November 8th, 2016 will go down in history as one of the greatest political upheavals that anyone can remember. Donald Trump won the U.S. Presidential election, beating favourite and year long poll front runner Hillary Clinton. With that win, he brought in a significant amount of global uncertainty related to his protectionist trade policies. One of his prime examples of one of the worst trade deals ever negotiated is the North American Free Trade Agreement (NAFTA).
The Globe and Mail published a very interesting piece the day after the action. Protectionist economic policies are something that don’t play to Canadian economic interests. Small businesses – traditionally excluded from discussions about trade – are seeing the benefits of exporting. According to a recent UPS Canada survey, three-quarters of Canadian small and medium-sized businesses (SMBs) recognize that free-trade agreements create opportunities in foreign markets by reducing trade barriers, and 61 per cent say exports are the key factor for continued growth and success. Many in the business community are concerned with one of Trump’s hallmark economic declarations. A renegotiation of NAFTA could affect Canada’s economy negatively. The flow of goods and people across the border could be choked by tariff and non-tariff regulations and/or stiffer immigration controls in the guise of security concerns. A “free and open” border has defined the relationship between Canada and the United States for decades. Prime Minister Trudeau has openly indicated that Canada is ready to deal with this head on.
Back in September, CTV News published a piece about the positive effects that a Trump presidency could have on the Canadian economy. In it, a RBC Capital Markets report was cited that focused on the upsides. It indicated that Trump’s proposals on lower tax rates, infrastructure spending and oil would promote U.S. economic growth, which would in turn have a “fairly meaningful” impact on the Canadian economy. When the American economy is humming, their export demand increases.
Also, Trump and a Republican-controlled Congress may breathe new life into the Keystone XL pipeline. The controversial project, meant to carry Alberta crude oil to refineries on the U.S. Gulf coast, had been sidelined by the Obama administration because of environmental concerns, despite the Harper Conservatives doing everything they could to champion the project.
The reality is that no one knows for certain what effects Trump will have on small, medium, or even big business in Canada. Analysts and professionals can speculate as much as they like, but ultimately everyone must wait and see. It’s one thing to make claims when you’re in election mode, but quite a different one all together when you’re in the position of being required to govern. What President Trump enacts in terms of policy will remain a waiting game.