A second Donald Trump presidency in the United States will put Canada between a rock and a hard place in its relationship between its two largest trading partners — the U.S. and the European Union — according to a panel of experts at a Carleton University roundtable on Friday.
Wolfgang Alschner, Hyman Soloway Chair in Business and Trade Law at the University of Ottawa, said that he thinks the incoming Trump administration means Canada will have to reevaluate how it regulates — or deregulates — certain industries and products to stay in step with its top trade partners.
“Canada, on one hand, has to regulate more in order to retain access to the EU market,” said Alschner. “After last Tuesday, when we look south, in order to stay competitive, Canadian companies have to deregulate.”
Alschner was one of five panelists involved in the Carleton-hosted discussion focused on Canada’s relationship with the EU, global economic governance and the implicatons of the Nov. 5 U.S. election in which Trump and the Republican Party swept to a historic victory.
Last year, Canada’s trade with the EU was valued at over $158 billion. Alschner said the EU’s Carbon Border Adjustment Mechanism (CBAM) will continue to have an impact on Canadian industries and explained that Canada would need to match the EU’s price of carbon for certain goods that it sends across the Atlantic.
“Canada is exporting carbon-intensive products to the EU, notably steel and aluminum, but also fertilizers… and they will be subject to CBAM,” said Alschner. “That creates a big problem because Canada does put a price on carbon that’s significantly lower, so there will be prices to be paid when Canadian products enter into the EU.”
‘Canada, on one hand, has to regulate more in order to retain access to the EU market. After last Tuesday, when we look south, in order to stay competitive, Canadian companies have to deregulate.’
— Wolfgang Alschner, Hyman Soloway Chair in Business and Trade Law at the University of Ottawa
Regarding the deregulation of products between Canada and the U.S., Alschner said that Canada could see some benefits, even in the costs of everyday products used by families across the country.
“In Canada we have different standards for car seats for children than in the U.S.,” said Alschner. “It just drives prices up in Canada, because you have to produce for the Canadian market. So, there are opportunities to look for mutual recognition of regulatory standards.”
In the case of the EU’s trade relationship with the U.S., Lithuanian political scientist Ramūnas Vilpišauskas — the Konrad Adenauer Stiftung Visiting Scholar at Carleton University — said he believed the appointments of U.S. “foreign policy hawks” who are focused on taking a tough line on trade with China could lead to a spillover effect against the EU.
“There is a ground to expect worsening of relations,” said Vilpišauskas — “a trade war.”
Warnings of a trade dispute with a second Trump administration are not new. In 2020, the government of Prime Minister Justin Trudeau managed to renegotiate CUSMA, the North American free trade agreement, but that was only after then-president Trump had slapped a 25-per-cent tariff on steel and a 10-per-cent tariff on aluminium imports back in 2018.
CUSMA is up for a review in 2026, and in the last week since the U.S. election, Trudeau reestablished a cabinet committee focused on Canada-U.S. relations, following a similar move he had made in 2016 when Trump was first elected.
“With Trump, maybe tactics have changed how Canada has to manage that relationship,” said Alschner, “but the strategy, fundamentally, I don’t think has changed.”
While there are challenges for Canadian businesses in the long run, Alschner said he thinks Canada shouldn’t see its trade relationships between the U.S. and the EU as a zero-sum situation, with Canada siding with one trade partner and losing out with the other.
“Yes, we have to align somewhat with the U.S. to keep that market access, but we have to exploit every opportunity we have to be the U.S.’s better angels (and) try to find ways to bridge that gap,” said Alschner. “I think Canada is going to be a little more credible partner in North America now with the Trump administration. I think there are opportunities as much as there are threats.”
