The new year is expected to bring tax relief to American businesses. And that’s bad news for business north of the border.

For tax rates, “the American system will go from being much more punitive to closer in line with Canada’s—likely a bit below for non-energy companies [and] higher for oil and gas producers,” says CIBC chief economist Avery Shenfeld, in an economics report. “So Canada will lose an edge we offered earlier.”

Further, U.S. tax reform moves to a territorial regime, in which profits are generally taxed in the country where they’re earned. That means U.S.-Canada cross-border multinationals could face rules that limit U.S. tax benefits when intra-company payments are made to an affiliate located abroad, says Shenfeld.

Rules could also limit the amount these multinationals can shield from U.S. tax through interest deductions.

Most concerning about U.S. tax reform from a Canadian biz perspective, however, is that U.S. businesses can immediately expense capital investments undertaken in the next five years.

Says Shenfeld: “For companies that have existing income to write that off against, it could tilt a location decision to operations south of the border.”

Such a decision could be further boosted by lighter environmental constraints in the U.S. and NAFTA uncertainty, among other things, he adds.

Read: Businesses have no plans for NAFTA fail: poll

Shenfeld assures that the loonie will land at a level where the U.S.-Canada trade balance is sustainable, “however painful [that] is to our personal buying power.”

A better result, however, would be meeting the challenge head-on.

Says Shenfeld: “A matching five-year period for immediate expensing in the trade-exposed resource and factory sectors would level the playing field, at a time in which we face a lot of other headwinds in attracting business investment spending.”

Read the full CIBC report.

Also read:

What’s more important for equities than U.S. tax reform

What nixing NAFTA would mean for markets