Welcome to Need to Know, The Hub’s roundup of experts and insiders providing insights into the developments Canadians need to be keeping an eye on.
Today’s weekend edition dives into thought-provoking research from think tanks, academics, and leading policy thinkers in Canada and around the world. Here’s what’s got us thinking this week.
It’s been a heck of a first few days for President Donald Trump. In just one week, the president issued nearly 60 executive orders on everything from trade to migration and citizenship to ending DEI programs, and everything in between. Many of these have already received intense backlash, and a lot of D.C. lawyers are racking up those billable hours with all the impending court challenges.
While it’s unclear how many of Trump’s policies will survive impending legal challenges, several either directly or indirectly impact Canada.
Trump’s executive orders hit Canada
Amid the fire and fury of executive actions, several have implications for Canada, raising questions about how we should respond (if only we had a sitting deliberative body where such questions could be debated!).
Here are the ones to date that Canadians should keep an eye on:
America First trade policy: On January 20, 2025, Trump announced his “America First Trade Policy,” directing reviews of trade deficits and “unfair” practices, including “the unlawful migration and fentanyl flows from Canada, Mexico, the PRC…” The policy mandates an assessment of the Canada-United States-Mexico Agreement (CUSMA) before its scheduled 2026 review. Hopefully, Canadian government officials are well on their way to developing their CUSMA renegotiation strategies, considering the formal review is now less than two years away at most.
Securing the U.S. border: Trump also issued the “Securing Our Borders” executive order, directing the construction of physical barriers and the deployment of personnel to achieve complete operational control of U.S. borders. While the order primarily focuses on the southern border with Mexico, its implications could extend to the northern Canada-U.S. border, which Trump has described as “ridiculous Open Borders.”. Could there conceivably be a push to build a wall along the Canadian border, and get Canada to pay for it?
Unleashing American Energy: Another executive order issued was to boost domestic energy production by reducing regulations, opening up protected lands, and promoting fossil fuels. This policy may reduce energy imports from Canada, potentially leading to trade tensions between the two nations. Moreover, the order also removes the Electric Vehicle (EV) mandate, as Canada spends over $50 billion on the EV sector. It might be time to revisit those subsidies. It might also be time to revisit some of those pipeline decisions that have hurt the access of Canadian oil to tidewater.
Using the U.S. military to protect territorial integrity: Another Trump executive order is directing the U.S. Armed Forces to prioritize securing national borders against threats like unlawful mass migration and narcotics trafficking. The order mandates that the U.S. Northern Command develop plans to “seal the borders,” which could affect both southern and northern borders, including Canada, potentially bringing a militarized border northward. In addition, executive orders against undocumented migrants could also create a wave of migrants to the Canadian border with the goal of seeking asylum.
Withdrawing from the WHO: Trump signed an executive order to withdraw the United States from the World Health Organization (WHO), citing the organization’s mishandling of the COVID-19 pandemic and undue political influence, with Trump calling it “corrupt,” accusing it of ripping the U.S. off.
The order halts U.S. funding to the WHO and recalls all its American personnel. The international institutions that define the liberal international order are under attack from the outside and within. Canada was present at the creation of many of these organizations, and they arguably form a core part of Canada’s national interests. With the order seemingly crumbling, where does this leave institutional pillars of Canadian foreign policy?
The OECD global tax deal: Finally, Trump issued a memorandum declaring the OECD Global Tax Deal as non-binding in the U.S. without congressional approval. This decision may affect Canada, a signatory of the agreement, potentially leading to the US reducing its tax rates well below Canada’s, which could hurt Canadian economic competitiveness.
American and Canadian flags fly outside the United States consulate, November 3, 2020. Nathan Denette/The Canadian Press.
A playbook for understanding how Trump’s tariffs will affect Canada
Speaking of needing to think about how Canada ought to be responding to the Trump challenge, the Royal Bank of Canada (RBC) is out with a timely report that develops a method for understanding the complex process of how a tariff shock could impact the Canadian economy.
Written by RBC chief economist Frances Donald and assistant chief economist Nathan Janzen, the study identifies seven channels through which tariffs could disrupt Canadian trade and broader economic stability.
First, pre-implementation uncertainty could cause Canadian businesses to delay investments within Canada, as they face unclear future trade conditions.
Second, pre-tariff stockpiling may temporarily inflate trade activity, as U.S. companies rush to import Canadian goods before the tariffs take effect.
Third, once tariffs are implemented, post-tariff demand reduction could follow, as higher prices for Canadian goods weaken demand in the U.S., depending on factors such as currency fluctuations and the availability of alternative suppliers.
Fourth, Canada’s response to U.S. tariffs, through retaliatory measures, could escalate trade tensions, potentially broadening the economic impact to more sectors.
Fifth, negative consumer impact is a critical consideration, as tariffs generally lead to increased prices for goods and the export sector contracts this could cause job losses and reduce consumer purchasing power in both Canada and the U.S.
Sixth, the Bank of Canada would face a complicated challenge in responding to the trade war. Tariffs can increase costs while weakening the economy, with unclear implications for interest rate adjustments and sectors like housing.
Finally, fiscal support from federal and provincial governments could mitigate short-term impacts, but a Canada-specific shock might strain long-term growth and put Canada’s credit rating at risk.
The economic stakes are high, and Canada needs a real game plan. This means we must fully grasp the complex ways Trump’s tariffs will flow through the economy. This report provides the starting point.
ChatGPT assisted in the creation of this article.
Taylor is The Hub's Research and Prize Manager. He is a Ph.D. candidate in Political Science at the University of Toronto. He has worked with several think tanks in Canada and the U.S. and previously served as a senior advisor to the Ontario Minister of Finance....
