What Will a Biden Presidency Mean to Canada?

It took a few extra days to decide, but the outcome of America’s election is now clear: Joe Biden will be the next president of the United States.

Many Canadians are relieved. Though ties with our big neighbour are sometimes fractious (regardless who’s in the White House), Donald Trump took the relationship to new lows. He called our prime minister nasty names and, with a slap of aluminum tariffs, declared Canada a national security threat to the United States.

Biden will better manage Canada–U.S. relations. But his priorities will lie at home. And after winning industrial states like Michigan and Pennsylvania, could Biden be even tougher on trade with Canada than Trump?

Smith Business Insight spoke with David Detomasi, Distinguished Faculty Fellow of International Business at Smith School of Business, about a Biden presidency, what it means for Canada and what Canada needs to do now to help the U.S.

What can Canadians expect from Joe Biden as he takes office?

Everything Joe Biden does, says and is as president will immediately be compared in most Canadians’ minds to what they think Trump is, was or did. That’s natural because of the very tumultuous time we’ve had with Trump. However, we should keep in mind that while Canada has a deep, longstanding and integrated relationship with the United States, and that it’s mostly been positive, there are things that are not positive in our relationship. It's not as if the things that are not positive are suddenly going to evaporate just because Joe Biden happens to be in the White House. We will still have controversies, but the drama will be far less. Canadians may think that suddenly our relationship with the U.S. will change overnight because someone else is in the White House. That's too much to ask. Joe Biden’s top foreign policy priority will not be improving U.S.–Canada relations. He will stabilize them, revert them back to the relatively calm state they were in pre-Trump, and then he will attack bigger foreign policy priorities.

Let’s talk about trade. Given that Joe Biden won key industrial states like Michigan and Wisconsin, won’t he need to show he’s tough on trade right away, and won’t that hurt Canada?

In certain areas of trade he might be tougher on Canada, but I don't think he will be tough on Canada in relation to industries in the Michigan-Wisconsin belt. When Biden talks about tough trade and ‘made in America’, his target isn't Canada. His target is emerging markets, primarily China, where I do think he will carry on Trump's broader agenda to make China be more fair in its international trade. What I expect Joe Biden to do in foreign affairs is to clearly define who America's friends are, who its adversaries are, and be very clear on who falls into what camp. Trump turned the whole thing upside down. He spent more time coddling former adversaries and beating up on America’s allies.

Do you expect more stability in Canada–U.S. trade relations with a Biden presidency?

Yes. Before Trump, Canada and the U.S. did not slap really big tariffs on each other. Disputes were usually confined to specific issues, such as softwood lumber, and rarely spilled over into other issues. Trump just went at everything at once, believing the whole relationship was flawed and inherently favoured Canada, which was never true. We were unable to just focus on one specific trade dispute at a time and keep the drama level low. That wasn’t Trump’s way of doing things.

You just mentioned softwood lumber, a longstanding Canada–U.S. issue. Can it be resolved?

That's another saga entirely. Softwood lumber is a problem that only gets managed and never solved. The basic idea is that the Americans charge their lumber companies more money to cut lumber on their federal lands than we charge ours—and the Americans call ours a subsidy and we call it a different regulation. That fight has had at least four or five rounds over the past 25 years, where the Americans claim Canada is subsidizing softwood lumber production, and we prove we’re not. And we usually win those fights. But until either Canada or the U.S. decides to change domestic regulation on how lumber is cut, which neither one of us are going to do, it's just a problem that doesn't get solved. I don’t think anything is going to change there.

There’s concern that Joe Biden will not be good for the oil industry. What’s your take?

Joe Biden has made a public commitment to stop the Keystone XL pipeline, which obviously will have an impact on Canadian oil producers. But overall, Biden kind of hurt himself a bit when, during the presidential debate, he was not clear about his position on fracking and U.S. energy production. There are a lot of people in Pennsylvania—a state he won—with jobs tied to energy, including fracking. So while Biden may not approve pipelines, I don't know how hard he will push an anti-oil agenda versus how hard he'll push renewable energy. You can make it harder to drill and make it easier to do renewables. Biden might just do the easier-for-renewables part. His attitude may be, why pick a fight with the oil industry if you don’t have to. 

Will Joe Biden be better for business overall than Trump?

I think so in the sense that businesses like predictability, they like stability. If the rules are going to change, they want it to be in an orderly way. I do not think Biden is going to move to hurt business with massive new taxes or massive new regulations. He will do some of that, but I don't think he will do it radically, and I don't think he'll do it ‘bigly’, to use the Trump term. I think he will be fairly measured in what he does, because that's his nature, and a Republican controlled Senate will work to stymie what they see as overly ambitious measures. Over time that's probably a good thing. Businesses can get back to doing what they do, which is to invest and grow and hire.

What are we to make of the fact that Biden’s victory was not a landslide? After all, Donald Trump almost won.

Trump is a manifestation of very long-running things in the American political system. One is that America is divided, and always has been. People have very different values depending on where they live and where they're raised. This idea that somehow the personal revulsion of Trump was going to motivate a massive blue wave across the entire country was always ridiculous. You weren’t going to get people in Iowa and North Dakota and Louisiana and Kansas to suddenly become Democrats. They weren't going to do that because they have very deeply-held values that are powerful and which they believe Trump values and protected. One is independence. Others are nativism and populism, and suspicion of foreigners. Another one is suspicion of government at all. They don't like it. They don't like government telling them what to do, even if it's to wear a mask or to do something else that will likely make their lives better.

Those trends are always there. What most presidents on either side have done historically is to realize that there's a big chunk of the population that they have to reach out to and to craft deals. Trump was the first one in my memory that didn't do that. He never bothered with that. He just inflamed his base. Other than confirming a lot of conservative judges, he was unable to fulfil most of his domestic agenda. He just made people mad. But just because Trump is leaving the White House, the trends and issues that put him into the White House in 2016 are not over.

Did Donald Trump highlight any flaws in the Canada-U.S. relationship that this country should keep in mind as we move forward?

Most of us dislike Trump. We certainly didn't like the way he treated people and are probably happy that he's gone. But there are some points he made that, at least in my mind, had some validity, even if the way he went about pursuing them was wrong, bizarre and silly. One of them was in the area of security and defence. I think he was right in the sense that Europe and Canada and America’s other main allies have kind of been free-riding on the American defence effort for decades. We really don't spend a lot of money on defence—and we know we don’t have to. We have a very good military, but it’s small and it’s got antiquated equipment. Trump has a point that Europe and Canada could do more to contribute on the hard end of defence.

There are real adversaries in the world. The biggest for the U.S. is Russia in terms of politics and China in terms of economics. China is already a very large economic power and is not playing by the same rules. So I think Biden will reach out to America’s allies again, but I think the allies will have to reach back and say, ‘OK, yeah, we're with you. We want to contribute a bit more.’ And I think that's something Canada is going to need to think about. It won’t be trivial.