As Canadians start to cope with the new reality of a Trump presidency, concerns are beginning to surface involving the stark contrast in both character and policy between President-elect Trump and Canada’s Prime Minister, Justin Trudeau.
Let there be no mistake, a mild concern amongst Canadians is warranted – not for diplomatic purposes, but for economic purposes instead.
Whether or not you think that Donald Trump’s policies will be functions that produce outputs consistent with his intention, the newly-elected president is more than eager to get America back on its path to relative economic dominance. This means that Trump will likely want to orchestrate a complete restructuring of foreign trade deals, government expenditures, and therefore taxes, given his vocal opposition to several enactments by the Obama Administration. Canadians are now peeking over the border desperately wondering how a Trump presidency along with his supposed changes are going to affect their own economy.
Let us examine.
A short trip to Donald Trump’s website will show you that he plans to “Unleash America’s $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves.” Trump believes these changes will make the price of oil and other products more competitive and inexpensive. His website also indicates that he plans on lowering corporate tax rates from 35% to 15%. He believes this lower tax rate will incentivize greater foreign investment, create new jobs, and bring American businesses back.
On the other hand, Prime Minister Trudeau has announced that he will impose a national floor price of $50 per tonne on carbon emissions, and that Canada’s corporate tax rate would not change from 38% in response to a more competitive corporate tax rate in America. Many believe Trudeau’s decision to impose a carbon tax and not respond to changes in the global market will render negative effects on any economy competing against other economies without imposed carbon taxes. Carbon taxes specifically intersect with almost every important industry involved in our day-to-day lives. They inhibit investment, production and supply, and therefore increase prices all across the board from the gas you put in your car to the food you put on your table.
Justin Trudeau supporters believe that he has the intention of making the world a better place, while Trump supporters believe that he has the intention of making America a better place. Indeed both are noble goals. However, the former goal often produces consequences that are both negative and unintentional. Any business or economy that doesn’t have its own best interest at heart is destined not only to fail but also to harm its constituents as well. How can you expect Canada to compete with America when America is competing for America but Canada is not competing for Canada, but rather for some abstract ghost-body referred to as the “international community”?
It can be argued that Canada’s economy under Prime Minister Trudeau has largely stayed afloat thanks to similarly destructive legislation, policies and expenditures that President Obama has implemented over his tenure in the Oval Office. In other words, Canada’s economic sustainability can – to a considerable degree – be attributed to the competing American economy not performing at its potential. Over-regulation during the Obama Administration has resulted in a mediocre-at-best economy with relatively unimpressive foreign investment. The Americans are like the best team in the Major Leagues performing at a sub-par level, thus allowing the less talented Canadian team to compete with them.
A business is able to succeed selling cans of soda for $100 a can so long as the competing businesses are also selling that soda for $100 a can. Canadians can thank Obama for choosing to sell his soda for $100, but now that Donald Trump is in office, that soda price could go down, and the only way to remain competitive is to respond to those changes accordingly. If Trump makes the changes that he says he is going to make, Canadians should pray that Prime Minister Trudeau acts in Canada’s best interest rather than in the “global” best interest.
Considering Donald Trump’s experience with business negotiation deals and Justin Trudeau’s inexperience with them, it should not be difficult to surmise that any renegotiation of NAFTA is likely going to favor America over Canada. Thinking that Trudeau can come out on top of a business negotiation with Trump is like thinking that a middle school girl can knock out Mike Tyson. It would be so bad that Donald Trump would metaphorically grab Justin Trudeau by the…. nevermind.
So while Americans can cheer at the content of this article, Canadians have a cause for concern. Whether you like Trump or not, he irrefutably has strong business acumen, fused with a burning desire to put America on top. Prime Minister Trudeau has unfortunately shown feebleness and a lack of leadership, while simultaneously exhibiting ardent prioritization of things such as the environment and the international community over the economic interests of ordinary Canadian citizens.
If Trudeau takes a back seat to Trump regarding NAFTA renegotiations and remains inelastic in response to corporate tax rates and other competitive changes in the global market, Canada will soon begin to receive warranted but undeniably avoidable economic trouble from their neighbors down below.