U.S. election will have real outcomes for us, no matter who wins

TORONTO—Regardless of who wins the U.S. presidential election campaign in November, it will be a victory for America First. While the approaches of Donald Trump and Joe Biden are clearly different, both are promising protectionist policies to voters who fear their country is falling behind—and either will create problems for us, even if Biden is the preferable choice. We already know the Trump approach. It includes bullying threats and the misuse of trade laws to penalize imports—the threat of new tariffs on Canadian aluminum being the latest example— or the threat to scrap trade agreements, as we saw with the one-sided negotiation of the Canada-U.S.-Mexico Agreement to get new concessions from Canada and Mexico. Seeing trade as a zero-sum game, in which only one side can be a winner, the Trump administration has also targeted bilateral trade balances, demanding that countries with trade surpluses buy specified amounts of U.S. products, as has been the case with China. Even when the target is another country, Canada can get sideswiped. By arm-twisting the Chinese to buy more American farm products, some of these U.S. farm exports will come at the expense of Canadian farmers who will end up selling less. So we have a rough idea of what we can expect from another four years of Trump—more confrontation, more threats of trade wars, more bullying, more abuse of global trade rules. This is how Trump's America First works. But what about a Biden administration? How would its America First strategy work? The Biden campaign is promising massive investments in infrastructure, clean energy, climate change, the auto industry and innovation across the manufacturing sector, as well as sharply increasing investments in research and development and commercialization as well as in training and skills. The goal is to use a protected American market, backed by massive U.S. spending on innovation and advanced technologies, to accelerate the competitiveness of the U.S. in world markets. But this depends on a different kind of protectionism. A Biden administration would make much greater use of Buy American laws, with massive increases in public procurement or funding that would be confined to products and services made in the U.S. The strategy is to invest heavily in next-generation infrastructure, energy and manufacturing through U.S. companies and to develop technologies and intellectual property so that U.S. companies will be poised to grab a much greater share of world markets—in the process, Biden’s campaign says, creating millions of well-paying and unionized American jobs. The campaign at one point even takes aim at Canada. “We will work with U.S. ports and labour unions to ensure that cargo bound for U.S. is offloaded in the U.S. and not in Canadian ports to avoid harbour taxes,” the campaign says. Prince Rupert, B.C., for example, has become a major offloading hub for goods from Asia destined for the U.S. which are shipped south by Canadian railways. So as with Trump, it is an America First strategy. With plans for a U.S.$1.3-trillion investment in infrastructure over 10 years, the Biden campaign underlines Buy America. “American workers should build American infrastructure and manufacture all the materials that go into it.” So much for Canada-U.S. free trade. “When we spend taxpayers’ money, we should buy American products and support American jobs,” Biden says. His platform complains that in 2018 the Defence Department spent US$300-million on “foreign engines and vehicles instead of buying from American companies and putting Americans to work.” Perhaps some of those vehicles came from Canada. In fact, the Biden campaign promises to tighten Buy American provisions. As his platform says, “Biden will use the government’s purchasing power to Buy American, boosting U.S. industries through a historic procurement investment," as well as “an ambitious extension of his infrastructure and clean energy plans.” These Buy America provisions would “require that all steel, iron, and manufactured products used in transportation projects are melted, mined and manufactured in the U.S.,” since “they are critical for the U.S. manufacturing industry.” Early on, a Biden administration would spend an extra US$400-billion on government procurement to create new demand for “American products, materials and services.” It will invest an extra US$300-billion in research and development to strengthen U.S. capacities in next-generation industries, from artificial intelligence, 5G communications and biotechnology to electric vehicles, advanced manufacturing, clean energy, and smart infrastructure. “This will be the largest mobilization of public investments in procurement, infrastructure and R&D since World War II,” the Biden documents claim. The auto industry gets special attention from the Biden campaign which says the goal is “to ensure that the American auto industry “wins the 21st century.” The auto industry is described as “the heart of American manufacturing” and Biden says it must be “the global leader for generations to come.” For starters, the U.S. government will spend “tens of billions of dollars” on clean vehicles and parts produced in the U.S., drawing on Buy America, to create near-term demand for U.S.-made vehicles and parts. But the bigger goal is to spur U.S. auto innovation through public and private investments in technology and innovation, using part of the promised US$300-billion boost in federal R&D spending, with a big focus on electric vehicles, batteries, and low-carbon hydrogen fuel cells. The Biden campaign promises a total of US$1.7-trillion in spending on clean energy to lead America to “become the world’s clean energy superpower.” It promises high-speed electric-powered freight and passenger rail in crowded transport corridors and even for a cost-to-coast network. There are plans to accelerate and promote commercialization and scaling up of tech companies through direct investments or grants and tax and other incentives, all backed by Buy America provisions. So how will Canada respond? We should be planning for a much more challenging future now, not waiting to see who wins in November. The U.S. election will have real outcomes for us no matter who wins. David Crane can be reached at crane@interlog.com. The Hill Times