Good morning. Republican candidate Donald Trump declared victory early this morning from his campaign headquarters in West Palm Beach, Fla., calling his return to the White House “the greatest political movement of all time.”
Later, when he had actually been declared the winner by officials, it became abundantly clear that Canadian policymakers and business leaders now face a U.S. administration that could introduce the sweeping and strict tariffs that were a cornerstone of Trump’s campaign.
The campaign may have also revealed how protectionism is increasingly being embraced by both the Republican and Democratic parties – a development that could have massive implications for Canada’s economy far beyond the next four or even eight years.
No biggie! More on that below, but first:
In the news
Unsecured bond holders at Corus Entertainment are refusing to engage with would-be buyer Quebecor Inc.
Toronto home sales climbed 14 per cent in October as homebuyers jumped back into the market.
Canada’s potash producers are warning that a lockout at British Columbia ports will allow rivals Russia and Belarus to gain market share.
Former SNC-Lavalin chief executive Jacques Lamarre’s conduct is being weighed by a professional order that oversees engineering in Quebec.
Happening today
- Bank of Canada Senior Deputy Governor Carolyn Rogers is talking about Canada’s mortgage market at the Economic Club of Canada in Toronto. Should be a full house.
- China’s trade balance report for October puts a spotlight on the country’s exports, which have been a lone bright spot for the struggling economy. Gulp.
- Earnings include semiconductor giant Qualcomm Inc. and Toyota Motor Corp.
Voters yesterday at the San Francisco Columbarium & Funeral Home.Jeff Chiu/The Associated Press
In focus
Why Canada’s relationship with America is changing
It’s fun to brace for the USMCA: The federal government is facing a protectionist new U.S. administration that will push for more trade concessions, further challenge Ottawa’s decision to implement a tax targeting U.S. tech giants and demand that the country fall in line with tariffs against China that could spur damaging retaliatory measures.
That’s something I could have written regardless of who won the election. But those challenges are especially heightened by the return of a Trump administration.
With Trump, who has called Prime Minister Justin Trudeau “dishonest and weak” and “mild and meek” on social media, Canada risks graduating from irritant to adversary in 2026, when the United States-Mexico-Canada Agreement comes up for renewal.
Harris might have waited until at least 2025 to press Canada for concessions. Trump could start @-ing Trudeau on X tomorrow.
There are varying degrees of protectionism – as the differing views on offer in this election made clear – but the campaigns revealed that the number of politicians in Washington who support free trade as we’ve known it for the past several decades are vanishing, David MacNaughton, a former Canadian ambassador to the U.S., told The Globe earlier this week.
“There’s no question, that we’re living in an environment where you won’t get many politicians in the United States to stand up and say, ‘I believe in free trade,’ or ‘I believe in the multilateral trading system that’s existed since the Second World War.’ ”
How does Canada fit into a world where it can no longer take less-restrictive exporting to the U.S. for granted?
“We’ve got to be in a position to emphasize that we’re prepared to step up and be part of an integrated Fortress North America or Fortress Canada-U.S. or whatever it is. We’re going to have to demonstrate that we are going to do that – and we’re not going to take 30 years to get minerals out of the ground that they need for EVs or batteries.”
Off on the wrong foot: As the clock ticks down to the USMCA negotiations, Ottawa has already inflamed the U.S. by moving ahead of its OECD allies with a 3-per-cent digital services tax, which is largely aimed at U.S. tech giants such as Google, Amazon, Netflix and Spotify.
- The federal government’s decision was met with scorn from the White House, which called for dispute consultations in August. A failure to satisfy the United States’ concerns within 75 days means the U.S. can request a dispute panel to examine the issue.
- According to my calculations, that day arrives at some point over the next two weeks.
David Paterson, Ontario’s trade representative to Washington, said this week that the tax is angering politicians across the aisle just as the country should be focused on strengthening ties. “There’s not all that many things that unite both Democrats and Republicans these days, but let’s not have it be opposition to Canada.”
Under pressure: At the USMCA meetings, the U.S. will be focused on defence and immigration and will expect Canada to be in alignment. Trudeau has vowed to reach a NATO goal of spending 2 per cent of GDP on defence by 2032. That timeline would be unacceptable to Trump, the former president’s ambassador to Canada Kelly Craft said earlier this week.
Trump’s tough stand on immigration is also likely to present Canada with new pressures to lower its immigration targets even further than the drastic reductions it announced last month.
In announcing its new measures, the federal government said high immigration levels have contributed to rising housing prices and allowed employers to find cheaper labour and avoid investing in their businesses.
The Chamber of Commerce and the Canadian Federation of Independent Business were critical of the moves, while human-rights advocates slammed the government for suggesting that migrants are responsible for Canada’s housing and affordability crisis.
Soon – on immigration, on defence spending, on the federal government’s attempt to extract revenue from U.S. tech giants – Canada might be pressed to go further on policies that are already unpopular.
For a country that counts on the U.S. for 70 per cent of its exports, then, Ottawa faces a difficult balancing act of appeasing its largest trading partner by leaning into policies that could inflame an already restless electorate. Are you Prime Minister Justin Trudeau or Conservative Party Leader Pierre Poilievre? E-mail me your thoughts: cws@globeandmail.com. (Please feel free to e-mail me even if you’re not one of those two people.)
In sum:
“Wishing to be friends is quick work, but friendship is a slow ripening fruit.”
- Aristotle
“If you’re a bird, I’m a bird.”
- The Notebook
Charted
Where it pays to lead
This chart does not include Saudi Arabia, whose reigning monarch’s salary is whatever he wants it to be.
The outlook
On our radar and reading list
At the box office: The Canadian Stage is reporting a surplus for the first time in its 37-year history.
In justice: Washington has Ottawa pegged as the weakest link on financial crime, Rita Trichur writes.
In Taiwan: A Canadian missionary who visited over a century ago remains one of the country’s most influential Westerners.
Morning markets
Global markets rallied on “Trump trades” in immediate reaction to the former U.S. president clinching the White House. Wall Street bets soared, with the Dow and S&P 500 futures touching record highs, while TSX futures followed sentiment higher.
Overseas, the pan-European STOXX 600 was up 0.96 per cent in morning trading. Britain’s FTSE 100 rose 0.94 per cent, Germany’s DAX gained 0.39 per cent and France’s CAC 40 advanced 0.89 per cent.
In Asia, Japan’s Nikkei closed 2.61 per cent higher, while Hong Kong’s Hang Seng slid 2.2 per cent.
The Canadian dollar traded at 71.92 U.S. cents against a surging U.S. dollar.
Editor’s note: Canada moved ahead of its OECD allies with a digital services tax. A previous version of this newsletter mistakenly referred to the wrong organization.