3 ways Trump’s victory could affect Canada

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.

Read: How to protect portfolios under Trump

Impact on energy

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%.”

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’s 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.

What about trade?

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.'”

Softwood lumber

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.

Global outlook?

It’s no surprise that global markets are reeling.

And, as Associated Press reports, key trading partners with the U.S. appear nervous worldwide.

Ulrich Grillo, head of the Federation of German Industries, tells AP that “Donald Trump would be well advised not to seal off the U.S. economy from the world. Otherwise, the lack of clarity about the future course will lead to significant negative effects for the world economy.”

The U.S. is a major market for German companies like BMW and Daimler. By one estimate, some 1.5 million jobs depend on exports to the United States–Germany’s biggest trading partner.

Further, says AP, the U.S. and the European Union are already struggling to make progress in free trade talks due to anti-trade sentiment on both sides of the Atlantic. The trade section of Trump’s website has no mention whatsoever about those talks.

Also, U.S. import barriers could hit economies such as China and South Korea especially hard as they struggle with slowing growth. China’s exports in the first 10 months of this year fell by 7.7% from the same period of 2015 while its latest quarter economic growth of 6.7% is the lowest quarterly level since the 2008 global crisis.

Read: Were they right? Contrary call for emerging markets pans out

As it stands, world trade in merchandise will grow this year by only 1.7%, the slowest pace since the financial crisis of 2008-9, according to the World Trade Organization.

Read: How rise in global trade affects monetary policy