Ontario is preparing for the potential risks and opportunities of a second Donald Trump presidency. While it’s tempting to fear the worst, it’s worth noting that Ontario weathered Trump’s first term reasonably well — at least until the COVID-19 pandemic. Between 2017 and 2019, the province saw consistent increases in real GDP and jobs while unemployment rates declined, dispelling some early doomsday predictions. Still, this relative stability required strategic adjustments, including the negotiation of a new North American trade agreement and measures to maintain tax competitiveness in response to U.S. corporate tax cuts.
More recently, some of President Joe Biden’s moves have challenged Ontario, notably his “Buy American” policies and massive subsidies for electric-vehicle manufacturing. We’ve responded with our own federal and provincial subsidies to retain auto production in the province, albeit at a significant cost to taxpayers.
However, this iteration of Trumpism could pose new, more potent challenges. An emboldened Trump presidency looks to be backed by a more compliant and cohesive Republican party, potentially armed with congressional majorities. This raises legitimate fears of intensified “America First” economic policies and potential trade frictions. With its strong manufacturing sector (which involves precisely the kinds of middle-class jobs Trump is keen to repatriate), Ontario faces heightened exposure to economic bullying from a U.S. administration focused on reshoring jobs through imposing tariffs or other trade measures.
Key risks
Trump injects unpredictability into the global economy, and uncertainty tends to deter business investment. Firms based in the U.S. may be wary of committing resources to Canada amid potential policy volatility and the risk of politically motivated retaliation. This is especially concerning for Ontario’s manufacturing base and interconnected supply chains, which depend on seamless cross-border commerce.
Another significant risk stems from U.S. immigration policies. A Trump-driven push to deport large numbers of undocumented migrants could lead to a spike in refugee claimants arriving in Ontario. Such a development would strain provincial resources devoted to settlement and integration.
A proactive response
Ontario’s response must be multifaceted. Lessons from the first Trump presidency underline the importance of collaborating with other provinces, the federal government, and influential state governors. A united Canadian front can help mitigate trade pressures while advancing shared interests. Diversifying Ontario’s trade relationships beyond the U.S. is essential, as is reducing interprovincial trade barriers to strengthen economic resilience. Renewing negotiations with countries such as the United Kingdom would help, even if it’d mean revisiting contentious sectors like beef and cheese.
Ontario should be cautious about escalating trade tensions. Engaging strategically with U.S. businesses with deep roots in Ontario would underscore the mutual economic losses that would arise from protectionist measures. The province should apply some strategic political sensitivity to announcements related to new business investment. These announcements are typically made with the Ontario voter in mind. Increasingly, the audience south of the border needs to be considered.
The province should resist the urge to match any major moves toward deregulation by the Trump administration and keep sight of the potential long-term implications. For example, the failure of a few mid-sized U.S. banks (Silicon Valley Bank, Signature Bank, and First Republic Bank) in 2023 has roots in Trump’s financial-sector deregulation. Instead, Ontario would be advised to focus on smart, principle-based regulatory reform rather than widespread deregulation.
One immediate priority for the Ford government should be to impose order upon its policy-making apparatus. It should convene a special committee of cabinet, composed of ministers overseeing portfolios such as industry, trade, immigration, agriculture, and finance. This body should be chaired by a high-profile, seasoned cabinet minister tasked with crafting a cohesive strategy to navigate Ontario’s response to the evolving U.S. political dynamics. Regular reports to the full cabinet would ensure alignment, while consistent public updates would bolster transparency and confidence in the government’s approach.
Opportunities
The potential chaos of a Trump administration will also bring opportunity for Ontario. The province can capitalize on its reputation as a bastion of stability and sound economic management — and distinguish itself by managing public finances responsibly, positioning itself as a more attractive investment destination than an increasingly indebted U.S.
With the U.S. potentially becoming less hospitable to immigrants, Ontario can seek to attract global talent. By working with the federal government to align immigration with economic needs, Ontario can continue to build an even more highly skilled workforce. This would necessitate serious investments in post-secondary education that could transform Ontario’s future economic prospects. It would also require a serious reconsideration of provincial funding and tuition policies that are threatening to erode this area of economic strength.
Meanwhile, Ontario must focus on long-term priorities like technological innovation and environmental sustainability. These will shape the economy of the future and are areas where the province has the potential to lead.
A second Trump presidency presents a complex challenge for Ontario’s economy. But with thoughtful engagement, strategic partnerships, and a focus on long-term strengths, Ontario can mitigate the risks and seize emerging opportunities — just as it did the first time around.
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