Key Takeaways
- The upcoming midterm elections in the US could have significant implications for Canada, particularly in regards to trade and the Canada-US-Mexico Agreement (CUSMA)
- The review of CUSMA is likely to be combative, with the US seeking concessions from Canada and Mexico
- The outcome of the midterm elections could lead to a shift in power in Congress, potentially limiting President Trump’s use of executive power
- Canada should be prepared for a challenging trade negotiation, with long-standing irritants such as dairy supply management and agriculture policies likely to be major points of contention
- The prolonged uncertainty surrounding the CUSMA review could act as a drag on investment and hurt all three economies
Introduction to the US Political Landscape
The return of Donald Trump to the White House has brought significant change to global trade, international relations, and domestic politics in the United States. As the country enters the second year of Trump’s second term, there are several factors that could impact Canada, including the upcoming midterm elections and the review of the Canada-US-Mexico Agreement (CUSMA). The midterm elections, which will take place in November, could see the Democrats gain control of Congress, potentially limiting Trump’s use of executive power and leading to a shift in the country’s trade policies.
The Midterm Elections and Their Potential Impact
The midterm elections are likely to be highly contested, with the Democrats seeking to gain control of the Senate and the House of Representatives. If the Democrats are successful, it could lead to a significant shift in power in Washington, potentially limiting Trump’s ability to unilaterally impose tariffs and other trade restrictions. According to Matthew Lebo, a political-science professor at Western University, "midterm elections are generally bad for sitting presidents," and the Democrats have a good chance of gaining control of the House. However, the Senate is likely to be a tougher challenge, with the Democrats needing to gain four seats to take control.
The Impact of the Midterm Elections on Trump’s Power
The outcome of the midterm elections could have significant implications for Trump’s use of executive power. If the Democrats gain control of Congress, they could potentially rein in Trump’s ability to impose tariffs and other trade restrictions, which could have a major impact on Canada. Trump has used his executive power to impose tariffs on Canadian goods, including steel, aluminum, and lumber, and has also threatened to withdraw from the CUSMA. According to Lebo, if the Democrats gain control of the House and the Senate, "things like impeachment are back on the table, oversight and all sorts of things are back on the table."
The CUSMA Review and Its Potential Impact on Canada
The review of the CUSMA is likely to be a major point of contention between the US, Canada, and Mexico. The US has complained about Canada’s dairy supply management system and agriculture policies, and Trump has suggested that the CUSMA is a "transitional" deal. According to Fen Osler Hampson, a professor of international affairs at Carleton University, the review of the CUSMA will be "a lot harder this time around, and we better be ready for it." The US is likely to seek concessions from Canada and Mexico, which could lead to a prolonged and contentious negotiation.
The Potential Consequences of the CUSMA Review
The review of the CUSMA could have significant implications for Canada, including the potential for increased tariffs and trade restrictions. According to Christopher Sands, director of Johns Hopkins University’s Center for Canadian Studies, the US is likely to continue the negotiations, seeking to get more concessions out of Ottawa and Mexico City. However, this could lead to a prolonged period of uncertainty, which could act as a drag on investment and hurt all three economies. Sands noted that "my hope is for a North American truce centred on the CUSMA as the venue for resolving all trade issues that carries us past the midterms."
Conclusion and Future Outlook
In conclusion, the upcoming midterm elections and the review of the CUSMA have significant implications for Canada. The outcome of the midterm elections could lead to a shift in power in Congress, potentially limiting Trump’s use of executive power and leading to a change in the country’s trade policies. The review of the CUSMA is likely to be combative, with the US seeking concessions from Canada and Mexico. Canada should be prepared for a challenging trade negotiation, and the prolonged uncertainty surrounding the CUSMA review could act as a drag on investment and hurt all three economies. As the situation continues to evolve, it is essential for Canada to remain vigilant and prepared for any potential outcomes, and to work towards a mutually beneficial trade agreement that promotes economic growth and cooperation between the three countries.