Riding the Red Wave: Tax and Trade Impacts of Trump’s 2024 Victory for Canadian Businesses
With Donald Trump re-elected as U.S. president, Canadian businesses should prepare for a renewed emphasis on “America First” policies that prioritize U.S. economic interests. This outcome could influence trade regulations, taxation, and the overall economic dynamic between the two countries. Here’s an in-depth look at what Trump’s administration means for Canadian companies operating across the border.
Trade, taxes, and tariffs
Trump’s presidency will likely usher in a reassertion of economic protectionism, similar to his 2017 approach. Canadian industries relying on U.S. exports—such as agriculture, manufacturing, and natural resources—could face tighter trade restrictions and higher tariffs. A heightened focus on bolstering U.S. manufacturing may result in raised import tariffs on goods from Canada, putting pressure on Canadian businesses to absorb higher costs or seek alternative markets.[1]
In terms of taxation, Trump’s continued support for the 2017 Tax Cuts and Jobs Act (TCJA) signals stability in the territorial tax system, which exempts foreign-earned profits from U.S. domestic taxation. Canadian companies with operations in the U.S. may still benefit from this structure, as it favors businesses with significant foreign earnings. Trump has also proposed lowering the corporate tax rate further, potentially down to 15-20%, to increase U.S. economic attractiveness. However, while this lower tax rate could attract foreign investment to the U.S., Canadian firms might face competitive disadvantages, particularly if Trump’s tax policies incentivize the repatriation of U.S. businesses.
Energy policy and environmental regulations
Trump’s energy policy will likely continue to emphasize fossil fuel production, rolling back federal environmental regulations to reduce compliance costs for U.S. industries. This stance is expected to diverge from Canada’s climate agenda, where environmental regulations are integral to policy.
The disconnect may impact Canadian industries directly affected by environmental standards, especially in sectors like mining, oil, and gas. Companies that operate cross-border will need to adapt to differing regulatory requirements, balancing the more relaxed U.S. approach with Canada’s stricter environmental compliance.
Defense and border security
Trump’s previous term was marked by a fluctuating commitment to international alliances, including NATO. This stance introduced uncertainty regarding the U.S.’s commitment to collective defense agreements, potentially affecting North American security dynamics. Domestically, Trump’s administration implemented stringent immigration policies, including the “Remain in Mexico” program and increased deportations, aiming to curb illegal immigration.[2] While this may have limited direct impact on trade, changes in defense and security policies could indirectly influence cross-border collaboration and market stability.
On the domestic front, Trump’s focus on tightening border security and immigration enforcement may create challenges for workforce mobility. Canadian businesses that rely on cross-border talent may need to reassess hiring strategies to manage potential restrictions on labor movement.
Strategic considerations for Canadian businesses
Under Trump’s administration, Canadian businesses should closely monitor U.S. policy shifts that could affect competitive positioning, supply chains, and market accessibility. It’s also essential for businesses to evaluate whether adjusting their supply chains or exploring alternative markets could offset the risks posed by increased tariffs and regulatory changes. By staying proactive and prepared for evolving trade dynamics, Canadian firms can mitigate potential disruptions and explore opportunities to strengthen resilience in a complex North American market.[3]
Navigating the complexities of U.S.-Canada trade and tax policies under a new administration can be challenging, but you don’t have to go it alone. Reach out to your DMCL advisor to discuss how these policy shifts might impact your business and explore strategies to keep you competitive and resilient in the face of change. They’re here to help you make informed decisions that align with your business goals and prepare you for the road ahead.
[1] Tom Geoghegan. (2024, November 2). What would Harris and Trump do in power? BBC.
[2] Lisa Desjardins, Ali Schmitz, Saher Khan. (2024, September 12). Comparing Trump’s and Harris’ positions on immigration and border security. PBS News.
[3] Sammy Hudes. (2024, November 6). Trump’s victory sparks concerns over ripple effect on Canadian economy. BNN Bloomberg.
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