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This piece is published by Policy in cooperation with Carleton University’s Norman Paterson School of International Affairs as part of our Emerging Voices program, which provides an editorial platform for outstanding students.

Natalie Lopez

June 8, 2022

On March 1, 2022, Canadians heard some eerily familiar talking points in President Joe Biden’s State of the Union address. Interspersed among his  administration’s goals and accomplishments were references to strengthening the Buy American Act, returning supply chains to American soil, and making more products in the United States. The rhetoric harkened back to the Trump rallies of five years earlier, when “Made in America” was “America First” and “Build Back Better” was “Make America Great Again.” The speech was a reminder that American protectionism has yet to disappear.

Thanks to our inescapable geography, the Canadian economy is linked to decisions made in Washington. Like its predecessors, the Trudeau government recognizes the Canada-US relationship as a key national interest. However, as we watch events in Europe and await an Indo-Pacific strategy, Canadians may have taken their eyes off our larger neighbour. That would be a serious mistake.

American protectionism has been a chronic problem for Canadian policymakers since Confederation. Unfortunately, protectionist policies are popular among American voters, especially during economic downturns. Given the deep connections between our economies, Canada often feels the brunt of the US “America First” proclamations. In modern America, both Democrats and Republicans espouse protectionism under their preferred branding choices. However, the Russian invasion of Ukraine and the US midterm elections have opened a window of opportunity for Canada to tackle the protectionism question. We can better prepare ourselves for our southern neighbour’s new wave of unfavourable policies by taking a proactive approach to the Canada-US relationship.

How did we get here?

The Canada-US trade relationship has always swung between cooperation and protectionism. Our current free-trade relationship is punctuated with perennial, American-initiated trade disputes over steel, softwood lumber, and agricultural products. President Trump capitalized on blue-collar workers’ frustration over globalization and technological change to promote “America First” economic policies. While some in Canada hoped that a 2020 Democratic presidential victory would signal the end of “America First,” President Biden favours protectionist policies under different branding, with less belligerence.

The Biden administration has used “Build Back Better” programs and “Made in America” incentives to jumpstart the post-pandemic American economy. This includes strengthening the Buy America measures of 1982 and the Buy American Act of 1933, and prohibiting foreign companies from bidding on publicly funded contracts. The administration is also using protectionist policies to realize its climate goals. The cancelling of the Keystone XL pipeline and arguments over Line 5 have put our energy sector in a precarious position. The latest battle over electric vehicle credits threatens the Canadian auto sector. Growing voter frustration has also prompted the administration to seek “Made in America” solutions to resolve COVID-19 supply chain issues. According to Global Affairs Canada, three-quarters of Canadian goods exported to the United States are part of integrated cross-border supply chains. If these supply chains are rerouted away from Canada and into the United States, millions of jobs and billions of trade dollars could be lost.

Canada’s credibility as a reliable trade partner was recently questioned during the Truckers Convoy’s border blockades. The Ambassador Bridge blockade cost between $3-6 billion in foregone trade. Ford Motor Company resorted to flying parts across the border as the blockade forced auto manufacturing plants to close temporarily. The blockade was amplified by the American right over Biden’s COVID-19 policies, with many across the border sending money to the truckers holding Ottawa hostage. Talk of a copycat convoy to D.C, though it came to nothing, conjured another January 6^th. The blockades and their leveraging of our bilateral trade relationship did nothing to offset Buy American sentiment and supply chain concerns in Washington.

Why does protectionism matter?

America is Canada’s largest trading partner, and Canada is America’s largest customer. In 2020 alone, USD$615 billion in goods and services crossed our shared border. From agriculture to security, Canada-US trade relations touch every sector of the Canadian economy. American Foreign Direct Investment in Canada totalled $456 billion in 2020. American companies including Ford, Amazon, and Walmart employ hundreds of thousands of Canadians. Uncertainty in the trade relationship could cause American firms to pack their bags and head for more stable markets. While tariffs hurt American consumers, American protectionism can cripple the Canadian economy.

Though it remains vital for continued Canadian prosperity, the new Canada-US-Mexico Agreement (CUSMA) also gives the US outsized influence on Canadian trade negotiations. According to Article 32.10, entry into free-trade talks with a “non-market country” (broadly understood to mean China), can be grounds for CUSMA termination. This clause gives the United States a technical veto over Canadian trade policy and may limit Canada’s ability to conduct trade negotiations with other economies. Canada should also prepare for CUSMA’s 2026 review date. We will need allies at all levels of government, in both the US and Canada, to ensure that CUSMA is not hollowed out in favour of protectionism.

Rifts with our neighbour can also affect Canada’s international standing. Though Canada is America’s closest ally, ongoing trade battles undermine global perceptions of the bilateral relationship. Countries will look for other interlocutors if Canada no longer has Washington’s ear. This could further weaken our hand when conducting international trade negotiations if access to the Canadian market will no longer be a pathway to entering the American market.

Why is 2022 Canada’s window of opportunity?

The overlap of the Russian invasion of Ukraine with the beginning phases of the 2022 midterm election provides Canada with an opening to grow its influence south of the border. The Russian invasion has left a void in global commodity markets as energy insecurity, mass migration, and food shortages grip the world. However, the war has also re-invigorated NATO and strengthened western resolve against Vladimir Putin’s authoritarian regime. Biden is doubling down on commitments to democracy promotion, human rights, and liberal international values. This has opened an opportunity for Canada to strengthen its alliances. The administration wants to demonstrate its leadership in NATO. Europe will be looking for new, reliable energy partners. Countries reliant on Ukrainian grain will be looking for alternative suppliers. With our sizeable diaspora population and breadth of natural resources, Canada is uniquely positioned to support international needs and American foreign policy objectives in Ukraine.

Americans will also soon turn their attention to the ballot box. The 2022 midterms will open the government to new legislators who may be unaware of the benefits of the Canada-US trade relationship. These elections will decide the House and Senate for the next two years while setting the stage for the 2024 presidential election.

What can the Government of Canada do?

Canada should fully use Obama-era relationships between the White House and the Prime Minister’s Office to advocate for Canadian policies. The Canadian government and the US administration could work together on their overlapping climate change and economic priorities. Coordinated policies can lessen protectionism’s effects on the Canadian economy while producing tangible “wins” for both governments. Canada can generate goodwill with the US administration by being an eager partner in international pursuits. Biden’s focus on democracy promotion abroad fits Trudeau’s focus on the rule of law. Cooperating on overlapping global priorities can also help Canada regain some of the reliability credit lost during the blockades.

All presidents are accountable to their party, interest groups, and the American electorate. Given the separation of powers in the United States, Canada should focus on building relationships in Congress and state legislatures. Individual legislators hold incredible sway over policy and can find common cause with Canada if our proposals align with their state’s needs. For example, the energy partnership recently proposed by Senator Joe Manchin of West Virginia could provide an extra lifeline to the Western energy sector. New York state and federal legislators also lobbied the Biden administration to re-open the Canada-US border. Canada should engage in bi-partisan, targeted relationship-building with influential legislators to cultivate policy allies where interests align.

The 2022 midterms may bring in a new Republican-dominated Congress. If Canada assumes that Republicans will only support protectionist policies, it will lead to a self-fulfilling prophecy. Instead, Canada should build relationships with Republicans focused on Canada-US trade. Starting this process early will expose candidates to Canada’s role in the US economy. The Trudeau government can enlist Conservative premiers to facilitate introductions if ideological affiliation is a barrier to getting meetings.

Canadians may wake up on November 9^th to find that Americans have elected a protectionist Congress. The Trudeau government must work with America’s representatives, regardless of whether they suit our strategic interests. Instead of constantly reacting to decisions south of the border, Canada should use this window of opportunity to proactively insulate our economy from future shocks.

While the CUSMA veto clause hinders Canada from entering into certain free trade agreements, it does not stop limited sectoral agreements for key commodities. Therefore, Canada should take advantage of this opportunity to forge new international energy and agricultural partnerships. Playing a prominent role will help re-establish some Canadian credibility as a reliable, international actor, which may open more trade doors in the future.

Canada must also bolster its domestic economy to remain competitive abroad. Budget 2022 devotes some funding to strengthening the economy and green transition. However, the federal government should also direct funding towards infrastructure projects that help get Canadian products to international markets. Rail lines, ports, highways, and, yes, pipelines will give Canadians more choice in where to send their products. Insulating the domestic economy from protectionist pressures will also require working with provincial premiers to limit domestic trade barriers.

Protectionism is here to stay. And while Canada cannot stop the century-old protectionist currents that move through the Canada-US relationship, Canada can use this window of opportunity to proactively lay sturdy foundations that can help us weather the next storm of protectionism. Tackling American protectionism will take a strategic, concentrated, and proactive approach. It will require time, effort, and attention from senior officials and political leaders. The prime minister, premiers, and ministers will need to work as a team and coordinate their actions efficiently. Canada does not want to be caught off guard by a new, hostile Congress or administration.

Natalie Lopez is a recent MA graduate of Carleton University’s Norman Paterson School of International Affairs in Ottawa, ON.