established for the first Trump Presidency. Then-Deputy Prime Minister Freeland was named as the Chair, and Public Safety, and then-Democratic Institutions and Intergovernmental Affairs Minister, Dominic Leblanc, as the Vice-Chair. The top two priorities for this committee were to be trade and the border.

At the time, the Committee anticipated that Canada would be faced with protectionist trade tariffs leading to a renegotiation of CUSMA, pressure to raise defence spending, to eliminate Inflation Reduction Act subsidies and tax incentives for the EV industry, and to match expected American corporate tax cuts. In addition, the Committee expects to address pressing border security issues raised by President-Elect Trump and by his so-called “Border Czar” Tom Homan, formerly an acting director for Immigration and Customs Enforcement.

How does the recent resignation of Prime Minister Justin Trudeau impact Canada’s reaction to anticipated presidential actions by the incoming President?

The PM’s January 6th resignation announcement, the prorogation of parliament until March 24th, and the anticipation of the current government failing under an upcoming non-confidence vote means that this country is effectively without a leader who can respond through legislative measures at the very moment that President Trump takes office. Federal opposition parties, business leaders and provincial Premiers are increasingly branching out on their own in their preparations for Trump 2.0. And in this political leadership void, Mr. Trump has been seemingly gleefully trying to stir the Canadian political pot.  David McNaughton, who previously served as Prime Minister Trudeau’s Ambassador to Washington, said in this respect: "The reality is, today you announce you're stepping down, your power, your influence dissipates almost immediately." We're going to have a few months of uncertainty right now ... and in the meantime, Trump is feeling pretty cocky these days." For my part, I think it’s too soon to say exactly how much that power will dissipate.  Prime Minister Trudeau is an experienced and skilled politician and despite his recent challenges within the Liberal caucus he’s demonstrated in the past a strong ability to manage crises.

In the news, we see reports of various Premiers acting on their own, addressing tariff and border issues. How does this impact our ability to negotiate with the new administration?

Despite the federal government’s attempt to again pursue a “Team Canada” approach to Canada-US relations, the cracks in the proposed common front are getting bigger. Several Premiers have acted alone and the friction between provinces appears to be increasing. Alberta Premier Danielle Smith visited President-Elect Trump in Florida, which was not well-received by all. She has made it clear that Alberta’s oil exports to the US should not be used as a bargaining chip if Canada considers retaliatory tariffs against the US.

The Ontario government has launched a multimillion-dollar advertising campaign in the United States to highlight that country’s close economic ties with the province and the future possibilities between the two. The Premier also announced that the OPP was open to partnering with federal agencies to beef up border enforcement.

Quebec Premier François Legault has stated that he will send Sûreté du Québec officers to the Quebec-US border, and has demanded that Quebec have its own representative  at the table when economic negotiations with the Americans get underway. The Premier is concerned Quebec’s major industries, such as aerospace, forestry, and agriculture, will be sacrificed to spare Alberta’s oil and Ontario’s auto sectors.

Newfoundland and Labrador Premier Andrey Furey, who is chair of the eastern premiers group including Quebec, is seeking a meeting with New England governor counterparts, to explain the toll tariffs would take on their electricity rates.

More recently, however, the Prime Minister did succeed in presenting a somewhat more united Canadian front.  At a First Ministers’ meeting convened last week, Ontario Premier Doug Ford made waves sporting a MAGA-inspired, navy-blue “Canada is not for sale”, baseball cap. But it was Alberta Premier Danielle Smith who truly stood out from the crowd of the convened federal, provincial, and territorial leaders. Once the meeting concluded, Premier Smith was the sole holdout on the resulting joint statement laying out Canada’s anticipated response to President-Elect Trump’s tariff threats.

President-Elect Donald Trump has repeatedly threatened to slap tariffs on all goods exported from Canada into the United States. What is the likelihood of that happening?

In November, in response to threats by then-President-Elect Donald Trump to impose tariffs on goods entering the US from Canada, then-Deputy Prime Minister Freeland stated that Canada would be prepared to once more go dollar to dollar in terms of retaliatory tariffs, should the situation eventually require it once CUSMA comes up for joint review on June 30, 2026. Freeland noted that during the last trade negotiations with the Trump administration, Canada had enacted retaliatory tariffs on American goods, which ultimately helped in lifting the 2018 American tariffs of 25% on Canadian steel products and 10% on Canadian aluminum products.

In the meantime, Mr. Trump has confirmed and repeated his intention to impose 25 percent tariffs on Canadian and Mexican goods via an Executive Order on day one of his new administration. We know they have prepared hundreds of presidential Executive Orders and President Trump has told Congress that he will circumvent the legislative process and act on his own.

It is worth noting that Canada and Mexico account for just over a third of US trade, which is significant, but still pales in comparison to the American weight in Canadian and Mexican economies – the US accounts for 77 percent of Canadian exports; for Mexico it is over 80 percent.

Ontario Premier and Chair of the Council of Federation of Premiers, Doug Ford has stated that there is a consensus among premiers to negotiate bilaterally with the US and deal separately with Mexico. Although then-Deputy PM Chrystia Freeland appeared to have left open the possibility of abandoning Mexico in trade negotiations, it is not a likely scenario as CUSMA contains an option for one country to express dissatisfaction with another country’s actions during the 2026 joint review and provides a framework for working out a solution over a decade while the agreement remains in force. In other words, Mexico could, in theory, remain part of CUSMA until 2036 at the earliest.

What should the Canadian government, Canadians and Canadian businesses do if faced with the threat of protectionist tariffs?

North America is a trading bloc that draws envy across the world. In fact, study after study have “concluded that the North American platform has everything necessary to be the leading economic bloc – energy and resources, talent, technology and innovation in life sciences and information technology plus a market of almost half a billion people.” With all the drama anticipated ahead, we must play our part in reminding decision-makers that cooler heads must prevail, and that multilateralism is indeed a win for all North Americans. 

The federal government and our Ambassador in Washington have been speaking publicly about the tariffs, with the latter noting Canada is the largest market for the US, by far – it is in fact larger than China, Japan, the United Kingdom and France combined. Moreover, the United States relies on Canada for essential products, including oil, electricity, critical minerals, and metals. As the adoption of Artificial Intelligence increases, the American need for these exports will only increase further.

The Conservative Party of Canada leader Pierre Poilievre has called Mr. Trump’s tariff threat “unjustified” and has suggested a willingness to impose retaliatory tariffs if necessary. However, unlike the last time when senior Conservatives. including Hon. Rona Ambrose and Hon. James Moore played an active role on Team Canada, Mr. Poilievre does not appear to be interested in joining a united Team Canada approach to facing the Trump administration. In his opinion, “the provinces are stepping in to fill a border leadership void caused by Ottawa’s inaction on border security.”

President Trump claims that Canada is lax about Border Security. Is there any truth to that claim?

According to numbers from U.S. Customs and Border Protection (CBP) that the Government of Canada has been pointing to, in the last fiscal year, U.S. border patrol officers made 23,721 arrests of migrants trying to cross illegally from Canada, more than double the 10,021 the year before (on the Southern border, border patrol officers made 1.53 million arrests during that same time period). Alarmingly, border patrol agents apprehended 87% of the total number of apprehended individuals on the US Terrorist Screening Dataset (otherwise known as the “Terrorist Watchlist”) at the Northern border in the last fiscal year. Meanwhile, according to the CBP, the agency seized 43 lbs of fentanyl at the Canada-US border in the last year, excluding October, compared to 21,148 lbs at the Mexico-US border in the same period. So, yes, I would say that this data suggests that improvements could be made.

In response, the Prime Minister had announced investments already made as well as made considerable new investments to disrupt the fentanyl supply, and to ensure better border enforcement. The federal government has reminded Premiers that the numbers of apprehended crossing into the United States pales in comparison to those coming in from Mexico, and the same applies to the stark disparity in quantities of fentanyl being smuggled into the United States. Meanwhile, Minister Leblanc announced that he will work with the Premiers to set a Team Canada approach in terms of border security, national security and ensuring the immigration system is orderly. He underscored that new funding will focus on surge capacity for RCMP officers and Canadian Border Services Agency (CBSA) agents, as well as on procuring new technologies, drones, and helicopters.

It may be obvious to say, but the dynamics between Canada and the new Trump Administration 2.0 is a rapidly evolving situation.  The Canadian government is hoping for the best, that in the end our bilateral relationship on trade and security will dissuade the President from implementing his more severe threats.  But the government is planning, such as it can, for the worst, and working very hard in Washington and across many strategically important states such as California to make the case against starting a major trading dispute with America’s single biggest and most important trading partner. We will know sooner rather than later which direction these dynamics go.