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“Vive le Canada” – What President-Elect Joe Biden Means for Canada: A Vantage Perspective

Shortly after the major networks declared Joe Biden the 46th President of the United States, Prime Minister Trudeau took to Twitter to say “Congratulations…I’m really looking forward to working together.” You could almost hear the sigh of relief that accompanied the Tweet. For the last four years, the historic saying “when the US sneezes, Canada gets a cold” might have been better said as “when the President tweets, Canada gets a tariff.” The amount of instability, volatility, and, at times, downright hostility, that the Trump administration focused on the nation’s closest ally remains difficult to comprehend.

Now, with President-elect Joe Biden waiting in the wings, Canadian officials are looking forward to four years of stability and predictability. They foresee a relationship still involving disputes, certainly, but disputes that are rational and calculated and communicated in such a way as to presuppose that they won’t shake the bedrock of friendship and mutual self-interest that drives bilateral relations.

COVID-19

With the US routinely reporting more than 100,000 COVID-19 cases a day now, it’s no surprise that many political observers expect the Canada-US border – the longest undefended border in the world and one shuttered to non-essential travel since March – to remain closed well into 2021. But in Saturday evening’s victory speech, Biden stressed that battling the pandemic is his top priority: “our work begins with getting COVID under control.” Less than 48 hours later, and before he had announced any senior staff or Cabinet appointments, the President-elect had already announced the members of his coronavirus task force, a group of leading scientists and experts who will help implement his pandemic response plan – a plan that replaces denial with duty and apathy with action. Should the new President be capable of controlling the virus, it’s entirely possible that the border restrictions will begin to ease up, loosening the flow of people. (Trade has continued largely unhindered, though amid a continental economy still in much distress.) The Biden win may also be a shot in the arm for those hoping for more coordinated vaccine development and procurement initiatives between the two countries.

CLIMATE

The President-elect is unapologetic in his climate action rhetoric. Biden campaigned on an ambitious climate change agenda, promising to rejoin the Paris Agreement, reach net-zero greenhouse gas emissions by 2050, and implement a $2 trillion plan to combat climate change that includes major investments in clean energy. If bold action from the United States President accompanies his bold rhetoric, Prime Minister Trudeau could have more latitude to do the same. This would be a tonic for Ottawa compared to the past four years, when the Canadian government, in the name of competitiveness, found itself under pressure to slow or amend its own environmental policies as American competitors faced fewer and fewer environmental regulations and taxes.

ENERGY

One of the more obvious upcoming tensions between Canada and the US will be over Keystone XL, the pipeline that is more like a rollercoaster. In November 2015, the pipeline appeared dead in the water when President Obama announced that he agreed with the U.S. State Department’s decision to reject the pipeline that would ship more than 800,000 barrels per day of crude oil from Alberta to Nebraska. Then, in January 2017, President Trump signed an executive order to revive the pipeline. Now, a President Biden is expected to reverse course once again, having vowed early in the campaign to follow his former boss’ lead and scrap the pipeline.

Getting Keystone XL built will require Canada, as Foreign Affairs Minister Francois-Philippe Champagne has put it, to “make our case”. The Minister said the government intends to “remind our American partners that Canada is the best energy supplier, reliable to the United States” and to point to our climate goals as excusing any negative environmental effects. It is true that oil from Alberta is more cost-efficient than oil from a number of other international markets, but Ottawa will find it hard to make progress on this file.

IMMIGRATION

At every turn, the Trump administration shunned immigration. As a result, Canada benefitted: somewhere between 260,000 and 280,000 people chose to apply to move to Canada instead of the United States, many of them high-skilled workers. Biden has promised to lift Trump’s travel ban, increase the number of high-skilled visas available for temporary workers, and expand the 140,000-person cap on employment-based green cards. The Silicon Valley community, a big financial backer of the Biden campaign, will be lobbying hard to hold the President to his word. But, for now, Canada will likely continue to receive a large number of immigrants who would have otherwise gone to the US: the changes won’t be top of mind for the incoming crowd in Washington and will be slowed by funding and staff cuts made to the U.S. immigration system by the previous administration.

TRADE

While President Biden will likely put an end to politically motivated tariffs like those imposed on steel and aluminum, that doesn’t mean he won’t advocate for some protectionist policies. He campaigned on a “Made in All of America” stimulus plan, which includes a $400-billion (U.S.) “Buy American” procurement policy that would favour domestic firms in federal procurement and that could prevent Canadian companies from bidding on U.S. infrastructure projects. This would prove a challenge for Canadian industry: Biden’s commitment to industrial policy is not unlike that of the Liberal government, but the scale of planned R&D investment—$300-billion on 5G, artificial intelligence and other cutting-edge sectors—would be a competitive challenge for us. Canadian trade negotiators, who may still be confident from their NAFTA 2.0/CUSMA win, will try to find ways to qualify under the policy; the price to pay may be greater U.S. access to Canadian public contracts.

TAXES

President-elect Biden has pledged a one-two tax punch: first repeal President Trump’s tax cuts, and then raise taxes by nearly $3.5 trillion over the next ten years on corporations and individuals earning more than $400,000 annually. Success on both fronts relies on support from the Senate – and, unless the Democrats win both of Georgia’s run-off races in January, a Republican-controlled Senate would block any attempts at tax reform. If – and that’s a big if – Biden is able to move ahead with his plan to raise the corporate income tax rate from 21% to 28%, that would go a long way to levelling the playing field between Canadian-based and US-based corporations.

INNOVATION

One thing much of the world – save for the United States – has been trying to figure out is how to reform the way digital multinational corporations are taxed. While there’s thought to be bipartisan agreement amongst Republicans and Democrats to protect the digital companies, which are almost exclusively headquartered in the U.S., there’s also the concern that countries will start individually imposing digital-services taxes in the absence of consensus. Should that happen, Canada (which has promised a three per cent DST on the targeted-ad-sales and digital-service revenues of firms with at least $1 billion in worldwide and more than $40 million in Canadian revenue) may find itself dangerously trapped in the middle – and potentially in violation of CUSMA if it proceeds.

Other areas in the innovation eco-system with cross-border ramifications that are worth keeping an eye on include digital health platforms (which are booming in the COVID-19 era), labour protection for gig workers, and clean tech advancements.

DEFENCE

Defence is the oft-forgotten bedrock of Canada-U.S. relations. As the countries look to modernize NORAD for the 21st century, defence may return to the public eye. President Biden will be looking for Canada to make continued increases in defence spending nationally, as well as to maintain support of international institutions like NATO.

CHINA

As U.S. lawmakers grapple with China’s change from competitor to seeming adversary, the rising power may very well be the only issue where Democrats and Republicans share common ground. While President Biden is expected to be more stable in his China policy (and less singularly obsessed with bilateral trade balances), he’s not expected to be any softer. Canadian officials hoping for an easy end to the Meng Wanzhou affair are likely to be disappointed: a sympathetic ear is far from enough to be a solution. That doesn’t mean they won’t try, and by this morning, in his first call with the President-elect, the Prime Minister had already raised the issue of “China’s arbitrary detention of Michael Kovrig and Michael Spavor.”

THE INTERNATIONAL STAGE

A little less than four years ago, then-outgoing Vice President Joe Biden visited Ottawa, where he said “vive le Canada, because we need you very, very badly.” The message was clear: in view of America’s incoming “America First” President, Canada would need to punch above its weight to defend the liberal order on the international stage. While President Biden will have to contend with continued domestic isolationist sentiment, his administration will be looking to re-engage with global institutions that the United States has neglected, if not bullied and insulted, over the past four years: NATO, the WHO, and the WTO are just a few acronyms that come to mind. For its part, Canada will be looking for ways to help the United States re-engage on the international stage and reunite with global leaders who have turned wary of the superpower (a role Canada has played before vis-à-vis the United States).

FRIENDSHIP

Canada, of course, will not be the first thing on President Biden’s mind. But the man knows and appreciates Canada, as do a number of his closest advisors. In Biden’s 2016 visit to Ottawa, he noted that he could say that he had worked not only with Justin Trudeau but also with Pierre Trudeau (on account of Biden’s long career in the United States Senate, having been first elected in 1972). Of course, Vice President Kamala Harris herself attended high school in Montreal. Susan Rice, a close adviser and possible Cabinet secretary (and who is believed to have been the runner-up to Harris for the VP nod), worked in Toronto and is married to a Canadian. And Biden’s campaign manager, Jen O’Malley Dillon, advised the 2015 Trudeau campaign. These kinds of ties will also play their part in bringing the two sides together.

CONCLUSION

The Trudeau government did an admirable job managing the capricious Trump administration. But this was made easier by Canadians’ deep dislike of all things Trump. Now, with President-elect Biden headed to the White House, the Prime Minister may find that Canadians have heightened expectations for positive outcomes and results. Will this be possible? The election got rid of the Trump presidency but it did not rid the U.S. of what Trump represents. President Biden will need to navigate a (likely) Republican Senate, 71 million Trump voters, and a protectionist left-wing faction of the Democratic Party – a possible recipe for continued political gridlock and policy stasis that could harm cross-border initiatives.

Still, Biden wrote in his 2007 memoir that likely “the single most important piece of advice I got in my career” came from the late Senate Majority Leader Mike Mansfield (D-Mont.) who told him, “Your job here is to find the good things in your colleagues—the things their state saw—and not focus on the bad.” This is important: this advice still guides President Biden in terms of his core philosophy, on issues domestic but also foreign.

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