As US Vice President Kamala Harris and Donald Trump compete fiercely for the White House in the US election, they have largely focused their messaging on the economy – and Canada is listening closely.
More than 90% of voters entered A recent Ipsos survey They said the economy and their personal economic situation will influence how they cast their ballot, far outweighing all other issues identified as important in the election.
This reflects the feeling that most Americans, like Canadians, feel that the cost of daily life remains difficult after two years of high inflation, which peaked in the wake of the COVID-19 pandemic but has declined recently.
Each candidate has taken different approaches to explaining how he or she will handle the economy. Harris has detailed a series of proposals to lower costs for Americans, including targeted tax breaks, health care coverage improvements and financial assistance for first-time homebuyers. Meanwhile, Trump has focused almost exclusively on tariffs on foreign imports and energy production, which he claims will boost funding for social support and businesses.
The same Ipsos poll showed that Trump has a slight lead among voters who trust him on the economy, but that lead has narrowed since Harris became the Democratic nominee in July.
Canada is preparing for how tough US economic protectionism could get in the next four years, and how the next review of North American free trade negotiations could play out under a Trump or Harris administration.
Here’s a look at what Harris and Trump have proposed about the economy, and how Canada could be affected.
Harris has often not been specific about how she will deal with international trade and other global economic issues, which has led many researchers and analysts to believe that she will continue the policies of US President Joe Biden. These policies prioritized incentives to boost American manufacturing while maintaining foreign trade partnerships.
Instead, Harris’ economic platform focuses primarily on building an “opportunity economy” at home, which she says will benefit the middle class.
Her policy proposals include expanding the child tax credit and earned income tax credit to more recipients, and capping taxes on those who earn up to $400,000 a year.
For wealthy Americans, Harris proposes enacting a minimum tax rate for billionaires and raising the rate on long-term capital gains for those earning at least $1 million annually to 28 percent.
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It called for providing first-time homebuyers with up to $25,000 in down payment assistance, and stimulating the construction of three million new homes and rental units across the United States by cutting federal red tape and providing tax breaks for homebuilders.
The Harris administration will also crack down on “bad actors” in the real estate and grocery sectors who inflate consumer costs to boost profits, which the campaign calls price gouging.
Harris pledged to continue Medicare negotiations with drug companies that began during the Biden administration to lower prescription drug prices and caps, bringing insulin prices down to $35 a month for seniors. It also says it will expand Medicare to include home care for families.
Other legislative priorities Harris says she will pursue are paid family and medical leave, raising the federal minimum wage, and eliminating tip taxes for service and hospitality workers — the last of which Trump has publicly proposed for the first time.
Trump’s economic plan is almost the opposite of Harris’ plan, with a heavy focus on international trade tariffs that he says will raise billions of dollars for the domestic economy and force companies to move their supply chains back to the United States. He also linked illegal immigration to the economy. Harm claims his restrictions will bring jobs back to Americans.
At the heart of Trump’s program is a blanket tariff of 10 to 20 percent on all foreign imports except goods from China, which he says would face tariffs of at least 60 percent. He said some companies that Trump views as harmful to American interests — such as Chinese auto companies looking to build manufacturing bases in Mexico — could face higher tariffs.
Trump also says he will boost U.S. energy production — in part by opening up federally protected lands — as well as homebuilding and domestic manufacturing by imposing broad regulatory cuts that he says will allow companies to grow and add jobs.
Besides eliminating tip taxes, Trump’s economic proposals for the public kitchen table are relatively weak. He has answered most questions about how to pay for affordable child care and homes by pointing to his tariff policies.
He also aims to make permanent the tax reforms he passed during his first term, promising another tax cut for middle- and lower-class families, as well as eliminating income taxes on Social Security benefits.
One idea Trump floated early in his campaign — building new “freedom cities” on federal land that would include not only new homes for Americans but also flying cars — was not included in his official campaign platform.
How will Canada be affected?
Canada will almost certainly be keen to see whether Harris or Trump will be able to boost homebuilding and bring down house prices, which have risen sharply since 2020, and whether those ideas can be replicated here.
Harris’ late entry into the presidential race means her economic agenda is still being evaluated. So far, experts believe it will maintain the Biden administration’s status quo on the international stage with potential increases in both spending and tax revenues at home.
Most of its domestic proposals, especially regarding tax breaks, require congressional approval — making Democratic control crucial to enacting its vision.
Kimberly Clausing, an economist and senior fellow at the Peterson Institute for International Economics (PIIE), told Global News that Harris’ affordability measures are “modest improvements that will move things in the right direction” for Americans but will not lead to macroeconomic impacts. . This would affect major trading partners such as Canada.
“I don’t think Canada will notice the Harris administration much,” she said, noting that Harris does not represent a radical change from the “weighted average” of the Obama and Biden administrations.
Harris said she will reopen negotiations on the Canada-United States-Mexico Agreement (CUSMA) when it is reviewed in 2026 to ensure companies in value manufacturing sectors are not incentivized to move their business to Canada or Mexico. But experts say those negotiations are likely to go more smoothly with a Harris administration than with a Trump White House.
Canadian officials and researchers are focusing more on the potential ramifications of Trump’s sweeping tariffs, which likely would not require congressional approval.
Economists almost uniformly agree that tariffs ultimately raise prices for consumers, as companies look to offset the higher cost of importing. Klausing and her colleagues at PIIE estimated in a report released in August The tariffs would cost the typical American family an additional $2,600 per year on average.
An April Scotiabank economic report estimated that Trump’s tariffs — and retaliatory duties imposed by affected countries on U.S. exports — would reduce U.S. gross domestic product by more than 2% within two years and raise inflation and interest rates. But the report said Canada would be hit worse, with GDP reaching 3.6 percent, given its dependence on trade with the United States.
The Canadian Chamber of Commerce says $3.6 billion worth of goods and services cross the border between the United States and Canada every day.
“Any disruption to the cross-border supply chain has a significant impact on small businesses in Canada and the economy as a whole,” said Yasmin Genette, vice-president of national affairs at the Canadian Federation of Independent Business.
Trump also pledged to reopen CUSMA with a focus on preventing China from taking advantage of the trade pact’s North American rules of origin regarding auto manufacturing. but Economists at the Bank of Montreal They warned that the entire agreement was at greater risk of being scrapped or redrawn entirely under a Trump administration — especially if Republicans control Congress.
Researchers also say Trump’s economic plans would increase the US government deficit at nearly twice Harris’ rate, and that any economic benefit from proposed tax cuts and regulatory easing would be offset by the effects of tariffs.
Jamie Gunn, chief economist at Desjardins, told Global News that Trump’s potential second term in office would be “more turbulent” than the Harris regime, and could even lead to a recession in Canada.
– With files from Global’s Craig Lord
