Analysts: Biden bodes well for Canada-U.S. trade

But Congress could perpetuate belligerent policies of Donald Trump administration

Canadians still reeling from U.S. President Donald Trump’s decision earlier this month to reimpose aluminum tariffs are likely hoping November’s presidential election will bring a change in U.S.-Canada trade relations.

Joe Biden currently leads Trump in the polls, but advice from expert observers is: don’t get your hopes up too high if the Democratic candidate wins the presidency.

That’s because Section 232 of the 1962 U.S. Trade Expansion Act gives U.S. presidents the power to unilaterally impose tariffs if imports are deemed to threaten national security.

While few presidents used it before Trump did, the genie is now out of the bottle, said Carlo Dade, director of the Canada West Foundation’s Trade & Investment Centre.

“The question is whether or not this power will be used again by Donald Trump – who has shown he is willing to use it at a drop of the hat to achieve a political purpose – or by someone else,” Dade said, noting that a potential Biden White House would still have to deal with the realities of trade sore spots like softwood lumber and country-of-origin labelling.

“The Biden administration may not want to use [Section 232 tariffs] against us, but this puts more pressure on them,” he added. “Yes, a Biden administration would be more serious and less likely to use this, but once you’ve demonstrated to every person in Congress ... that this tool is out there, do you stop seeing this popping back up? My answer to this is no.”

One way that this threat to Canada-U.S. trade could be ameliorated under a Biden administration, said researcher Christopher Sands, is if the U.S. Congress recognizes the presidential overreach that’s possible under Section 232, and works to address the issue.

Sands, senior research professor at John Hopkins University in Maryland and director of the Canada Institute at the Woodrow Wilson International Center for Scholars, said that idea isn’t as far-fetched as it sounds, as both Republicans and Democrats have shown displeasure in recent years towards presidents from the opposing party increasingly exercising direct executive powers.

“I think there’s one area of Congress where there’s broad agreement,” Sands said. “If you talk to Republicans, they are more likely to bring up the fact that Barack Obama refused to grant a presidential permit to the Keystone XL pipeline expansion. I know they’d probably hate me for comparing them, but both Trump and Obama did a lot of this executive-order policy-making ... that boils down to acting without Congress, and I think both parties are realizing that’s a bad idea.”

Sands, however, does foresee a more stable Canada-U.S. trade relation in the short-term under a Biden administration. The sudden surprise tariffs, for example, would likely not be present.

The former vice-president has also expressed some concerns about North American free trade and the new Canada-U.S.-Mexico Agreement, but that item is “not high” on Biden’s list of to-dos if elected, Sands noted.

The one issue with which Biden is likely to present a problem for Canadian economic interests, he said, would be the Keystone XL project – which gained the presidential permit it needed under Trump. Sands noted Biden’s support of the Green New Deal initiative clearly continues along the path of the Obama administration – although the Keystone project may be too far along for a new president to stop.

“Biden has said that maybe he would like to go back and rescind the permit or revoke it, but the segment of the pipeline that crosses the border is done,” he said.

“So it’s not clear if the president can revoke the permit and order the pipeline dismantled. It’s probably too late…. Biden does appear to want environmentalists on his side, but my view of it is that it will be disappointing for [Canadian energy] while not being an attack on Canada.”

Dade is less optimistic.

“You can look at the Obama administration as the starting point for the type of opposition Biden has towards Keystone, and that’s in the rear-view mirror,” he said. “Biden has gone much further; he is doubling down, and his appeal to the Bernie Sanders wing of the party is largely environmental.... Politics in the U.S. isn’t always rational, and certainly – at the extremes – it gets further away from rationality at the cost of reason and common sense.”

One area where experts agree Canada will see trade gains with the United States is overall trade with treaty allies and geopolitical/ideological partners. Though Washington’s attitude towards China is not likely to change under a Biden administration, the Democrat would likely be much more aware of the damage Canada would sustain under a more divided global trade system, said Jack Mintz, president’s fellow and former founding director at the University of Calgary’s School of Public Policy.

“One interesting thing [Biden] has, which I think is good for Canada, is that when he talks about going after China, he makes the statement that he doesn’t want to use trade policy to go after allies,” Mintz said. “He wants to go after China, and in fact he is going to work with the allies … to maybe go after China on trade policy.”

Sands added that the likelihood of the United States rejoining the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP) trade bloc – an initiative headed by Washington under Obama – would further boost the system and enhance Canada’s global trade profile through a stronger TPP.

“Biden cares about the TPP because he cares about the global system,” Sands said. “There is already a group from the [TPP] working to get their message through to Trump. Biden could be the beneficiary there if he wins the election; he can pick up easy deals through the TPP, and countries like Japan and Australia are already making moves to facilitate a U.S. re-entry.”

Dade agrees that the United States returning to the TPP would be a major boon for Canada, but added that the presence of the U.S. Congress and its many voices will again need to be addressed if Washington considers rejoining the trade pact.

That political reality could help Biden toward improving trade relationships with Canada – or hinder him.

“I was in attendance in 2015 in Ottawa for Biden’s farewell visit [as vice-president],” Dade said. “It was just amazing, the love fest between Prime Minister Justin Trudeau and Biden....  I think the relationship there will be night and day compared with what we have, and this will benefit provinces like Ontario and B.C. greatly.

“The question is, does that feeling translate to Congress, where some of these America-first mentality exists? Because that’s what could cause trouble for us.”