The 2020 U.S. presidential election has been anything but typical. With a global pandemic, the resultant economic chaos, a great deal of political dispute and debate, and a divided electorate casting ballots through an array of alternative methods, the process has not been without its challenges.

That has also meant that getting to a clear and final result has taken longer than usual. But barring a successful block in court by the Trump campaign (none of which have panned out) or a shock rebellion in the Electoral College vote in December, former Vice President Joseph R. Biden, Jr. will become the 46th president of the United States on January 20, 2021

What does a Biden presidency look like for Canada and how will his administration impact Canadian business and investments? The prospects are somewhat mixed and depend on Biden’s handling of a number of critical factors.

Joe Biden is of course very different from Donald Trump, but Biden will also face unique challenges as he prepares to lead our friends and neighbours to the south.

Power and politics

Politically speaking, Biden will enter the White House with a Democratic majority in the House of Representatives and a likely Republican majority in the Senate. The final makeup of the Senate hinges on the results of two run-off elections in Georgia early in the new year – just one win by a Republican will give them a 51 seat majority. Either way, Biden is likely to face strong opposition if not outright gridlock from the right wing of the Senate.

Outside of politics, Biden will face two massive challenges that are very much intertwined: the ongoing COVID-19 pandemic and the economic chaos left in its wake.

Prior to the pandemic, the U.S. was experiencing robust growth, with job creation and stock market performance in high gear. That all changed early in the year as the pandemic took effect. Unemployment hit record highs, markets became volatile, and a series of government stimulus packages were distributed and debated as a move to protect Americans and their economy. As the pandemic continues, expect uncertainty to follow.

The Biden agenda and Canada

What can Canadians expect from a Biden administration? As a Democrat, Joe Biden is generally considered to be “friendlier” for the Canadian economy. Past Democratic presidents such as Bill Clinton and Barack Obama were also seen as being more open to trade and strong partnership agreements with Canada.

But just because Donald Trump exits the White House on January 20, 2021, doesn’t mean that all problems between Canada and the U.S. will magically disappear.

Biden’s eight years as Vice President and decades-long career in the Senate means he enters the Oval Office with a great deal of experience in politics, international relations, and the economy. Biden also played a crucial role in the Obama administration’s handling of the 2008 financial crisis, in particular, the automotive sector.

He is also known to have a more moderate approach to governing and has an existing relationship with Canadian leaders, including Prime Minister Justin Trudeau who was among the first to congratulate him on his win.

With the Democrats holding on to their lead, Biden will face a friendlier House in Washington, but the Senate will remain a Republican stronghold (especially if they win either of the two contests in Georgia). That will no doubt lead to political gridlock for the new president.

U.S.-Canada trade relations

The Trump administration was noted for being particularly aggressive against any deals that appeared to give an advantage to a foreign trade partner. Given the massive size and interconnectivity between the U.S. and Canadian economies, this was frequently a problem for Canada.

For example, in June 2018, Trump infamously slapped tariffs on Canadian steel and aluminum, citing “national security” issues. And of course, Trump vehemently opposed NAFTA, an agreement he believed to be detrimental to U.S. jobs and industry. The latter was ultimately replaced with the United States–Mexico–Canada Agreement (USMCA), which came into effect July 1, 2020.

Biden is expected to be friendlier to Canadian trade interests. While Trump was keen to add protectionist tariffs to Canadian and other foreign products, Biden is seen as a moderate, taking a more global view to trade relations – no doubt a comfort to many of Canada’s resource industries.

Climate and energy policy

Biden has stated that combating climate change will be a major part of his agenda. While this may not be welcome news for Canada’s oil patch, it does represent opportunities for Canadian businesses working in producing alternate energy sources. British Columbia businesses in particular have an opportunity for growth here, such as natural gas and clean and renewable energy sources.

Taxes and spending

Trump’s tax cuts were both hailed and critiqued as benefitting big business interests and the rich in America. The cuts certainly impacted U.S. government revenue and spending but they also had an impact on the Canadian economy.

With a lighter tax regime in the U.S. while Canada maintains a higher tax rate, the Trump tax cuts made investing in Canada less attractive to some interests.

Biden will likely impose new taxes, if not eliminating much or all of the Trump tax program. Biden will feel pressure do so as a stimulus to the U.S. economy during the pandemic. He’ll also need to pay for social programs that are popular with the Democratic base. And he will also want to tackle the massive debt faced by the U.S, exacerbated by the pandemic.

The COVID-19 pandemic impact

The COVID-19 pandemic has had a huge impact on day-to-day U.S.-Canada relations. The border has been shut since the spring to all but essential crossings, causing massive disruption in the tourism and hospitality sector, among other industries. With millions of U.S. citizens testing positive for the disease, visitation to Canada has all but stopped and will likely continue to be that way for the coming months.

All eyes now turn to Biden to get a handle on the pandemic and to work with U.S. state governments, as well as Canadian officials, to enact a plan and get cross-border business back on track.

With promising new developments on the vaccine front and Biden’s commitment to a more science-centric approach to the pandemic, there appears to be greater hopes for getting the border opened sooner rather than later.

Until a vaccine proves effective and is widely distributed on both sides; however, the border is likely to remain closed for the next few months. Not the best news for BC’s winter tourism hot spots for the 2020-21 season, but if Biden can effectively work to contain and control the virus, the prospects look better for the spring and summer months.

Made-in-Canada solutions

More than anything, the pandemic will have more of an impact on our economy and local investments than the 2020 U.S. election.

The border closure and other impacts of the pandemic have been devastating to numerous Canadian business sectors. Since the pandemic started, nearly 40% of Canadian businesses have laid off staff and nearly 20% fear having to take more drastic measures in the next few months if things do not improve.

Our governments are trying to help out through a variety of programs. Just this month, the federal government announced a new $1.5 billion job-training package to help Canadians working in industries hardest hit by the pandemic, in particular, construction, transportation, and hospitality. This money will help them with skills training and employment services.

So as Americans prepare for a new administration and Canadians eagerly watch on, much hinges on what Biden and his allies do to get a handle on the pandemic. Just as we must all do our part to plan and prepare for the challenges ahead.

BlueShore Financial, Business Advisor, Robert Madzej

Robert Madzej

Business Advisor

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The information contained in this article/video was written by BlueShore Financial or one of our expert financial writers and was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. It is provided as a general source of information and should not be considered personal financial advice.