Trump’s 2024 Win: What It Means for U.S.-Canada Relations and Economic Tie

With the Associated Press reporting Donald Trump as the winner of the 2024 U.S. presidential election, securing 277 electoral votes at the time of writing, Canada may face substantial changes in its relationship with its largest trading partner. The United States and Canada are closely linked through trade, energy, and security agreements that shape both economies and everyday life across the border. Here’s a look at how Trump’s return to the White House might reshape U.S.-Canada relations and impact Canada’s economic landscape.

Trade Relations: Preparing for Potential Challenges

Canada’s trade with the U.S. is extensive, with approximately 76.5% of Canadian exports—valued at around $380 billion USD in 2023—heading south of the border. Trump's “America First” policies previously introduced tariffs on Canadian goods, including steel and aluminum. A renewed focus on protectionist measures could mean tariffs on other key Canadian exports, such as lumber and dairy. Such changes could raise costs for Canadian exporters, with each 1% increase in tariffs potentially impacting Canada’s economy by $3 billion USD annually. The USMCA trade agreement provides some protection, but new U.S. trade policies could still have a significant impact.

Divergent Energy Policies: An Evolving Landscape

As Canada pursues its goal of net-zero emissions by 2050, the Trump administration’s support for increased U.S. fossil fuel production could present a contrast. Trump’s policies might drive U.S. oil output to around 14 million barrels per day by 2026, potentially lowering global oil prices. This could affect Canada’s oil revenue, with the oil sands industry comprising about 10% of Canada’s GDP. Additionally, Canada’s burgeoning clean energy sector—worth about $10 billion USD in 2023—might face challenges in building partnerships in a U.S. market more focused on fossil fuels. This divergence could require Canada to adapt its energy trade and environmental strategies to align with shifting U.S. priorities.

Workforce Mobility: Cross-Border Talent May Face New Barriers

Canada’s economic relationship with the U.S. is strengthened by the movement of skilled labor, with industries like tech and healthcare relying on workers crossing the border. Over 400,000 Canadians currently reside in the U.S., and tighter immigration policies could make it more difficult for Canadian professionals to access opportunities in the U.S. Industries that depend on this mobility may need to adjust, and Canada could see a potential impact on talent retention and development as cross-border work becomes more restricted.

Currency and Inflation: The Impact of a Stronger U.S. Dollar

Changes in U.S. interest rates and economic policies under Trump could strengthen the U.S. dollar, affecting Canada’s economy. A stronger U.S. dollar might enhance Canada’s exports by making them more affordable for U.S. buyers, potentially benefiting certain sectors. However, it could also increase the price of U.S. imports, affecting Canadian consumers and businesses that rely on American goods. Analysts estimate that a stronger U.S. dollar could add 0.3% to Canada’s annual inflation, which may further strain households dealing with high costs of living.

Security and Diplomatic Relations: Balancing Defense and Diplomacy

The U.S. and Canada share vital security responsibilities, from border protection to NORAD. Trump’s assertive foreign policy style could introduce new diplomatic challenges, requiring Canada to carefully maintain open communication and alignment on defense priorities. With Canada’s defense budget at around $30 billion USD in 2023, the country may need to consider increased spending to meet shared security obligations. Maintaining this alignment is essential for both nations’ safety and stability.

Navigating a New Chapter in U.S.-Canada Relations

As Trump begins a new term, Canada’s economic and political landscape may shift in response. The two countries’ economies are deeply intertwined, and while challenges lie ahead, Canada can look for ways to strengthen resilience, diversify trade relationships, and foster innovation to adapt to changing U.S. policies. While uncertainties remain, Canada’s long-standing partnership with the U.S. will continue to be crucial, and finding common ground could prove essential in facing future challenges.

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