Heliene Inc. president Martin Pochtaruk is one of Canada's leading renewable energy entrepreneurs, but after the Northern, Ont. company suffered under Trump's protectionist policies in 2018, Pochtaruk decided to open a production line in the U.S.Weston Handren Photography/The Globe and Mail
In January of 2018, Donald Trump fired the opening volley in the trade wars that defined his first presidency, and Martin Pochtaruk’s solar company was one of the earliest Canadian casualties.
That month, the United States slapped sky-high tariffs on all imports of solar energy equipment in a bid to slam the door on Chinese producers. But Mr. Pochtaruk’s Heliene Inc., a maker of high-efficiency solar panels, also shipped 90 per cent of the products it manufactured in Sault Ste. Marie, Ont., south of the border, and the tariffs caused steep losses.
The message to Heliene’s founder and chief executive officer was clear: “Move our manufacturing to the United States or die.”
Today Heliene is still headquartered in the Northern Ontario city and does its research and development there, but it operates two production lines in Mountain Iron, Minn., with another opening soon in Minneapolis, which will bring its total U.S. manufacturing work force to 500 people. Tim Walz even referenced the company’s U.S. investments in his home state during the vice-presidential debate against J.D. Vance.
“Trump has been very protectionist of U.S. manufacturing and I would expect he’ll do even more,” said Mr. Pochtaruk of Mr. Trump’s impending return to the White House. “But this time we’re on the right side of the border.”
Heliene’s journey reflects the anxiety gripping corporate Canada since Mr. Trump swept to victory promising an America-first trade agenda.
As a share of Canada’s overall trade, the U.S. is more dominant than ever – buying roughly 77 per cent of Canada’s merchandise exports in recent months, the highest level since 2007. If Mr. Trump follows through on his threat to impose a universal tariff of 10 per cent to 20 per cent on all imports it could weigh heavily on Canadian exports. Meanwhile, his promise to reopen the United States-Mexico-Canada Agreement (USMCA) in 2026 could put a chill on business investment in Canada, given the uncertainty about access to the U.S. market.
However, other trade experts also see opportunities in the trade tumult for Canada to benefit within fortress North America. That is, if Ottawa plays its cards right and steps up on a range of issues important to Washington, from military spending, to migration, to cutting China out of electric vehicle and battery supply chains.
“It really is about how credible a partner we are, and nice words are not enough anymore,” said Louise Blais, a former Canadian ambassador to the United Nations and consul general in the southeastern U.S.
For now, the prevailing mood is dour. For good reason. Even a 10 per cent across-the-board tariffs would shrink Canada’s economy by the equivalent of $1,100 per person, according to analysis by University of Calgary economist Trevor Tombe.
“That‘s really the best-case scenario,” said Prof. Tombe, since it doesn’t account for the impact rising uncertainty would have on investment.
A permanent tariff “would almost surely mean a recession for Canada,” he said.
Finance Minister Chrystia Freeland emphasized this week that Ottawa plans to rely heavily on the relationships it built with U.S. officials during first Trump administration as it attempts to safeguard trade access to the U.S. To that end, there were conflicting media reports on Friday that Mr. Trump has asked Robert Lighthizer, his former U.S. trade representative and Ms. Freeland’s counterpart during the renegotiation of the North American Free Trade Agreement, to step back into the role.
While some personnel will be sitting in the same seats as in 2018, the table itself has changed.
Canada’s economy braces for an ‘unpredictable’ future with Trump back in White House
Mr. Trump’s resounding victory – and likely Republican control over both houses of Congress – has strengthened his hand, and experts expect him to move quickly to advance his protectionist agenda with executive orders. Canada’s government, by contrast, is highly unpopular at home and long in the tooth. There’s a good chance the Conservative Party, led by Pierre Poilievre, will be in power by the time the USMCA is formally reopened in 2026. ,
The world has also “fundamentally changed” over the past half-decade, and that will require Canada to approach the negotiations very differently, said Bill Morneau, Liberal finance minister from 2015 to 2020.
China’s progress in advanced technologies, such as electric vehicles and batteries, has shocked the American political establishment. Washington now sees Beijing as a serious threat to U.S. economic supremacy. And a bipartisan consensus has emerged around the need for massive government intervention in the economy – through tariffs or subsidies – to revive U.S. manufacturing and to cut China out of crucial parts of the North American supply chain.
If Canada wants to succeed in any future trade negotiations, this needs to be front of mind, Mr. Morneau said.
“We need to think about how we are part of North American energy security, and we need to look at our defence spending to make sure that we are moving towards the NATO targets more rapidly,” he said.
“We also need to think about how we can ensure that we are part of a North American technology sector that is critically important. So, from my perspective, I would question whether we really should be moving forward with the digital services tax at a time when we want to be working together with the United States on technology,” he said, referring to Ottawa’s tax on profits of large tech companies.
To a large degree, Canada has already thrown its lot in with the Americans, most recently announcing a 100 per cent tariff on Chinese EVs and 25 per cent tariffs on Chinese steel and aluminum.
It’s a tricky situation – having to draw closer to a trade partner at a moment when their belief in trade is in question. But past attempts to diversify trade away from the U.S. have come up short.
It’s not for want of trying. Canada has signed a series of free trade agreements over the past decade, including a deal with Korea in 2014, the European Union in 2016 and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), covering 11 countries, in 2018.
In absolute terms, exports to Asia have grown at a healthy clip, said Jeff Nankivell, CEO of the Asia Pacific Foundation of Canada. There are good opportunities for Canadian companies to expand in Southeast Asia and Japan, where agriculture tariffs are declining as part of the CPTPP, he said.
But other markets haven’t shaped up the way evangelists of trade diversification had hoped. Companies are nervous to expand in China, given its tensions with the U.S., and the diplomatic spat between Canada and India over the killing of a Canadian citizen, allegedly by Indian agents, has “flattened the trajectory of what could have been possible,” Mr. Nankivell said.
At the end of the day, global trade patterns are overwhelmingly determined by the size of and distance between trading partners, said Peter Morrow, an associate professor of economics at the University of Toronto who focuses on trade.
“You can’t just have Canada wake up and decide that it’s going to trade with England in similar quantities as it trades with the U.S. So, when you talk about diversifying away from the U.S., you’re really fighting against very strong economic forces,” he said.
Despite the risks posed by Mr. Trump, there are plenty of opportunities, said David Paterson, Ontario’s representative in Washington. He said he’s spent much of the past year meeting with Republican politicians in preparation for the possible return of Mr. Trump, and there is interest within the party in what Canada can bring to the table.
“If we get on the front foot, clear the deck, remove the [digital services tax], do our defence spending, stop transshipment from China‚ and show the Americans that those things are all possible, then we would be in a very favourable spot. And I wouldn’t trade places with any country in the world in terms of being able to build business with the United States,” Mr. Paterson said.
Reopening the USMCA could also provide an incentive for Ottawa to liberalize its agriculture sector by dismantling the supply management system that sets production quotas and prices for dairy farmers, said Prof. Tombe.
The program infuriated the first Trump administration but, in the end, U.S. negotiators abandoned the issue. That might not be the case this time around, and the federal government could offer to end supply management as a concession to get a better deal for Canada’s economy – with the added benefit of lowering dairy prices for Canadians.
“It would be an amazing win-win,” said Mr. Tombe.
For Heliene, the solar company, it wasn’t only the push of tariffs that sparked its manufacturing shift south of the border. President Joe Biden’s Inflation Reduction Act provided lucrative tax credit incentives the company tapped, ones which Canada has failed to match.
But the result is the same – America’s win, Canada’s loss.
“As a Canadian I’m upset because how do we bring investment to Canada,” Mr. Pochtaruk said.