Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
BDC | Oct 15, 2020
The U.S. presidential election on November 3 is dominating media attention. The candidates and their respective parties are proposing very different economic visions whose impact will go well beyond their country's borders.
Since winning the Democratic nomination, Joe Biden has led Donald Trump in national polls by an average margin of 7.3% (9.7% as of October 8). Biden also holds a substantial lead in a majority of swing states, but a bias in the polls in one direction or the other, as was the case in the 2016 election, remains a possibility. Taking this into consideration, poll aggregator FiveThirtyEight gave the Democratic candidate an 85% probability of victory as of October 9, compared to 15% for the President.
Trade remains crucial for the Canadian economy. In 2019, exports accounted for 32% of Canada’s GDP. Each month, our country exports approximately $50 billion in merchandise, thus, stable trade ties are a priority for Canada. Trump's election in 2016 presented a risk for the abrogation of the North American Free Trade Agreement and led to the Canada-U.S.-Mexico Agreement in 2018. Despite signing that deal, the current administration is not shy about imposing tariffs on individual Canadian exports, as was the case for aluminum this summer. Despite the Trump administration's retreat in that case, this type of dispute remains likely if the President is re-elected.
The U.S. election will also have an impact on taxation south of the border. Tax cuts enacted by the Trump administration in 2017 have reduced Canada's relative competitiveness on this front. The U.S. corporate tax rate has fallen from 35% to 21%. In 2018, corporate taxes in the U.S. were 1.1% of GDP compared to 3.7% in Canada.
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