This article was previously published in the National Newswatch.
The Trump regime is a force of chaos. More to the point, its policies are economically foolish. President Trump’s economic policies will actively undermine economic growth and competitiveness of the United States. Canadian leaders—both provincial and federal, current and future—should take heed. In fact, a pretty reliable map for growth might come from carefully examining Trump’s decisions…and doing the opposite.
Let’s start with the obvious. Trump’s tariff war is unambiguously anti-growth.
Economists disagree a lot. On tariffs, economists across the spectrum do not disagree. Trade is good. Imports are good. Trade is not a zero-sum game: both importers and exporters are better off. Buying inexpensive products made in other countries means domestic consumers pay less. It frees up domestic labour and capital to drive other sources of growth. Indeed, the Peterson Institute finds that the tariffs—if they eventually proceed—would cost a typical American household $1,200 per year.
Canada’s response to newfound American economic isolationism should be the opposite, both domestically and abroad. It’s past time to strip away barriers to trade between provinces and territories. A recent study from the MacDonald Laurier Institute found that eliminating regulatory misalignment between provinces could increase Canadian GDP by $200 billion. And deepening trade relationships with other global markets—from Asia to Europe and beyond—can help diversify against the risks that some trading partners become unreliable.
Next on the list: Trump’s nostalgic efforts to hinder the energy transition in the United States —at the expense of future American prosperity.
Trump’s executive orders have halted offshore wind projects, and prevented all on- and offshore wind projects on federal land from receiving new leases on federal lands. The Department of Interior has paused approvals for all renewable projects. Trump is actively working to create inertia in demand for oil and gas. Meanwhile, the costs of wind and solar electricity continue to drop dramatically, creating new opportunities for cheap electricity. Trump isn’t just halting climate policy that (sensibly) tries to reduce emissions to avoid the costs of climate change, he’s actively impeding market trends and the inevitable market transition. As the data show, renewables and battery storage are only accelerating from Texas to California. Why? Because of costs. As economist Joseph Stiglitz has noted, Trump’s approach could set back American growth by decades.
Canadian governments should do the opposite. Provinces should continue to scale up renewable electricity to meet rising demand at low cost. They should create market mechanisms to buy low-cost, low-carbon power. They should rely on sensible, low-cost policy to drive emissions reductions, like large-emitter trading systems. While the U.S. clings to the past, Canada has an opportunity to leapfrog by embracing the newer, cheaper, better emerging technologies, even as they bring some disruption. A U.S. withdrawal isn’t going to alter the inevitable arc of global economies toward decarbonization. But it does create opportunities for Canada to compete with other countries such as China for more market share in emerging areas of growth.
Finally, Trump’s biggest drag on the economy comes from the tactic that he seems to prize most: unpredictability.
When it comes to setting policy, there’s nothing that scares away investment faster than uncertainty. Will Trump’s tariff threat return next month? If not, next year? As Martin Wolf notes in the Financial Times: Trump’s America is an unreliable partner. The uncertainty is as damaging as the tariffs themselves. Likewise, abruptly pausing or cancelling funding already committed for various projects—indeed, changing the rules in mid-game—adds new risk. Investors need clarity not just policy changes, but also assurances that those policies won’t swing wildly in the future based on the unpredictable whims of a deal-making President. At the same time, President Trump and his allies are shredding American institutions, creating new uncertainty and risk.
Canada, on the other hand, should play to its strengths: peace, order, and good government. Not so long ago, Canada’s financial sector better withstood the global financial crisis than their American competitors. As Dan Ciurak finds in a recent C.D. Howe paper, strong institutions and regulatory processes give Canada valuable stability.
Ultimately, Trump’s destructive policy choices of the last month put ideology over economics. Canada can meet that moment by coming together around first principles. Yes, Trump shocks create threats. But they also create opportunies—if Canada acts to seize them. Canada can thrive by focusing on long-term economic growth, not short-term gamesmanship. At the end of the day, avoiding chaos might just be the comparative advantage that a united Canada needs to prosper.
