2024 U.S. Election: Impact on the Calgary Business Community

Canada’s trade relationship with the United States 

Canada and the United States have one of the largest and most comprehensive trading relationships in the world – a relationship that supports millions of jobs on both sides of the border and observes nearly $3.6 billion in goods and services crossing each day. Moreover, the U.S. is the largest investor in Canada, and Canada is the largest source of foreign direct investment in the United States. In 2023, Canada exported $595 billion in goods and services to the United States – 78 per cent of our net exports.

The economic impact of Canada and Alberta’s trading relationship with the United States is similarly profound. In 2023, Alberta alone exported $156.1 billion to the United States – over 90 per cent of our net exports by value. Whether energy, agriculture, mining, consumer goods, forestry or any sector exporting goods or services, a thriving trade relationship with the United States is vital to Canada’s competitive advantage.

And Albertans know this relationship matters, particularly ahead of the upcoming U.S. election. Recent polling from Janet Brown Opinion Research, commissioned by the Calgary Chamber of Commerce, found that 72 per cent of Albertans are following the U.S. election closely, and 83 per cent expect the election to impact Alberta’s economy. This is significant and shows Albertans are aware of the serious impact the Canada-U.S. relationship has on our economy.

Given the considerable economic value of the Canada-U.S. trade relationship, a comprehensive understanding of policy decisions and directions south of the border is critical to the short- and long-term prosperity and economic security of our country. As we analyze the policy environment in the United States, Canadian governments must work proactively to advance policies and investments that foster collaborative, stable and beneficial trade relationships – regardless of who holds power in Washington. Over the next few weeks, the Calgary Chamber will release a series of articles discussing the importance of the U.S. policy landscape on the Canadian economy, including:

• 2024 U.S. Election: Impact on the Calgary Business Community, analyzing the value of the Canada-U.S. trade relationship and providing insights of both Trump and Harris’ potential direction on foreign trade. 
• 2024 U.S. Election: Republican & Democrat Economic Policy, diving into specific platforms for each major party in the U.S. and providing an analysis of their impacts on the Canadian economy. 
• 2024 U.S. Election: Recommendations to Canadian Governments, providing actionable recommendations for Canadian governments to work effectively with either successful candidate in the U.S. election. 

Trade significance with the U.S. 

Canada’s trade relationship with the U.S. is critically important in particular for energy, agriculture and small business sectors.

Energy

Canada remains the single largest foreign supplier of energy to the United States, providing an average of more than 4.6 million BOE (barrel of oil equivalent) per day in total petroleum products to the U.S. in 2024 – more than 52 per cent per cent of the U.S. import supply. Through 2022, Canada exported more than $216 billion worth of energy products to the United States – 90 per cent of energy exports. The ability to successfully export our energy products to the United States is crucial to the health and growth of the Canadian energy sector. Across Canada, the energy sector contributed nearly 700,000 jobs (direct and indirect) and 12 per cent of our GDP. In Calgary, the top five businesses by revenue in 2023 were energy companies – all of which either export to the United States, have operations there, or both.

In a time of increasing concern over energy security and given the economic value of Canada’s relationship with the United States, it is important that businesses and governments on both sides of the border understand how the upcoming federal election in the United States could impact our energy trade relationship. Moreover, ensuring strong relationships is essential for both the Canadian and U.S. economy, any decline in our energy exports from Canada would have direct consequences for jobs in the Canada energy sector and would ultimately represent a decline in GDP contribution.

Agriculture

The continued growth and success of Canada’s agriculture sector relies on our ability to export agriculture and food products, and access to a massive market such as the U.S. is key to our export advantage. Currently, the agriculture sector contributes 7 per cent of our GDP and provides roughly 1 in 9 jobs in Canada. Given the volume of product moving to the U.S. each year, maintaining growth in our agriculture trading relationship with the U.S. is fundamental to the success of the agriculture industry in Canada. Through 2023, Canada exported upwards of $99 billion worth of agriculture and food products globally, and the United States represented 60 per cent of exports by value. Moreover, our agricultural trade relationship with the U.S. has been growing at an average annual rate of nearly 8 per cent since 1989, the year that NAFTA was signed. Free and advantageous trade to the U.S. is necessary for the continued growth of our agriculture industry and a decline in this relationship would represent a decline in an industry that currently employes 2.3 million people across Canada.

Small business

Small and medium enterprises (SMEs) are the backbone of our economy, and a key contributor to their success is our trading relationship with the United States. In 2022, SMEs contributed 41 per cent of our exports by value across the globe and 42 per cent of our exports to the United States. In the same time period, 99.7 per cent of businesses in Canada were SMEs, and they employed 64 per cent of the private labour workforce. Small businesses in Canada choose to expand to the United States for many reasons: ease of logistics, similar market interests, a comprehensive free-trade agreement, and – perhaps most importantly – a significantly larger pool of consumers to access when compared to the Canadian market. This explains why across Canada, 79 per cent of the revenue from exports for small businesses came from exports to the United States. U.S. market access for Canadian SMEs is a significant advantage that allows them to grow and scale with a larger pool of capital and customers in our southern neighbours. For our SMEs to succeed, it is essential that our favourable trade relationship with the U.S. is maintained. If our trading relationship with the U.S. were to decline, it would limit the ability of SMEs to grow and scale with the massive pool of consumers currently available in the United States. SMEs employee 10.7 million people across Canada, if SMEs are limited in their capability to grow in the U.S. market it puts jobs and GDP at risk.

Trade overview: Democrats & Republicans 

With the 2024 U.S. election looming, it is important to understand how each presidential candidate views trade relationships. Based on available information, it is likely that either administration would enact domestic economic and international trade policies that would impact the Calgary business community – and the Canadian economy broadly.

Republican administration

The Republican Party in recent years has operated with a protectionist mindset when handling trade policy. Taking a distinctly “America First” approach to trade and introducing policies that “protect American workers and farmers from unfair trade” highlights the desire of the Republican Party to insulate certain sectors of their economy from international trade pressures, even if at the expense of their trading partners such as Canada. Agriculture, dairy, auto-manufacturing, critical minerals and lumber have been consistent trade issues across the Canada-U.S. border – and a Trump administration would likely move to protect American domestic production, effectively disadvantaging Canadian firms. J.D. Vance, Donald Trump’s selection for Vice President, hardens the Republican party’s stance on trade protectionism. Vance has cited increased trade with China and Mexico as the cause for the decline of American manufacturing in his home state of Ohio and across the industrial Rust Belt.

To illustrate this point, former President Trump has proposed that if successful in his re-election bid, he would impose 10 per cent across-the-board levies on all products imported to the United States. This campaign trail promise is bold and may not be representative of actual policy enacted by a potential Trump administration; however, it indicates the severity of protectionist policy a Trump administration may be willing to consider, and its inclusion in the 2024 Republican Platform shows a degree of commitment to this policy.

Democratic administration

Whereas the Trump administration is more often viewed as the protectionist, anti-globalist option, a Harris administration would not be without its own challenges for the Canadian economy. Ms. Harris, in her capacity as a Senator was one of 10 (mainly Democrats) who opposed the recent Canada-United States-Mexico Agreement (CUSMA). In a statement on the issue, she justified her opposition on the grounds that environmental provisions were not strong enough. Additionally, during Harris’ 2016 Senate run, she opposed the Trans-Pacific Partnership – a key accomplishment for the Obama-Biden administration – on the grounds it failed to adequately protect both American workers and environmental standards.

Moreover, former President Trump’s 2016-2020 administration installed many tariffs, and his successor, President Biden, kept many of them, and expanded others, while creating new subsidies and protections for strategic U.S. industries such as auto-manufacturing and semiconductors. A Harris presidency would likely share similarities with the Biden administration, and it appears Ms. Harris may hold a stronger trade and protectionist perspective than President Biden, who was consistently a public proponent of free trade – even if his policies in recent years didn’t represent this value as strongly. One could reasonably expect a Harris administration to continue the trend of more managed trade and industrial policy. Further complicating matters, Ms. Harris’ running mate, Tim Walz has opposed most free trade agreements he’s had the opportunity to vote on. Walz opposed agreements with Peru, Panama and Columbia, citing concerns over human rights abuses, and in a 2015 statement claimed that NAFTA was working against the American worker.

On international trade and protectionism, the Republicans and the Democrats may not be as far apart as they once were. Both hopeful Presidents represent challenges for Canada, especially considering some of the trade issues which may come up in the next four years. A CUSMA renegotiation is on the table for 2026, with certain trade irritants already identified. Canada’s Digital Services Tax Act and Online News Act are two pieces of legislation which have aggravated trading partners in Washington, and our federal government’s failure thus far to meet our NATO contribution goal may cause further issues in negotiations.

What it means for Calgary, Alberta & Canada’s economy 

The impact to Canada’s, Alberta’s and Calgary’s business community of a complicated and less competitive trade relationship with the United States are broad and significant. Canada is a relatively small economy, and Canadians represent a fraction of the purchasing power that American consumers hold. Our access to the American market through our free-trade agreement is a massive competitive advantage to Canadian companies, and a decreasingly advantageous trading relationship with the United States would drive down revenues for a significant number of businesses in Calgary and across Canada. As revenues fall, that means less available capital for Canadian businesses to support themselves, fewer jobs as firms must make cuts to compensate for lower revenue and stifled investment in new technologies as cash flows tighten. Simply put, Canada’s increasingly poor productivity performance would only be exacerbated by a worsened trading relationship with the United States. Additionally, as revenues drop, so too do government revenues raised through taxation. This means less available funds for the infrastructure and services that support our country, such as healthcare, schools and transportation infrastructure.

Were tariffs to increase, or new tariffs be legislated in the U.S., costs would increase across the board, making it more difficult to export Canadian goods and services to the United States. Furthermore, it is possible that the Government of Canada would install retaliatory tariffs in response to American levies. At a time when Canadian businesses are already struggling with rising costs – 59 per cent of businesses in the Calgary Metropolitan Area ranked this as their number one concern last quarter – the potential for significant cost inflation due to tariffs on both sides of the border is not productive. Canada’s comprehensive trading relationship and market access with the U.S. has historically been a significant advantage to businesses that operate in Canada. Were relationship to worsen it would make Canada a less attractive jurisdiction for the investment needed to fuel growth in our economy.

Bottom line 

Canada’s trade relationship with the United States is remarkably important to the strength of our economy. Business across the spectrum – from micro-firms to multinationals – rely on the market access and favourable trading conditions that our bilateral relationship allows us. Both outcomes of the U.S. election have serious implications for our economy, and governments must work proactively to address issues before they harm our business community.

In the coming weeks the Calgary Chamber will release two follow-up pieces, one discussing the Republican and Democratic platforms and what their economic and foreign policy directions may be, and another providing recommendations to governments in Canada to prepare for either outcome of the election and how to improve Canada’s trading relationship with either administration.

ABOUT THE CALGARY CHAMBER OF COMMERCE  

The Calgary Chamber exists to help businesses reach their potential. As the convenor and catalyst for a vibrant, inclusive and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification and opportunity. As an independent, non-profit, non-partisan organization founded in 1891, we build on our history to serve and advocate for businesses of all sizes, in all sectors across the city.