As U.S. election day approaches in just seven weeks, it’s looking like the Canadian economy might be caught between a rock and a hard place — regardless of the outcome.
Experts say a Donald Trump presidency and his proposed 10 per cent tariffs on Canadian imports would hurt Canada’s economy, but Kamala Harris could also be problematic — especially if Conservative leader Pierre Poilievre becomes Prime Minister.
Shortly after the U.S. election, talks around the Canada-United States-Mexico Free Trade Agreement, referred to as CUSMA, will ramp up as it is set for review on July 1, 2026.
Both Trump and Harris are expected to pressure Canada to open markets to U.S. exporters while defending protectionist policies.
But Harris’ liberal positioning could create tensions between her and Conservative leader Poilievre, should he win an election in Canada, a scenario that is increasingly likely.
“There may be a butting of heads between the two parties, given their differing political ideologies,” said Michael Davenport, economist at Oxford Economics Canada, “and that could complicate the CUSMA negotiations further.”
Since CUSMA was implemented in March 2020 under the Trump administration, there has been a 47 per cent increase in North American trade and an additional 4 million jobs created by eliminating almost all tariffs and keeping goods flowing between borders duty-free, according to the Canadian Chamber of Commerce.
But a falling-out in trade negotiations in 2026 could be dangerous for the Canadian economy, said Matthew Holmes, senior vice president of policy and government relations at the chamber.
“My hope would be that we take this very seriously,” he said.
While Trump tore up former North American Free Trade Agreement, he might be inclined to keep CUSMA as is, he added.
“In a certain way, (the Trump administration) sees CUSMA as theirs. They helped make that happen.”
Holmes worries that current U.S. trade representative Katherine Tai would also continue to criticize Canada’s trade relationship under a Harris presidency. Notably, Harris was one of 10 senators to vote against CUSMA in 2020.
“It’s not an easy ride for us in either scenario” said Holmes.
Besides shaky CUSMA negotiations, a Trump presidency with Republican control of Congress would result in weaker growth, higher inflation and higher interest rates on our side of the border, according to a recent analysis by Oxford Economics.
A Harris win, with Democratic control of Congress, is a slightly better scenario that would see a boost in Canada’s gross domestic product but also a rise in inflation, though these effects are expected to be moderate by 2029.
And Harris’s economic policies would not significantly impact Canadian interest rates, according to the analysis.
Ultimately, Holmes thinks Poilievre and Harris would have “a willingness and pragmatism to get to business and get to work on striking a good deal,” while Trump has proven to be “a combative partner.”
Matthew Lebo, professor of political science at Western University, agrees, adding that there have been many cases where political leaders with differing ideologies were able to form good relationships.
“It might be better if they were on the same page,” he said, “but I certainly wouldn’t say that, because Canada looks destined to have a Conservative prime minister next, it would be better for the Canadian-American relationship — or better for Canada in general — to prefer a Trump presidency to a Harris presidency.”
