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Three-hour delays snarled truck traffic along Huron Church Road in Windsor, Ont., Wednesday, April 2, 2003. United States Customs officers are thoroughly checking U.S.-bound vehicles at the Ambassador Bridge.Jason Kryk/The Canadian Press

Canadians have always taken more than a neighbourly interest in U.S. elections: our economic prospects are so intertwined. But the stakes have rarely been higher or the outcome so clouded. The U.S. economy is struggling to find firm footing after several years of sluggish growth and high unemployment. Washington is grappling with potentially crippling fiscal problems, political gridlock and a lack of direction. Meanwhile, the global economy is weakening dramatically as China slows, Japan slumps and a large swath of Europe slides deeper into recession. The winner on Tuesday will have all that and more on his plate. Here are the key issues that will impact Canada's own fortunes.

Our country pulled to the fiscal cliff

It's the No. 1 threat to Canada's growth prospects. The inability of warring Democrats and Republicans to reach a budget compromise has produced the worst possible outcome. If the lame-duck, outgoing Congress can't resolve its differences by Jan. 1, a combination of automatic tax hikes and budget cuts take effect that may be steep enough to shift the economy into reverse. A U.S. slump would dip across the border, slicing into Canadian exports of everything from energy to autos. The close presidential race – and the possibility of a Democrat-controlled Senate while Republicans retain their majority in the House of Representatives – makes it hard to discern the policy direction. "From a Canadian perspective, we just want to see it work," says Paul Taylor, chief investment officer of fundamental equities with BMO Asset Management.

Dramatic differences over corporate tax

Proposed cuts in U.S. federal taxes by both parties will help level the playing field, but they won't lure Canadian-based companies to relocate. Far more important are the differences over taxation of U.S. companies' foreign earnings. Not surprisingly, U.S. multinationals prefer the Romney approach, which would not tax such earnings, on the grounds that they are already taxed once in foreign jurisdictions. By contrast, Mr. Obama advocates a universal tax, with large rebates for manufacturers that boost investment in U.S. production and jobs.

Good news for Keystone

Most analysts expect the long-delayed XL Keystone pipeline, planned to carry Alberta crude south to the Gulf Coast, to be approved quickly, regardless of who wins. Mr. Romney has already vowed to do so on Day 1, as part of a plan to make "North America" energy independent. But Mr. Obama has played his cards closer to his vest. One view is that he only delayed approval – rather than rejecting it outright – to avoid upsetting part of his Democratic constituency leading up to the election. But he, too, has vowed to decrease dependence on Mideast oil. The problem for Canada is that there is a glut of oil in the U.S. Midwest, which has weighed down prices and sparked increased U.S. exports of refined products. A better destination for Alberta production would be the U.S. East Coast, which is served by higher-cost imports. Canadian natural gas producers stand to score big gains from a U.S. move to continent-wide energy independence.

Caught in the Chinese currency backlash

Mr. Romney has vowed to label China a currency manipulator for keeping its yuan artificially low to gain an unfair trade advantage. Under U.S. law, this could lead to punitive tariffs and would inevitably heighten trade tensions. Mr. Obama has also assailed Chinese policies and wants to reduce dependence on Chinese exports. Either way, Canada could get caught in the backlash. But a direct U.S. assault on Chinese trade seems unlikely, because of the huge adverse cost impact it would have on major technology and other manufacturers, as well as heavyweight retailers such as Wal-Mart Stores.

Bernanke ouster could bring pain

The Republicans have made no secret of their unhappiness with U.S. Federal Reserve chairman Ben Bernanke and his aggressive monetary easing. More conservative policies could hamper the economic recovery and hurt commodity prices, which would have a direct impact on Canada's resource-heavy economy. Mr. Romney would be also inviting the wrath of the markets if he attempted to undermine or force the Fed chief into retirement.