When Mark Bedard needed more space for his fast-growing business earlier this year, he jumped on the opportunity to expand its presence in the United States. The move was influenced by the American election—not because the candidates inspired some sort of pursuit of the American dream, but rather because he feared looming protectionist rhetoric threatened his company’s prospects.
Bedard’s company, Chambly, Que.-based MTL Technologies, sells commercial refrigerators and freezers, and 96% of its business comes from the U.S. (The company ranked No. 408 on the 2016 PROFIT 500 Ranking of Canada’s Fastest-Growing Companies.) “What makes us nervous is Donald Trump talking about NAFTA and this protectionist stuff,” said Bedard, speaking before election day. “That’s why we incorporated there—to have our foot firmly planted south of the border, just in case.”
Indeed, Trump campaigned on the popular promise to bring back jobs to the U.S. To do so, he has stated his intent to pull out of NAFTA, or what he calls “the worst trade deal maybe ever signed anywhere.” And that’s a scenario that, while seemingly far-fetched, would devastate the legions of Canadian businesses that depend on smooth trade with our neighbours to the south.
MORE DEALS: Why Are Canadians Losing Faith in Free Trade? »
Many Canadian companies with stakes in the U.S. were, like Bedard, feeling skittish about their business prospects in the lead-up to the November 8th vote. “There’s a huge level of uncertainty as to what the playing field will look like going forward,” said Steve Rhone, president of Mississauga, Ont.-based Weston Forest Products, which was No. 344 on the 2016 PROFIT 500. Part of that apprehension stemmed from not knowing how Trump or even Clinton (who had, to a degree, latched onto American protectionist sentiments) would reform trade agreements. But in Rhone’s industry, forestry, the election also stalled negotiations on the softwood lumber agreement between Canada and the U.S.—a deal that expired last month. “There’s little motivation for the Obama administration to settle any of these things in its last few weeks,” he said. As a result, Rhone believes “exports between Canada and the U.S. have been a little bit challenged.”
Peter Kaufman is another Canadian entrepreneur whose business felt the effects of the election period. Kaufman is founder and president of Buddy’s Kitchen, an Aurora, Ont.-based gourmet dog food producer and retailer that was No. 35 on the 2016 STARTUP 50 Ranking of Canada’s Top New Growth Companies. He noticed a dip in business from his American distributors in the last year. And while he says he can’t correlate the shift directly to the election, the protectionist rhetoric unleashed by the campaign is having very real effects. “I have absolutely had clients tell me their customers need to see a Made in USA’ label,” said Kaufman. “The fear-mongering among the Republicans, in particular, has really made some independent mom-and-pop retailers [in the U.S.] move away from anything with a foreign name on it, and that includes Made in Canada.’ It’s just safer for them, but it’s made it really difficult for us.”
Predictability is likely to be one major victim of the election result. Kaufman has an acronym to remind himself of its importance: VUCA. It stands for vulnerability, uncertainty, complexity and ambiguity. He described those factors as the nemesis of smooth business practice, and obstacles he tries to control for every day. “We have to deal with it regardless,” said Kaufman. “As an entrepreneur, that’s what you sign up for. But when you throw those factors into the political arena, something I have no control over, yeah, there’s a lot of anxiety built in.”
MORE UNCERTAINTY: What to Do When You’re Worried About the Economy »
Even for companies that hadn’t seen an impact on their business pre-election, the fear of unknown, and potentially drastic, policy changes makes it difficult to make even short-term plans. “You worry about the impact on business, on trade, on the labour market, and on social cohesion,” said Daniel Tisch, president and CEO of Toronto-based Argyle Public Relationships, No. 431 on the 2016 PROFIT 500. “One has to be concerned about the rhetoric against certain groups.”
Though pre-election day polls predicted Hillary Clinton was likely to triumph, most business owners acknowledged the need to plan for a Trump presidency. “The challenge is, I don’t think you can predict what Donald Trump is going to do,” said Janine Taylor, president of Mississauga, Ont.-based promotional products design firm The Next Trend Designs Inc. (No. 454 on the PROFIT 500). Taylor notes that most companies can adapt to changes in policy, even big ones, with adequate warning—about six months to a year. “With Hillary Clinton, I believe that if changes were going to be made, we’d have the warning we need to adapt, and I’m confident we could,” said Taylor. “My fear with Trump isn’t what he’s talking about doing in January 2017 should he become president, its, What is he going to do that we can’t even conceive of yet?”
- How to Crack the U.S. Market »
- The Hidden Challenges of U.S. Franchising »
- How to Set Up Your U.S. Office »
- Why Your Business Shouldn’t Stop at the Border »
- A Surprising Way to Crack the U.S. Market »