REGINA, Sask. — As the United States midterm elections hand control of Congress to the Democrats, we check in with business commentator Paul Martin on what the stunning shift in the political landscape means for the prairie economy, the 50 per cent import tariffs, and the future of the border standoff.
Podcasts are available now on GX94, Yorkton, or on 620 CKRM, Regina, hosted by Steven Wilson. Or read the transcript below:
Steven Wilson — Welcome to Trade Dispute: Impact on the Prairies. I'm Steven Wilson. As the results of the United States' midterm elections send shockwaves through Washington, a stark contradiction is emerging between Ottawa and the White House regarding the terms of a potential cross-border trade deal.
United States President Donald Trump has maintained that a deal is very close. Yesterday morning, Trump claimed that Canada is yielding to American demands, telling a morning television program that Ottawa had agreed to fund a massive pipeline expansion and supply fertilizer to the United States without tariffs. However, Canadian trade experts and agricultural analysts immediately pointed out a glaring factual flaw to the president's claim.
Canada does not currently charge any export tariffs on fertilizer or its components. Historically, it was President Trump who threatened to impose severe import tariffs on Canadian potash. By framing duty-free fertilizer as a newly negotiated victory, analysts say the president is quietly walking back his own threat to tax Canadian minerals, while spinning the logistical reality as a political win to his agricultural base.
For Saskatchewan, which supplies 90 per cent of all potash imported by the United States, business leaders say the president's sudden pivot confirms the province's mining sector holds all the leverage. In North Dakota and Montana, border state agricultural coalitions say the announcement brings massive relief, noting that taxing Canadian fertilizer would have devastated American farmers ahead of the next planting season.
While the White House claims it is extracting concessions, Prime Minister Mark Carney is offering a completely contradictory narrative.
Speaking to reporters yesterday, Carney stated that while trade negotiations are more intense, it is because the United States is asking less of Canada and offering more. Carney firmly stated that Canada's red lines, including culture and the sovereign right to negotiate outside trade deals, have been taken entirely off the table. That strategy of holding the line is finding broad support among Canadian policy experts.
In a major feature published by The Walrus, foreign policy analysts warn that Washington is asking Canada to give away the essence of its sovereignty, declaring that the era of a deeply integrated lockstep relationship with the United States is permanently over.
Despite the geopolitical friction, Canadian and prairie capital remain highly active in the energy sector. It was announced yesterday that Canadian pension funds have joined a massive $3.1 billion investment in an American liquefied natural gas project, highlighting that energy remains the primary insulated sector in the bilateral relationship.
The shifting political landscape in the United States is now adding a massive layer of complexity to the trade standoff. Early midterm election results project the Democratic Party winning both the United States House of Representatives and the Senate, delivering a stunning rebuke to the Trump administration. We're joined now by business commentator Paul Martin.
And Paul, the election results coming in last night and this morning for some of the counts in like Alaska and parts of California. Were you surprised by the results that we saw?
Paul Martin — Perhaps surprised by the magnitude of the change, especially the Senate as much as it slipped, but not surprised by the direction. I think that was fairly well telegraphed, that there was a shift in the wind in the U.S. and you could see it just the way the administration was campaigning. When they started to devote as much of their time and energy into what would have been ruby red states, you knew something was up.And you know that the change came probably is not surprising just how much force American voters exerted in making that statement perhaps was the surprising element to it.
Steven Wilson — Now, when you take a look at the results, aside from really Montana and North Dakota, which stayed Republican, a lot of the border states did kind of vote towards the Democrat. Do you see that as almost a rebuke towards the trade policies of the Trump administration and the affordability situation that's developing there?
Paul Martin — I think it's fair to say that you can draw that conclusion. And, you know, Canada and the border state relationship between the two countries really did start to play a factor, particularly later in the campaign. But my big takeaway on this one also is that it's not just the border states.
If you get into, imagine Kansas sending a Democrat senator and many of the other Midwest states. What struck me is if you just looked at it from a perspective of farming states, they're the ones who seem to be the most vocal in switching their side and repudiating Trump's position, not on the domestic issues. You didn't see anybody pushing back against his position on border controls, for example.
It really was on the international file, and that I would include in there, tariffs, particularly tariffs against Canada. Because trading relationship between those two regions, the U.S., Midwest, and Canada, very, very strong. And it's because industries like agriculture are so integrated across the border that they were feeling it.
And even something as sort of indirect as farm machinery and the steel that goes into it being subject to tariffs, as well. They were pushing back on that and saying, no, you've raised our cost of doing business, not just affordability in terms of day-to-day household expenditures, which did play a factor in this, and tariffs have a role in that, but really about how the industry sees itself as continental more than domestic. I think I was surprised at how loud that message came through, and that bodes well for, I think, Canada.
The real issue now is, at the end of the day, did the Democrats win, or did the Republicans get kicked out? And I think the latter is probably more accurate. The Democrats cannot say that, hey, we found a new leader, everyone rallied around that individual, and here's our new policy.
In fact, the Democrats actually look more fractured to me than just about, than they did going in. Because who is the leader now? And what is a Democrat policy?
It wasn't that people rallied around the Democrats. They were just tired of the Trump policies, particularly the foreign affairs policies, the war in the Middle East which has driven up fuel prices, the tariffs which have driven up prices in the U.S. You'll recall you and I talked a couple of years ago about this very topic, that when the Americans say they're imposing tariffs on Canada, for example, it sounds like Canada's paying. In fact, it's the other way around.
It's Americans who pay those tariffs, because when they import something from us, it's subject to a tax on their side of the border. And I think that reality filtered through. And you see it showing up in the pushback that came from regions that would traditionally have been supportive of the Republican side and said, no, we need to rethink on this.
And now, can the Democrats actually force changes on this? That's the part that's yet to be seen, because we really don't know what is Democrat policy going to be going forward. And Trump has signaled, I will be Mr. Veto. So, you know, we've certainly got a change of complexion in the U.S., but will we see a change in policy? Will that actually be manageable for the Democrats to actually make the changes that most of us would expect would happen?
Steven Wilson — Now, one thing that I think is overlooked for a lot of Canadians, because they, you know, they hear the midterm elections, the Republicans have lost control of the House and the Senate, but the tariffs that were put into place under Section 338 are strictly under the executive branch. This doesn't mean that the tariffs are going to go away, does it?
Paul Martin — That's right. And I think that's the point here is that, yes, the Democrats have control, but, you know, don't forget, this will start for a couple of months. They don't really go into power until January.
But then once they get there, we know Trump never just rolled over. He's going to be looking for ways to keep implementing his policies, and he's been known to circumvent the rules. And I suspect a goodly number of issues are going to be added to the U.S. Supreme Court for rulings on this. And so Trump's lawyers have been very creative in finding places to exert the executive authority. We'll see whether that sticks or not, but I don't think we should expect a quick fix. This is going to be debated for quite some time, I believe.
Steven Wilson — So it looks like we could be, we'll be seeing these right through into the new year, unless there's a new deal that's struck in the meantime.
Paul Martin — Yeah, I think that's a fair assessment. But, you know, there is a change in the trade winds in the U.S., and so we shouldn't overlook that. But I just think, yeah, the wind's blowing in a different direction.
But don't expect a quick fix on this. But I think you see the direction is moving in a new way. And it's one that likely we would feel better about.
So we'll see how this plays out.
Steven Wilson — Well, thank you very much, Paul. Business commentator Paul Martin, thank you for chatting with us this morning about the impacts that the U.S. elections could have had or could have on the trade dispute.
Paul Martin — Not at all. Take care.
Steven Wilson — We will continue to monitor the political and economic landscape as both sides adjust to the new reality in Washington. I'm Steven Wilson. Thank you for listening to Trade Dispute: Impact on the Prairies.
Listen weekdays at 9 a.m. on 620 CKRM and GX94 for new installments of Trade Dispute: Impact on the Prairies.
