National Bank warns of 1.5% drop in Canada’s GDP growth over Trump

A new bank report says the protectionist policies of Donald Trump’s U.S. administration could chop the growth of Canada’s gross domestic product by as much as 1.5 per cent.

The analysis by the National Bank Financial Markets says Trump’s arrival could be good for Canada’s energy sector because of plans to revive the Keystone XL pipeline.

But it says that will be offset by big losses in exports because of possible changes to the North American Free Trade Agreement and proposed new border taxes.

The report says if the U.S. imposes a 10 per cent border adjustment tax on imports, it would result a nine per cent drop in Canadian exports, causing a 1.5 per cent decline in GDP growth.

The report says Ontario and New Brunswick could be hit the hardest because their growth has come mainly from exports to the U.S. and not internal trade with other provinces.

The report suggests Trump adviser Stephen Schwarzman’s recent reassurances on NAFTA should not be taken at face value because the softwood lumber dispute might unleash a round of tit-for-tat tariffs.