Cabinet to discuss relations with U.S. as presidential election draws nearer

Industry Minister François-Philippe Champagne says the Canadian and American economies are more integrated than ever, which should act as a buffer against the threat of U.S. protectionism.

Champagne and his fellow Liberal ministers today will hold their third and final day of meetings at a winter cabinet retreat in preparation for the upcoming parliamentary sitting.

Economics and affordability dominated the first two days of talks but today things will shift international.

Specifically, cabinet will be discussing the upcoming United States presidential election and the very real prospect that former president Donald Trump will be returned to the White House.

Foreign Affairs Minister Mélanie Joly says Canada is preparing for any potential outcome in the 2024 race for the White House, be it the re-election of President Joe Biden or a second chance for Trump.

Champagne says the Canadian and U.S. economies have always been intertwined but are even more so now, and millions of jobs in both countries depend on that stability.

"One thing that I think former president Trump understands is jobs. And now jobs, millions of jobs, depend on what we have achieved over the last decade," Champagne told reporters in Montreal on Monday.

"So that economic integration, I think, is going to be a key for the future."

That includes, he said semiconductors, biotechnology and the auto sector. In 2022 Canada lobbied hard for an exemption to a provision in Biden's Inflation Reduction Act to ensure electric vehicles made with Canadian batteries or components would still qualify for major U.S. tax credits.

That carve out — initially the credits were much stricter about America-only content — helped Canada secure several major battery plants last year. Champagne told The Canadian Press in December in an interview that battery plants like the one Volkswagen is building in Ontario would not have happened without the Inflation Reduction Act.

"It would have been far more difficult," he said. "I think the IRA was the catalyst for reindustrialization in North America.

"If you look at the battery ecosystem, we have strength. My mission is always to strategically position Canada in key supply chains and now we have inserted Canada in the key strategic supply chain, for example of electric vehicles in North America."

Laura Dawson, an expert on Canada-U. S. relations and the current executive director of the Future Borders Coalition, says Canada needs to be prepared no matter who wins because both Biden and Trump have protectionist tendencies.

"It's an important time for really taking stock of that relationship, reinvesting in that relationship, because for both Canada and the United States, it is of existential importance for both economics and security," Dawson said in an interview.

She is among a panel of experts who will make presentations to the cabinet today on the U.S.-Canada relationship.

She will be joined by Kirsten Hillman, Canada's ambassador in Washington, Flavio Volpe, president of the Auto Parts Manufacturers Association, and Marc-André Blanchard, the executive vice-president of CDPQ Global investment group.

Dawson said there is work to be done on more effective and integrated supply chains for both economic and national security purposes.

The prospect of a Trump presidency, said Dawson, requires "much more direct action from Canada right now."

"We know what Trump 1.0 was like for Canada and that was a challenge," she said. "But I don't feel like that experience makes Canada really well prepared for Trump 2.0. Because even though we understand what that individual is like he is much more prepared to launch a very aggressive America-first campaign that right out of the gates that's going to, I think, significantly impact Canada in a negative way."

Dawson said Canada needs to start a national charm offensive now, sending ministers, consuls general, premiers and industry leaders to meet with U.S. lawmakers, particularly Republicans, and get Canada's message in place now.

This report by The Canadian Press was first published Jan. 23, 2024.