As a country, we simply aren’t ready for what is coming from Washington. I’m not talking about the tariffs — who knows what they will be or if and when they will come.
I’m talking about Trump’s changes to the American economy.
On Saturday, Trump was speaking to his most enthusiastic supporters at the Conservative Political Action Conference in Maryland, just across the river from D.C. Once again, he made them a promise that should make every American excited and every Canadian nervous.
“To further, turbo charge our economy, we’ve launched the most aggressive deregulation program in any nation’s history, and we’re also going to be seeking the largest tax cuts in American history,” Trump said.
“We brought them down, as you know, from close to 40% down to 21% now we’re bringing them down to 15% if you make your product in the United States of America.”
There are so many things in that brief snippet of Trump’s speech that should worry Canadian business and political leaders.
A radically reduced regulatory system in the United States would make it harder for Canadian companies to compete. Some regulation is good, much of it is busy work or ideas backed by law that no longer make sense.
In Canada, we have a high regulatory burden and our biggest trading partner and competitor for investment is about to have a much lower burden. That will make Canada less attractive to investment and to executives making decisions on where to expand or locate plants.
The same on taxes.
Right now, the effective corporate tax in Canada is 15% — the same level Trump wants to lower his rate to. For more than a century, Canadian industrial policy has sought to ensure a lower rate on corporate taxes as a way to attract investment and jobs.
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For the most part it has worked, but with an equal corporate tax rate, a reduced regulatory burden and the possibility of tariffs, the United States becomes more attractive.
That is, unless we also change and radically alter our economic rules.
Sadly, we are about to get a new prime minister who doesn’t see that as the way forward. A few weeks ago in Halifax, Liberal leadership hopeful Mark Carney announced that he would get rid of the consumer carbon tax but then said he’d make up the difference by increasing the industrial carbon tax.
“We will get the big polluters to pay for it,” Carney said.
Twice he mentioned steel companies as an example of the kind of big polluter he wants to pay for his program. Steel companies create jobs, unlike Carney, and are already paying massively on the carbon tax.
Take Algoma Steel in Sault Ste. Marie, which in the fiscal year that ended March 31, 2024, paid $24.6 million in carbon taxes on a net income of $105 million. Since then, the carbon tax already went up by 23% last April 1 and this coming April 1, it will see another increase of 19%.
That means, barring any other changes, were Algoma to produce the same amount of steel that they did in fiscal year 2023-24, they would be paying nearly $36 million annually in carbon taxes. And on top of that, Carney wants to increase the industrial carbon tax and add a carbon tariff on imported goods.
The plan of the new Liberal leader is as detrimental to our economy as the plans coming out of Trump’s White House. Why whine about the damage that tariffs on steel and aluminum will do to our economy when we inflict our own damage to kill of jobs and chase away industry.
Algoma is a steel company on the brink would likely shut down in the face of Trump’s changes and Carney’s foolish policy. Other players in the industry, like ArcelorMittal, which owns Dofasco, would likely just move production to their various American plants in and around Detroit, in Ohio or elsewhere.
Carney mocks the idea put forward by Conservative Leader Pierre Poilievre that we need to axe the tax, but that is exactly what we will need to do.
In the face of tariffs, but just as much in the face of Donald Trump’s remaking of the American economy, we will have no choice. Actually, we will have a choice: We can stay with the status quo and sink into a recession and persistent economic decline, or we can start to rebuild our economy to compete and that includes not putting unnecessary costs on businesses and industry that will only chase away jobs and investment.
Poilievre understands that; he gets that to compete in this new economic order being created by Trump that we need to unleash our own economy, diversify trade, and embrace Canada’s natural resource-based industries.
We face multiple threats from Washington; the choices we make here in Canada will determine whether we thrive or head down the path of permanent decline.