Canada has a lot at stake in tomorrow’s U.S. presidential election – particularly in the event of a Donald Trump victory, which could inject a wee bit of volatility into global trade.
(So much is at stake, in fact, that you’d think I would not have written in Friday’s edition that the election is on Wednesday. That’s wrong: It’s tomorrow! Ignore Friday Chris. He’s old news.)
Apologies for his mistake. Okay, down to business:
In the news
Carbon capture: Oil sands CEOs are optimistic for movement on a $16-billion emissions project.
Cash cache: Warren Buffett is sitting on more than US$325-billion in cash after continuing to unload billions of dollars worth of Apple and Bank of America shares.
Hikes on hold: Bell Canada parent BCE is expanding into the United States by acquiring internet provider Ziply Fiber for $5-billion, while also pausing dividend increases in order to help fix its balance sheet.
Happening this week:
- Did we mention the U.S. election is tomorrow? You can follow our live coverage here.
- The day after the vote, the U.S. Federal Reserve Board begins meeting ahead of Thursday’s interest-rate decision, which is widely expected to be a quarter-point cut.
- China announces October trade figures on Thursday. Exports to the U.S. at risk just as you need them the most? Figures.
- GFL Environmental Inc., whose Toronto office building was hit with a barrage of bullets last week in the newest attack on homes, property and equipment linked to the waste-management company, reports after close on Wednesday.
- You can find more earnings and events from the week ahead here.
The U.S. Capitol in Washington, D.C. Is it getting darker or brighter?AFP/Getty Images
In focus
The U.S. election’s many effects on Canada
The results of tomorrow’s vote carry massive implications for the Canadian economy – which depends, in large part, on a healthy trade relationship with its wealthy southern neighbour. Globe reporters Jason Kirby, Mark Rendell and Matt Lundy laid out the implications of a Harris or Trump victory on trade, markets, energy and taxation. Here, we take a quick spin through their findings:
On trade
Trump: The former president has promised a 10-per-cent to 20-per-cent tariff on all imports into the United States, and much steeper levies on Chinese goods, Mexican cars and other products he claims are undercutting American manufacturing.
That poses a major risk to the Canadian economy: More than 70 per cent of Canada’s exports go to the U.S. – worth around $650-billion in 2023. A large amount of business investment is premised on seamless access to the much larger market to the south, the reporters write.
Economist Trevor Tombe calculates that a 10-per-cent U.S. universal tariff, combined with retaliation from other countries, could shave $45-billion off the Canadian economy and lead to a 1.6-per-cent drop in productivity.
Harris: If her trade policy represents a more nuanced approach than “tariffs on everything,” we haven’t seen much evidence of it from her campaign. We noted in Friday’s newsletter that economists see her policies on that front as “a bit of a blank slate,” but what we do know suggests a more protectionist stand than that of President Joe Biden.
As a senator, she was one of 10 who voted against the United States-Mexico-Canada Agreement (USMCA), which replaced the North American free-trade agreement, which she’s also on record saying she would have voted against. As the USMCA comes up for renegotiation in 2026, Canada might be in tough.
Ottawa and its economic allies might already have their hands full anyway. European Union officials are unprepared for a potential Trump-inspired tariff onslaught, which could trigger a global trade war, Eric Reguly writes. Even a Harris victory could trigger tariff misery, he says.
(I’ve been reading stories about how those top European officials have been racing to prepare for the possibility that Trump might win, which either suggests a forgetfulness that the U.S. presidential election is held on the same day every four years – or that top European officials are, like many of us, just getting by as best we can.)
On energy
Trump would roll back the Biden administration’s climate-friendly policies, which would have a significant impact on some states in particular.
- As The Globe’s Adam Radwanski recently reported, Biden’s Inflation Reduction Act is powering a clean energy boom and bringing jobs to swing states like Georgia.
- And even Texas, the reddest and oiliest of states, is embracing renewable energy, Jeffrey Jones reports.
Economists don’t believe he’d hit Canadian oil with tariffs, but one of the only predictable things about Trump is that he can be, at times, unpredictable. In any event, tariffs on that scale would be bad for exporters of energy or anything:
Harris, meanwhile, has undergone a remarkable transformation on fossil fuels. At a 2019 campaign even, she compared the industry to Big Tobacco:
“They had done the studies and they knew of the harm that their product was creating, but they still pushed their product ‘cause they were making a ton of money. That’s the same thing with Big Oil. They’ve known for a long time what they’ve been doing that is destroying this God-given planet,” she said.
At a September rally this year, Harris boasted that she and Biden had overseen “the largest increase in domestic oil production in history because of an approach that recognizes that we cannot over rely on foreign oil.″
That’s a fast change of heart on fuel. But when you’re suddenly running for president of the United States, you need all the energy you can get.
You can read more on the election’s effects on Canada from our reporting team here.
Recommended election reading:
We might be caught up in a fraught period, but complacency is having a moment.
- Ian McGugan wonders why markets have seemed so complacent about the election.
- Which reminds me of Tim Shufelt’s piece wondering why oil traders seem so complacent about global economic shocks.
- And the Bank of England lectured last week that “we mustn’t get complacent” over artificial intelligence and its impact on financial stability.
Globe Junius declares that Canada is either headed for the worst four-year stretch of economic performance in its history, or the federal Liberals have bungled the math on their plan to ramp up defence spending through the end of the decade. (Junius is shorthand around here for our editorial board.)
The lookout
On our radar and reading list
London’s landlord: How one developer landed at the centre of a fight over the Southwestern Ontario city’s core.
Dreaming of electric sheep: Gadgets and tech promising a good night’s sleep are rampant and expensive, but do they work?
Hmmm: Generative large language models like OpenAI’s ChatGPT are using techniques similar to human thought as an “unintended by-product.” Huh! Huh.
Morning markets
Global markets edged higher in cautious trading ahead of tomorrow’s U.S. presidential election, which is still too close to call. Wall Street futures were in positive territory while TSX futures were up as crude prices climbed.
Overseas, the pan-European STOXX 600 was up 0.24 per cent in morning trading. Britain’s FTSE 100 rose 0.625 per cent, Germany’s DAX inched 0.04 per cent lower and France’s CAC 40 advanced 0.24 per cent.
In Asia, markets in Japan were closed for a holiday, while Hong Kong’s Hang Seng closed up 0.3 per cent.
The Canadian dollar traded at 71.89 U.S. cents.