Will Biden’s second state of the union mark a less protectionist approach to Canada?

Canadian business leaders say they’ll be listening for a softer tone from Biden on the protectionist rhetoric that marked his first two years in the White House.

Biden will likely take a hard line on China, with many up in arms over what Chinese officials insist was a weather balloon that drifted through Canadian and U.S. airspace.

That incident, which ended Sunday with U.S. jet fighters shooting the balloon out of the sky, gives the president a perfect excuse to pitch the importance of economic decoupling from China, said Flavio Volpe, president of Canada’s Auto Parts Manufacturers Association.

But it would be a mistake to assume that the U.S. will automatically turn to Canada for its energy, raw materials and manufactured goods, Volpe said.

“Canada will do well to not assume that we are inside the tent. We will have to prove and reprove ourselves on many points we take for granted,” he said.

“Look for transactional language to begin dominating our relationship rather than ideology. Shared values matter, but sharing value matters more.”

The president has been moving off the “inward focus” that marked the first two years of his presidency, said Louise Blais, a retired Canadian envoy who now serves as a senior adviser to the Business Council of Canada and as diplomat-in-residence at Laval University in Quebec.

“Starting this year, actually, there’s been a real shift in the narrative that he has been using when he casts the issues related to economic security and supply chains,” Blais said.

“After two tough years … we’re now starting to see a different approach — at least rhetorically. He is talking about the importance of working with America’s continental allies.”

Recent polls suggest that whatever success Biden has had pulling the U.S. economy out of the post-pandemic morass, it hasn’t been registering with ordinary Americans.

A new poll released Monday by ABC News and the Washington Post found that 62 per cent of those surveyed believed Biden accomplished “not very much” or “little or nothing” during the first half of his term, compared with 36 per cent who feel the opposite.

That’s despite a number of signature wins, including infrastructure spending worth $1.2 trillion, the comprehensive health, tax and climate change spending package known as the Inflation Reduction Act and billions on building up domestic manufacturing.

Fresh jobs numbers reported Friday also painted a different picture: the economy added a remarkable 517,000 jobs last month alone, bringing the country’s unemployment rate down to just 3.4 per cent.

Brian Deese, Biden’s outgoing director of the National Economic Council, acknowledged Monday that the full impact of the administration’s efforts has yet to be fully felt, in part because of Biden’s focus on engineering a more equitable “bottom-up” and “middle-out” recovery.

Deese described a recent flurry of new startups and self-employment efforts as a source of hope, “because people don’t do that if they don’t think there’s opportunity in the economy going forward.”

That activity also serves as “a huge source of potential dynamism for our economy,” he added, “that we need to make sure that we don’t fall back into a pre-pandemic equilibrium of low growth, low wage increases, increased inequality.”

Treasury Secretary Janet Yellen was among those dispatched by the White House to sing the praises of Biden’s economic plan in advance of the president’s speech.

“We’re investing in America again…. Factories are opening all across America, and not just on the coast, but throughout the country in areas that haven’t seen the investment that they need,” Yellen said Monday during an appearance on ABC’s “Good Morning America.”

A recession in the U.S. seems unlikely given the strong jobs numbers reported for January, the lowest unemployment rate in 53 years and inflation that continues to decline, she said.

One of the only wild cards would be if Republicans on Capitol Hill, led by newly elected Speaker Kevin McCarthy, make good on a lingering threat to send the U.S. into default by refusing to increase the debt ceiling, she added.

“America has paid all of its bills on time since 1789, and not to do so would produce an economic and financial catastrophe,” Yellen said.

“It’s something that simply can’t be negotiable, and while sometimes we’ve gone up to the wire, it’s something that Congress has always recognized their responsibility (and) needs to do again.”

This report by The Canadian Press was first published Feb. 7, 2023.

James McCarten, The Canadian Press

by Canadian Press

Will Biden’s second state of the union mark a less protectionist approach to Canada?

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