Key Takeaways:
- The upcoming midterm elections in the US could lead to a shift in power in Congress, potentially limiting President Trump’s use of executive power.
- The Canada-US-Mexico Agreement (CUSMA) is likely to face a combative review, with the US seeking concessions from Canada and Mexico.
- Protectionism is expected to remain a significant issue in US trade policy, regardless of the outcome of the midterm elections.
- Canada can expect to feel the effects of the US political turmoil, particularly in regards to trade and economic relations.
- The CUSMA review will be a complex and challenging process, with the US, Canada, and Mexico facing a three-way choice: renew the agreement, withdraw from it, or trigger an annual review.
Introduction to the US Political Landscape
The return of Donald Trump to the White House has brought significant changes to global trade, international relations, and domestic politics in the United States. As the country enters the second year of Trump’s second term, the president faces significant headwinds, including a potentially combative review of the CUSMA and a bitter midterm battle for control of Congress. The outcome of these elections could have significant implications for Canada, particularly in regards to trade and economic relations.
The Midterm Elections and Their Implications
The midterm elections are expected to be highly contested, with Democrats seeking to regain control of Congress and limit Trump’s use of executive power. According to Matthew Lebo, a political science professor at Western University, "midterm elections are generally bad for sitting presidents." If Democrats are able to gain control of the House and Senate, it could lead to significant changes in the political landscape, including the possibility of impeachment and increased oversight of the president. However, if Republicans maintain control of Congress, it could embolden Trump and allow him to continue his current policies unchecked.
Cracks in the Republican Party
Despite the Republican Party’s current control of Congress, cracks are beginning to emerge. Some Republicans, such as Rep. Marjorie Taylor Greene, have announced their retirement, citing frustration with Trump’s heavy-handed control and the increasingly polarized political climate. Others, such as Sen. Thom Tillis, have pushed back against Trump’s policies, including his "One Big Beautiful Bill" healthcare plan. Trump’s threats to withhold his endorsement from rebel Republicans may be losing their sting, as his popularity plummets. An early December Gallup poll put Trump’s approval rating at 36%, with a disapproval rating of 60%.
The Future of Protectionism
According to Fen Osler Hampson, a professor of international affairs at Carleton University, protectionism is likely to remain a significant issue in US trade policy, regardless of the outcome of the midterm elections. Neo-liberal ideas about unfettered free trade have become broadly less popular across the United States, and Canadians who assume that protectionism will go away if Democrats regain power are indulging in wishful thinking. However, the November elections could restore some checks on Trump’s use of executive powers, particularly with regards to tariffs. Trump has boosted tariffs on Canada to 35%, and Canada is also being hammered by separate tariffs on steel, aluminum, automobiles, copper, and lumber.
The CUSMA Review
The CUSMA review is expected to be a complex and challenging process, with the US, Canada, and Mexico facing a three-way choice: renew the agreement, withdraw from it, or trigger an annual review. Trump has complained about Canada’s dairy supply management system and agriculture policies, and has suggested that CUSMA is a "transitional" deal. Hampson warned that long-standing trade irritants are likely to be magnified in the negotiation, and that Canada needs to be prepared to push back against US demands. Christopher Sands, director of Johns Hopkins University’s Center for Canadian Studies, expects the US to continue negotiations, seeking concessions from Ottawa and Mexico City. However, this prolonged uncertainty could act as a drag on investment and hurt all three economies.
Conclusion and Future Outlook
In conclusion, the upcoming midterm elections and CUSMA review are likely to have significant implications for Canada, particularly in regards to trade and economic relations. The US political landscape is becoming increasingly complex, with cracks emerging in the Republican Party and protectionism remaining a significant issue. Canada needs to be prepared to navigate these challenges and push back against US demands, while also seeking to preserve the option to renew CUSMA under a future US administration. As Sands noted, a North American truce centered on CUSMA could be a potential path forward, but it will require careful negotiation and cooperation between the three countries.