Donald Trump's return to the White House next year could bring economic pain and difficult decisions for Canada's Liberal Prime Minister Justin Trudeau, once branded a "far left lunatic" by the Republican.

The potential consequences include trade disputes that push Canada into recession since 75% of its exports go to the U.S., as well as thousands of people pouring north across the U.S. border, analysts and economists said.

Trump's victory adds to Trudeau's woes at a time polls show he would likely lose, opens new tab to his Conservative opponent in an election that must be held within a year. Canada's slowing economy and a rapid surge in the cost of living over the past few years are top campaign issues, which come against the backdrop of diplomatic disputes with China and India that have hampered efforts to diversify trade.

Canada, the world's No. 4 crude oil producer, is especially vulnerable to Trump's plan for a 10% tariff on all imports and his vow to boost U.S. energy production.

Laura Dawson of the Future Borders Coalition, which seeks to smooth bilateral trade and travel, said the real challenge will be gradually declining investor confidence in America's northern neighbor.
"For Canada, four years of a Trump presidency could be very long indeed," she said.

Trump called Trudeau "a far left lunatic" in 2022 for requiring truck drivers crossing the border to be vaccinated against COVID. In June 2018, Trump walked out of a G7 summit in Quebec and blasted the Canadian leader for being "very dishonest and weak."

Trudeau, who has been in power since 2015, congratulated Trump on Wednesday and said the friendship between the two nations was the envy of the world.

"I know President Trump and I will work together to create more opportunity, prosperity, and security for both of our nations," Trudeau said on X.

Asked about Trump's win on Wednesday, Finance Minister Chrystia Freeland sought to reassure Canadians.

"A lot of Canadians were anxious throughout the night and I want to say ... that Canada will be absolutely fine," she said. "We have a strong relationship with the United States, we have a strong relationship with President Trump and his team."

In January, however, Trudeau told reporters another Trump presidency would be "a step back" that made life tough for Canada.

Desjardins Economics analysts forecast Trump's policies would result in real Canadian gross domestic product falling by 1.7% by end-2028 compared to what would have happened under a Democratic president.

The Canadian Chamber of Commerce said Trump's planned 10% tariff would cut Canada's real income by 0.9% annually and labor productivity by nearly 1%. If other countries retaliate, setting off a trade war, real income would drop by 1.5% annually, with labor productivity falling by nearly 1.6% each year, the chamber said.

Trump first took office in 2017 vowing to renegotiate the North American Free Trade Agreement, the trilateral trade deal with Mexico and Canada, complaining that trading partners were taking advantage of the U.S.

After 18 months of sometimes rancorous talks, which at one point saw the United States and Canada imposing sanctions on each other's products, the pact was reborn as the U.S.-Mexico-Canada (USMCA) deal.

Trump said on Oct. 11 he would use an existing USMCA clause to start renegotiating the treaty in 2026.

"I'm going to have a lot of fun," he said.