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Economy

Trump Could Bring Back “America First”. What Could Happen to Canada’s Natural Resource Exports?

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5 minute read

From EnergyNow.ca

By Resource Works

A second Trump presidency likely means more tariffs, and Canada’s energy and forestry sectors will feel the impact.

As the passing of former Prime Minister Brian Mulroney was reported, we thought back to his ratification of the North American Free Trade Agreement (NAFTA) with the United States and Mexico.

The question now is: If Donald Trump becomes the next President of the U.S., what happens to the U.S.-Mexico-Canada Agreement (USMCA) of 2020? The USMCA came after Trump threatened to pull out of NAFTA in 2018.

On Monday, the Supreme Court of the United States recently overturned a ruling from the Colorado Supreme Court that barred Trump from appearing on the ballot during the 2024 presidential election, clearing a major obstacle in his goal of once again winning the presidency in November.

If Trump does win again in November, stand by for round two of the “America First” campaign of his first term.

“After decades of the status quo, President Trump has made it clear that Americans will no longer take back seat to the rest of the world,” said Ken Farnaso, who was a deputy national press secretary during Trump’s ultimately unsuccessful 2020 re-election campaign.

So prepare, for starters, for a 10 percent tariff on imports into the U.S. — and Canada is the second largest source of those imports.

Trump’s promised tariffs would hammer Canadian exports to the U.S. In 2021 (the latest figures we see), those exports were worth $355 billion, including oil ($78.8 billion), automobiles ($26.4 billion), and natural gas ($13.4 billion).

What would Trump do about increased exports of Canadian oil to the U.S. through the Trans Mountain Expansion Project? What about our natural-gas exports, which have helped the U.S. become the world’s biggest exporter of liquefied natural gas (LNG)?

And a Trump presidency would undoubtedly mean more trouble for Canada’s forestry sector. It has long been fighting “entirely unwarranted,”  U.S. tariffs on our softwood lumber — and now has been told that America will soon boost the border-crossing charges to 13.86 percent, up from 8.05 percent.

(Under the U.S. Tariff Act, the Department of Commerce determines whether goods are being sold at less than fair value or if they’re benefiting from subsidies provided by foreign governments. U.S. producers insist that provincial stumpage fees are so low as to amount to an unfair subsidy.)

And on foreign affairs, note Trump’s tough promise for China: tariffs of 60 percent or higher on imported Chinese goods.  And, he has added, “Maybe it’s going to be more than that.”

This comes after the trade war he triggered during his first term as president when he imposed $250 billion in China tariffs. That disrupted the global economy, hammered consumers, and hit stock markets.

U.S. stock-market watchers have shuddered at this new promise. Nikki Haley, who suspended her campaign for the Republican nomination on Wednesday morning, has said: “What Donald Trump’s about to do, is he’s going to raise every (American) household’s expenses by $2,600 a year.”

Trump has said nothing about current U.S.-Canada relations, but has in the past declared:

  • “We lose with Canada — big-league. Tremendous, tremendous trade deficits with Canada.”
  • “Canada has been very difficult to deal with. . . . They’re very spoiled.”
  • “Canada, what they’ve done to our dairy farm workers, it’s a disgrace.”

Roland Paris, a Canada-based associate fellow of the U.S. and the Americas Program writes:

“ Canada is not the only country bracing for Donald Trump’s possible return to the White House – but few have more at stake.”

“Three-quarters of Canada’s goods exports, accounting for more than one-quarter of the country’s gross domestic product, go to the U.S. Given Trump’s impulsiveness and deeply protectionist instincts, Canada’s business and political leaders are understandably nervous.”

Prime Minister Justin Trudeau told business leaders in Montreal:  “It wasn’t easy the first time, and if there is a second time, it won’t be easy either.”

Indeed. If the second time begins with Trump being elected on November 5, and sworn in on January 20, 2025, it could be a nasty case of “Oh, Canada.”

Economy

US strategy to broker peace in Congo and Rwanda – backed by rare earth minerals deal

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MXM logo MxM News

Quick Hit:

Senior Trump advisor Massad Boulos says the U.S. is brokering a peace deal between the Democratic Republic of the Congo (DRC) and Rwanda that will be paired with “Ukraine-style” mineral agreements to stabilize the war-torn region.

Key Details:

  • The U.S. wants Congo and Rwanda to sign a peace treaty and, on the same day, finalize critical mineral supply deals with Washington. Boulos told Reuters that both deals are expected within two months.

  • Rwanda’s side of the treaty involves halting support for M23 insurgents, while the DRC has pledged to address Rwanda’s concerns about the Hutu-dominated FDLR militant group.

  • DRC President Tshisekedi has floated the idea of giving the U.S. exclusive access to Congolese minerals in exchange for help against M23. “Our partnership would provide the U.S. with a strategic advantage,” he wrote in a letter to President Trump.

Diving Deeper:

According to a Thursday report from Reuters, President Donald Trump’s administration is accelerating efforts to finalize a dual-track strategy in central Africa—pushing for a peace agreement between the Democratic Republic of the Congo and Rwanda, while simultaneously brokering “Ukraine-style” mineral deals with both nations.

Massad Boulos, Trump’s senior adviser on Africa, told Reuters that the administration expects the mineral agreement with Congo to be signed on the same day as the peace treaty, followed shortly by a separate deal with Rwanda. “The [agreement] with the DRC is at a much bigger scale, because it’s a much bigger country and it has much more resources,” Boulos explained, while noting Rwanda’s potential in refining and trading minerals is also significant.

The DRC and Rwanda have set a tight timetable, agreeing to exchange draft treaty proposals on May 2nd and finalize the accord by mid-May. Secretary of State Marco Rubio is scheduled to preside over the next round of negotiations in Washington.

Rwanda’s cooperation hinges on its withdrawal of support for M23 rebels, who have taken over key territories in eastern Congo. These insurgents have even paraded through captured towns alongside Rwandan troops, prompting international condemnation. In return, Congo has committed to addressing Rwanda’s longstanding concern over the presence of the FDLR—a militant group composed largely of Hutu fighters accused of plotting to overthrow Rwanda’s Tutsi-led government. The FDLR has been active in the region for years and remains a major point of contention.

The instability in eastern Congo—home to over a hundred armed groups—has prevented investors from tapping into the country’s vast mineral wealth. The DRC holds an estimated $24 trillion in untapped resources, including cobalt, copper, lithium, and tantalum, all essential for advanced electronics, renewable energy systems, and defense applications. Boulos emphasized that no deal will go forward unless the region is pacified: “Investors want security before they invest billions.”

Reports suggest M23 has seized control of major mining operations, funneling stolen minerals into Rwanda’s supply chain. Though the UN’s peacekeeping mission, MONUSCO, was designed to stabilize the region, it has been ineffective during this latest wave of violence. President Tshisekedi asked the mission to withdraw last year, and several countries—including South Africa, Malawi, and Tanzania—are now pulling their peacekeepers after M23 captured the regional capital of Goma in January.

Red Cross teams began evacuating trapped Congolese soldiers and their families from rebel-held areas on Wednesday. At least 17 UN peacekeepers have been killed so far this year.

In a March letter to President Trump, President Tshisekedi made his case for a strategic partnership, offering exclusive U.S. access to Congo’s mineral wealth in exchange for American support against the insurgency. “Your election has ushered in the golden age for America,” he wrote, describing the proposed deal as a “strategic advantage” for the United States.

Boulos, who has longstanding business ties in Africa, quickly visited the DRC following the letter and began working to finalize the terms of the proposed agreement.

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Business

Overregulation is choking Canadian businesses, says the MEI

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  From the Montreal Economic Institute

The federal government’s growing regulatory burden on businesses is holding Canada back and must be urgently reviewed, argues a new publication from the MEI released this morning.

“Regulation creep is a real thing, and Ottawa has been fuelling it for decades,” says Krystle Wittevrongel, director of research at the MEI and coauthor of the Viewpoint. “Regulations are passed but rarely reviewed, making it burdensome to run a business, or even too costly to get started.”

Between 2006 and 2021, the number of federal regulatory requirements in Canada rose by 37 per cent, from 234,200 to 320,900. This is estimated to have reduced real GDP growth by 1.7 percentage points, employment growth by 1.3 percentage points, and labour productivity by 0.4 percentage points, according to recent Statistics Canada data.

Small businesses are disproportionately impacted by the proliferation of new regulations.

In 2024, firms with fewer than five employees pay over $10,200 per employee in regulatory and red tape compliance costs, compared to roughly $1,400 per employee for businesses with 100 or more employees, according to data from the Canadian Federation of Independent Business.

Overall, Canadian businesses spend 768 million hours a year on compliance, which is equivalent to almost 394,000 full-time jobs. The costs to the economy in 2024 alone were over $51.5 billion.

It is hardly surprising in this context that entrepreneurship in Canada is on the decline. In the year 2000, 3 out of every 1,000 Canadians started a business. By 2022, that rate had fallen to just 1.3, representing a nearly 57 per cent drop since 2000.

The impact of regulation in particular is real: had Ottawa maintained the number of regulations at 2006 levels, Canada would have seen about 10 per cent more business start-ups in 2021, according to Statistics Canada.

The MEI researcher proposes a practical way to reevaluate the necessity of these regulations, applying a model based on the Chrétien government’s 1995 Program Review.

In the 1990s, the federal government launched a review process aimed at reducing federal spending. Over the course of two years, it successfully eliminated $12 billion in federal spending, a reduction of 9.7 per cent, and restored fiscal balance.

A similar approach applied to regulations could help identify rules that are outdated, duplicative, or unjustified.

The publication outlines six key questions to evaluate existing or proposed regulations:

  1. What is the purpose of the regulation?
  2. Does it serve the public interest?
  3. What is the role of the federal government and is its intervention necessary?
  4. What is the expected economic cost of the regulation?
  5. Is there a less costly or intrusive way to solve the problem the regulation seeks to address?
  6. Is there a net benefit?

According to OECD projections, Canada is expected to experience the lowest GDP per capita growth among advanced economies through 2060.

“Canada has just lived through a decade marked by weak growth, stagnant wages, and declining prosperity,” says Ms. Wittevrongel. “If policymakers are serious about reversing this trend, they must start by asking whether existing regulations are doing more harm than good.”

The MEI Viewpoint is available here.

* * *

The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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