A Washington lobbyist told me last week that Canada should welcome the planned return to a Republican Congress because the GOP tends to support open trade and supply chains.
My opinion? Don’t count on it. The “Republican tide” that was supposed to give the party a large majority in the House simply hasn’t materialized – but a victory of little or a lot doesn’t make much difference in terms of ability to govern.
Assuming Republican Kevin McCarthy is the next Speaker of the House, he will be distracted by internal divisions among his own GOP membership and struggle to maintain his position as Speaker.
If and when McCarthy gets his contentious group online, Canadians need to internalize that today’s Republicans are not the pro-corporate, pro-globalization party that corporate Canada feels so comfortable with. The few remaining pro-trade Republicans in Congress are relics of the past. The “America First” faction now owns the franchise, and Marjorie Taylor Greene is more representative of the party than Mitt Romney.
The Republican goal over the next two years will be to block US President Joe Biden’s administration – to demonstrate that Biden is weak and undo all the gains made over the past two years.
Expect to see a landslide of impeachment investigations launched by Republican members of the House, not only against Biden but against cabinet members such as Homeland Security Secretary Alejandro Mayorkas for his alleged weakness in the Mexican border. While these allegations are unlikely to meet the impeachment standard for bribery, treason, or “high felonies,” these investigations will waste Congress’ time.
Expect to see regular tussles over the debt ceiling as Republicans try to demand concessions from the administration. Between mid-December and January, the United States will reach its credit limit and will have to raise the ceiling or risk defaulting on its financial obligations. This will most likely cause another government shutdown and lower US credit ratings and investor confidence in an already shaky economy.
Whether or not Donald Trump announces a presidential election in 2024, he continues to infect American politics by mobilizing like-minded candidates determined to bring down the government. The former chief agitator planted seeds that will now grip the ability of US lawmakers to govern in the public interest.
What does this mean for Canada?
Any US program or policy affecting Canada that requires further spending by Congress will be mired in bureaucracy. Licenses and permits will be similarly affected, so while the new Congress may favor reversing the Democrats decision on Keystone XL pipeline, the permit required to build it is unlikely. The green protectionists who were blocking Canadian pipelines and hydroelectric infrastructure will be replaced by like-minded American pioneers as they expand drilling in protected American parks and restore coal-fired electrification to its former glory.
On border issues, the impeachment proceedings against Mayorkas will divert the attention of Customs and Border Protection senior management from issues requiring special attention on the northern border of the United States. On a practical level, the expected crackdown on Mexico as a refugee corridor will certainly divert US border agents to the southern border and away from Canadian crossings, slowing trade and travel.
Where are the points of convergence? Issues such as bilateral cooperation on critical minerals are likely to continue, as long as no US spending or authorization is required, as they align with US attempts to isolate China – one of the few problems in the world. American bipartisan agreement.
Given that the president has authority over national security, the US commitment to modernizing NORAD is likely secure, but funding it will be another story. While the amount of new US NORAD spending is still unknown, Canada has just committed billions and the US traditionally pays the bulk of this joint commitment to our common early warning defense network.
Surprisingly, the CUSMA trade deal is likely immune to a lot of Congressional manipulation. While the deal reverses some of the gains of NAFTA, it also locks in areas of market access and dispute resolution that are important to Canada. Given that the deal has Trump’s stamp of approval, his cronies in Congress will likely let it pass for now.
Also safe are any bilateral business, trade, or investment initiatives that may remain under the radar and require no congressional attention or expenditure, such as routine regulatory matters and cooperative programs in scientific research.
However, Canadians must find a way to compensate for their economic dependence on the United States. Canada should continue to be a good neighbor where it can, but it must also minimize the backlash from the United States paralyzed by its own Congress.