TRADE

Canadian diplomats may have breathed a sigh of relief when Joe Biden replaced the mercurial Donald Trump as U.S. President last year, but Canada’s trade tensions with the United States have not disappeared.

Mr. Biden cancelled the Keystone XL pipeline permit on his first day in office. The State of Michigan is trying to shut down Enbridge Inc.’s Line 5 pipeline, which carries as much as 540,000 barrels of oil a day from Western Canada to Ontario through two U.S. states.

Meanwhile, Canadian diplomats are trying to make sense of the “Buy America” provisions in that country’s US$1-trillion infrastructure spending bill, which could keep Canadian firms from bidding on major government-funded projects.

Geopolitical changes will complicate the trade file. The rising tension between China and the U.S. is leading both countries to rejig global supply chains to their own strategic advantage. Meanwhile, institutions at the heart of the liberal trading order, notably the World Trade Organization, have become dysfunctional, making bilateral and regional trade agreements even more important.

Canada’s own trade relationship with China has grown enormously in recent decades, but the political relationship has soured since the detention of Huawei executive Meng Wanzhou in Canada and Canadians Michael Spavor and Michael Kovrig in China. How the incoming government navigates these uncertainties will have major implications for Canada’s trade-oriented economy.