U.S. is Canada’s largest trading partner and the outcome of US elections will hold a crucial place for the Canadian economy. Both the Democrats and the Republicans have different economic visions which will drastically steer the economic direction within the US and beyond its borders. While the Canadian Prime Minister, Justin Trudeau, recently quoted that the country is prepared for “multiple contingencies and multiple outcomes”, it is uncertain what implications will it hold for the Canadian interests. Here are few sectors which will have direct consequences of the elections.
The Trump led government enacted corporate tax cuts in 2017 which fell from 35% to 21%. While it lasts, the Trump administration has also demonstrated trade and tariff uncertainties in the past which are highly unfavorable for the entrepreneurs at large and other export-oriented businesses. Biden on the other hand proposes to raise corporate taxes which could disenchant Canadian tech startups and companies with big US exposures.
“Made in America”
Biden has proposed tax incentive on “Made in America” that offers tax credits for US based companies. His aggressive marketing for American companies that enhance domestic employment and salaries can also potentially discourage Canadian market expansion.
NAFTA is Canada’s international mobility program which liberalizes trade between the US, Mexico, and Canada has also seen fair set of challenges from the Trump government. He has prompted tariff feuds which have disrupted the growth of international trade. For example, imposing tariffs on imports of aluminum for Canada, recently. Biden, on the other hand, has proposed to invest $400 billion In purchasing American made products. This might hamper many Canadian entrepreneurial dreams as their vision might narrow down only to Canadian markets.
Almost one-tenth of the Canadian economy thrives on the energy sector. And Biden’s climate agenda can impede key oil infrastructures, like the Keystone XL pipeline. Having said that he has also proposed to spend $2 trillion over the next few years on sustainable sources of energy. This may provide lucrative opportunities for the Canadian equity investors in the renewable energy sector.
Corporate tax rates, trade policy, infrastructure spending, and climate change rules can be some of the pressing factors for the Canadian entrepreneurs from the 2020 US elections. Canada also needs to strategize its policies and reduce its high dependency on the US. This combined with highly contrasting policies offered by both the presidential candidates, it is important that the Canadian government participates more objectively in the future.