TORONTO – A Donald Trump administration, combined with a Republican-controlled Senate and House of Representatives, could have reverberations that will be felt by the Canadian economy for years.
Here’s a look at what Trump’s victory could mean for various sectors of our economy:
Remember Keystone XL? Plans to build the 1,900-kilometre pipeline from Alberta to Nebraska were thwarted last year under U.S. President Barack Obama. But Trump’s win could breathe new life into the project at a time when Canada’s oilpatch needs it. Trump has said he would “absolutely approve it, 100 per cent.”
Still, when considering Trump’s propensity for categorical statements, one should keep in mind the details. He has said he wants a greater cut of the profits, but hasn’t explained what that means. There is also TransCanada’s outstanding request for US$15 billion in damages after Obama’s rejection. Trump is also regarded as a friend of U.S. fossil fuels, on record as favouring oil and gas drilling on federal lands. That could stifle appetite for Canada’s oil and gas production.
Our largest trading partner will soon be led by someone who has committed to ripping up NAFTA if it isn’t renegotiated. Any country can withdraw from the free trade agreement with six months’ notice. And with Republican control of both the legislative and executive branches, Trump is better positioned than past presidents who’ve made similar threats.
But some say he could face resistance from legislators in states that have reaped the benefits of the deal. As former prime minister Brian Mulroney, the architect of NAFTA, recently told CTV’s Question Period, “You tear that up — my mother used to say, ‘You’re cutting off your nose to spite your face.'”
One of the first trade irritants that could test U.S.-Canadian relations is softwood lumber. A 10-year-old agreement that removed U.S. duties on Canadian softwood lumber expired last month. That paved the way for the possibility of steep taxes, which could result in layoffs throughout Canada’s forestry sector.
Trump can expect to face pressure from the U.S. lumber lobby to implement such duties. In an era of rising protectionism, he may be emboldened to oblige.