Dealing with Biden
From the February 2021 print edition
It seems obvious that many Canadian businesspeople will be happy that the presidency of Donald Trump is behind us. Whatever the specific policies, an administration run by President Joe Biden will most likely mean a smoother, more amicable relationship with Canada. At the very least, that relationship will be more predicable than what we’ve seen over the past four years.
The relationship is important on both sides of the border. And let’s not forget Mexico, as nearly 80 per cent of our exports go to our combined CUSMA partners. We’re the largest goods export market for the US – mostly for vehicles, machinery, mineral fuels and plastics. In 2019, US goods and services trade with Canada totalled a staggering $718.4 trillion.
This is something that President Biden would do well to keep in mind. With so much crossing the border in the form of goods and services, it’s important to keep things smooth and both sides happy whenever possible.
Indeed, Prime Minister Justin Trudeau recently intimated to the media that after four years of dealing with an unpredictable and often pugnacious administration to the south, dealing with a Biden-run government should be much easier.
President Biden will work towards goals that he sees as benefiting the US and its interests. That’s to be expected. Exhibit A of this is the fate of the Keystone XL project, which he kiboshed within hours of taking his oath of office. Doing so had been a key campaign promise.
So, what will a Biden presidency mean for Canadian business, manufacturing, supply chains and the import-export community?
For one, expect a lot more “Buy American” talk. A key promise from Biden’s campaign is to “ensure the future is made in America”. That could mean tighter rules surrounding US government procurement. Biden reportedly told Trudeau as much during their call on January 22. During that conversation, although the new president seemed aware of how deep supply chain connections are between the two countries, he made no promises that Canada would escape being shut out of such contracts.
What should Canada do? The message from Ottawa should reflect a policy that the Canadian Manufacturers & Exporters refer to as “Buy North American.”
“Canada, Mexico, and the United States don’t trade with each other anymore – we build things together,” said Dennis Darby, president and CEO of CME, in a January 18 blog post. “Excluding each other from our respective government procurement markets could seriously hurt our precarious economic recovery.”
This could take time and effort. Recall that it took Canada a year to negotiate exceptions in 2010, following the economic crisis of 2008-09, when President Barack Obama’s administration enacted Buy American provisions. The prime minister should regularly remind President Biden of the integrated nature of North America’s economy and supply chains. Hearing that message may help to soften the protectionist sentiment in Washington.