The aftershocks of Donald Trump’s surprise victory in the U.S. presidential elections cannot be overstated from an economic point of view, as the United States remains to be Canada’s largest trading partner with US$575 billion in goods and services exchanged between them in the previous year alone.
Experts warned that the imposition of trade barriers such as new tariffs would prove to be disastrous—a sobering notion considering Trump’s apparent preference for an isolationist policy, if his campaign statements are any indication.
“Almost one in five Canadian jobs is dependent on trade with the United states,” former industry minister James Moore told the Financial Post
“I think there’s a tremendous amount of anxiety because this was an election about anger and division. It wasn’t an election that was heavy with public policy.”
PNC Financial Services Group senior international economist Bill Adams said that Trump’s stated policy preferences “could have wide-ranging effects on U.S. trade and global growth.”
“The direction of these policies may be clear, but the scope and pace of their implementation is anything but. Ratifying a treaty to replace NAFTA would require the ‘advice and consent’ of a two-thirds majority of Senators, meaning the participation of some Democratic senators,” Adams wrote in a November 9 analysis.
Such a drastic change might not materialize right away, but BMO Capital Markets chief economist Douglas Porter advised vigilance just the same.
“He’s usually complained about the specifics of NAFTA, not Mexico’s economy in general. So, I think there’s still room to work something out. I’m sure he’s going to come under tremendous pressure from his own party — and from industry, as well — to try to work something out. But we’ll see.”
“We’ve got a long history of candidates, both in Canada and the U.S., talking about renegotiating NAFTA or changing NAFTA. Admittedly, Mr. Trump is far out on the spectrum on that one. And it would be pretty tough to imagine he’d completely backtrack on that front,” Porter concluded.
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