2024 U.S. Election: Republican & Democrat Economic Policy

Challenges regardless of outcome 

The United States presidential election, regardless of the outcome, will impact the Canadian economy, as discussed in our previous release, 2024 U.S. Election: Impact on the Calgary Business Community. To effectively mitigate harms and improve our trading relationship with a Republican administration under Mr. Trump or a Democrat administration under Ms. Harris, it is critical to understand the parties’ proposed international trade and domestic economic policies.

This policy paper will outline some of the key points in each party platform as they relate to domestic economic policy and international trade and discuss high-level impacts of these policies.

On a high level, a potential second term under President Trump may continue where the first left off in terms of trading relationships; however, based on campaign promises and the recently approved 2024 Republican Platform, the protectionism and aggressive tariffs may increase. Similarly, assumptions that a Harris administration may operate under the same foreign trade policy direction as the Biden administration may be inaccurate. Harris’ record on foreign affairs and the recently approved 2024 Democratic Platform could indicate a more protectionist position based on environmental considerations and protecting domestic jobs and supply chains.

Republican Platform

The 2024 Republican Platform specifically references the following measures:

• Introduce measures to prioritize U.S. domestic manufacturing, energy, critical minerals, automotive and strategic supply chains. 
• Introduce baseline tariffs on foreign-made goods and prevent the import of Chinese vehicles.  
• Renegotiate failed agreements, forging an America First Trade Policy. 
• Rebalance trade (referencing America’s $1 trillion per year deficit in goods), ensuring domestic production can support national independence in essential goods and services. 
• Protect American workers, farmers and industries from unfair foreign competition.  
• Strengthen buy-American and hire-American policies.  

Based on the 2024 Republican Platform, new or expanded tariffs, hostile trade agreement re-negotiations, programs to incentivize domestic manufacturing and supply chain development could all be implemented throughout a Trump presidency. Mr. Trump has previously committed to a 10 per cent levy on all foreign goods – a promise we see reflected in the Republican platform, and while a drastic move such as this would surely face significant opposition within the United States – perhaps even from within the Republican party – it is not unachievable. Were a Trump administration to decrease U.S. reliance on trade, prioritizing domestic production and ensuring national independence of essential goods and services, Canada could expect the value of our trading relationship with the United States to decline.

Specific sectors may face more significant challenges than others: the Republican platform calls out manufacturing and the automotive industry as well as critical supply chains more broadly. We could expect firms who are currently operating in manufacturing, automotive, energy and critical minerals to have a decreased competitive advantage when trading with the United States as their domestic capabilities expand.

Democratic Platform

In terms of economic and trade policy, the 2024 Democratic Platform forwards the following policies:

• Bring home critical supply chains and reaffirm United States leadership in cutting-edge industries. 
• Continue developing investments for capacity building in domestic renewable energy, electric vehicles and green technologies. 
• Prioritize energy independence, resiliency and innovation in clean and renewable energy. 
• Extend the Buy Clean and Buy American standards and ensure that federal projects require low-carbon, American Made cement, steel and other materials. 
• Strengthen Buy American procurement rules to their toughest levels in seven decades. 
• Reinvest in America’s manufacturing base and level the playing field for American workers. 

While the Democratic party may be construed as less aggressive in terms of protectionist policy, a Harris administration presents its own challenges to Canada-U.S. trade relations. As referenced in our previous release, 2024 U.S. Election: Impact on the Calgary Business Community, Ms. Harris was one of only 10 votes against the recently renegotiated Canada-United States-Mexico Agreement (CUSMA), and she also opposed the Trans-Pacific Partnership Agreement. In both cases, her justification was on the grounds that environmental provisions were not strict enough, as well as a belief that both agreements did not go far enough to protect domestic jobs and industry.

The 2024 Democrat Platform speaks in no uncertain terms of increasing domestic production, accelerating the implementation of the Investing in America agenda to bring manufacturing back to the United States. The platform states that a Harris administration would continue to reinvest in America’s manufacturing base – levelling the playing field for American workers facing foreign competition.

The Democratic platform also notes the ambition to secure energy independence for the U.S. and includes measures to incentivize the clean and renewable energy industry and its supply chain to develop in the United States. Simply put, a Harris administration would continue the Biden administration’s aggressive pursuit of renewable energy development through incentive programs found in the United States Inflation Reduction Act. Scaling up solar, wind and geothermal projects – as well as investing in research and development – all feature heavily in the 2024 Democratic Platform, so it’s reasonable to expect significant investment in these sectors under a Harris administration. Canadian governments and firms could expect to see a decline in investment in the renewables sector in Canada as capital moves to a more competitive U.S. jurisdiction. The Democratic platform also includes multiple references to Buy Clean and Buy American standards – the procurement rules strengthened under President Biden which required federal projects to use low-carbon, American made construction materials – these regulations would continue under a Harris administration.

The Republican platform may speak more explicitly to tariffs, protecting workers in targeted industries from unfair competition and shifting the American goods and services trade deficit – while the Democratic platform describes an America with accelerated manufacturing industries, secure domestic energy supply and an increasingly competitive investment environment for traditional and clean energy projects. Both platforms indicate a desire to reduce American reliance on foreign jurisdictions for the supply of essential goods and services and an increase in domestic production of strategic goods. The two parties have similar interest in terms of trade, prioritizing American workers, American goods, and energy security from within their own borders. This places Canada’s competitive trade advantage with the United States in question.

Protectionism

• Republican: Expect protectionist polices to continue under a Trump administration. Tariffs, renegotiating free trade agreements (i.e., CUSMA) and accelerating domestic production as much as possible will all feature in a Trump presidency.  
• Democrat: Expect a continuation of the trend of incentivizing domestic production through programs such as the Inflation Reduction Act. Additionally, CUSMA renegotiations could feature demands for stronger climate and worker protection regulations.  Extending Buy Clean and Buy American policies are more than likely. 

Energy Security

• Republican: Mr. Trump has promised to make America energy independent and energy dominant. Expect American energy production to increase significantly, and the potential for American imports of energy products and related supply chains to decline.
• Democrat: Anticipate continued acceleration in clean energy and clean energy supply chain development, with an emphasis on energy security, and securing energy independence through renewables development.

Tariffs & Levies

• Republican: Mr. Trump has proposed a 10 per cent levy across the board on all imports to the United States. Additional tariffs and levies may be applied to benefit American domestic industries where applicable. 
• Democrat: No direct mention of new tariffs or levies has been made by Ms. Harris or features in the democratic platform although it should be noted that the Biden administration did not repeal the tariffs introduced by the 2016-2020 Trump administration, and in some cases (such as steel, aluminum, semi-conductors, electric vehicles and battery technologies) increased tariffs.

Tax Policy

• Republican: Mr. Trump has suggested that taxes on American workers, and businesses will be reduced – on the expectations that government revenues will be supported through tariffs on foreign producers.  
• Democrat: A democratic administration would utilize various Investment Tax Credits to incentivize development in key sectors (renewables, manufacturing etc.). They also suggest that a global minimum tax be introduced.  

Environmental Policy

• Republican: There is no mention of environmental protections; however, the platform does reference measures to support the energy industry, including nuclear.  
• Democrat: Environmental policy features as a broad theme, taking an ‘America first’ lens to environmental policy, investing in the domestic renewables sector, and incentivizing research in green and clean energy. Environmental protections featured in the initial CUSMA negotiations could return as an issue in any future trade agreement negotiations.

Worker protections

• Republican: A Republican administration proposes to protect American workers from unfair foreign competition by developing critical supply chains for manufacturing in the United States.  
• Democrat: Worker protections feature significantly, were a key concern in the initial CUSMA negotiations and could return as an issue in any future trade agreement negotiations. 

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 occurring on November 5 have serious implications for our economy, and governments must work proactively to address issues and mitigate negative impacts to Canada’s business community.

In an effort to decrease the trade deficit, a Trump presidency could install repressive tariffs and has plans to decrease the United States reliance on trade across the spectrum – from energy products to consumer goods to construction materials. A Harris administration could take a more hardline stance on environmental and worker protections in free-trade agreement negotiations and has plans to significantly increase domestic production of renewable energy, and incentivize the growth of domestic automotive, semi-conductor and battery technology industry – effectively decreasing American demand for Canadian products in these sectors.

Next week, the Calgary Chamber will release the conclusion to our series on the U.S. election, providing concrete recommendations to governments in Canada to prepare for either outcome. By working proactively, we can mitigate the risks to our trading relationship with the United States and make improvements to our international relations 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.