The Canada-U.S.A. trade relationship under President Trump's Administration

03 February 2017

Canada’s trading relationship with the United States of America under President Donald Trump’s Administration will be very different from previous Administrations and at times unpredictable and volatile. Canada’s largest trading partner is about to go “protectionist” with the goal of creating American jobs as priority #1.

One of Prime Minister Trudeau’s responses to the “America First/American Jobs First” trading environment was to move Chrystia Freeland from the International Trade portfolio to be Minister of Foreign Affairs, but with responsibility for the trade file with the United States. The Prime Minister’s mandate letters to Minister of Foreign Affairs, Chrystia Freeland, and Minister of International Trade, Francois-Philippe Champagne, set out their priorities.

Mandate Letter for the Minister of Foreign Affairs

The mandate letter to Minister of Foreign Affairs Freeland sets out her top priorities that include:

  • Maintain constructive relations with the United States, Canada’s closest ally and most important economic and security partner, and lead efforts to deepen trade and commerce between our two countries.
  • Lead a whole-of-government approach and strategy to the relationship with the United States of America by:
    • ensuring border security and facilitating the movement of people, goods and services;
    • continuing joint efforts to address global security threats, combat terrorism, and defend our continent;
    • cooperating on energy security and energy infrastructure; and
    • advancing shared action on environmental issues and climate change, including through collaboration on clean technology development and innovation.
  • Strengthen trilateral North American cooperation with the United States and Mexico. This will involve working with the relevant Ministers to enhance North America’s global competitiveness and facilitate trade and commerce within the continent, including with respect to the North American Free Trade Agreement.

Mandate Letter for the Minister of International Trade

The mandate letter to Minister of International Trade Champagne states that the Minister’s overarching goal will be to increase trade and attract job-creating investment to Canada, focusing on implementing the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), expanding trade with large fast-growing markets and deepening our trade links with traditional partners. The Minister of International Trade’s top priorities include:

  • Lead the ratification and implementation of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
  • deepen trade and commerce between Canada and the United States and strengthen North American’s global competitiveness.
  • Implement and expand Canada’s Free Trade Agreements globally. This includes:
    • modernizing agreements with Israel and Chile; and
    • promoting trade and investment with emerging markets including China and India.
  • Promote Canadian agricultural interests during trade negotiations.
  • Promote trade and investment with established markets such as Japan.
  • Develop and implement a new Trade and Investment Strategy to support Canadian businesses exporting to international markets and help Canadian jurisdictions attract global investment.

The Future of the Canada-U.S.A. Trading Relationship

Canada’s trading relationship with the United States under President Trump’s Administration and a Republican controlled Congress will be unlike relationships with previous Administrations, Republican or Democrat. The North American Free Trade Agreement will be re-negotiated which is a priority for President Trump, who considers NAFTA to be a catastrophe for American workers. The scope of the NAFTA re-negotiations are not yet known, but expect those re-negotiations to begin in several months. Canada needs a rules based system to govern trade with the United States so it is crucial that the NAFTA re-negotiations succeed.

American special interest groups are lobbying to press the Administration to remove perceived Canadian trade barriers - Canada’s supply management programs are an obvious target. Congress is working on a border adjustment tax that will negatively affect Canadian exports if implemented. Protectionist measures will be challenged before the World Trade Organization (or under NAFTA Chapter 20 if it still exists). If the United States loses, retaliation will follow. None of this bodes well for a predictable and secure Canada-U.S.A. trading relationship.

The Prime Minister has re-aligned his Cabinet and priorities in preparation for American demands for changes to NAFTA and new barriers to Canadian exports to the United States. Canadian exporters are rightfully concerned about future access to the US marketplace. Priority #1 for Foreign Affairs Minister Freeland is to “maintain constructive relations” with the United States. This will be a formidable task in that, to quote Bob Dylan, “The times they are a-changing.”

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

Related   Government Affairs