Canadians many have been cool to the idea of a Donald Trump presidency south of the border, but now that it’s about to become a reality, we need to consider what it’s going to mean for Canada-US relations and what it will mean for our economy.
Kevin Libin, managing editor of the National Post / Financial Post. is optimistic about the prospects for Canada:
…Trump had expressed unqualified support for importing Canadian energy in general, and the Keystone XL pipeline in particular. Clinton, on the other hand, once a staunch Keystone backer, had chosen to flip and turn against it, as a way to appease the most left-wing Democrats. Canadians, and struggling Albertans especially, can renew their hopes that we might soon be sending up to a million more barrels of our oil every day to American refineries.
Just as importantly for Canada’s exporters, Trump has promised to slash U.S. federal corporate income taxes — those combined top marginal corporate rates are currently some of the highest in the world — from 35 per cent to 15 per cent. Eager to lure home the US$2.4 trillion of American corporate profits sitting idle offshore, Trump has shrewdly promised a one-time, low tax rate of 10 per cent that, if enacted, will encourage major corporations to repatriate their cash and reinvest it back in the U.S., a massive private stimulus program that will do much to spur demand for Canadian exports.
Kevin joined me on the show today to discuss this further – here’s that conversation:
I certainly hope Kevin’s correct. As much as I did not want Donald Trump to win, I’m obviously hoping that he succeeds as President so that the US can thrive over the next four years.
There is some cause for concern, however.
First of all, it seems all but certain that the Trans Pacific Partnership is dead (and frankly, that may have been the case had Clinton won. Moreover, the Liberals have yet to ratify it). The Harper Conservatives worked hard to negotiate the deal, and it would have had tremendous benefits for our economy.
Additionally, Trump has talked about “tearing up NAFTA,” although it’s unclear what that might mean. Trump’s concerns seem to have more to do with Mexico, and of course we have the original Canada-US FTA that predates NAFTA. But again, it’s pretty clear that NAFTA has been good for Canada. And even if trade between Canada and the US continues uninterrupted, Trump’s threat to slap higher tariffs on goods from Mexico and China could lead to a costly trade war – the effects of which we’d no doubt feel here.
However, Libin is right to note the potential benefits of the US finally approving the Keystone XL pipeline, something that Clinton opposed. In fact, it’s possible that the next few months might see both a ‘yes’ on the Transmountain pipeline and a ‘yes’ on Keystone XL. That would be very good indeed for Canada and for Alberta in particular.
Let’s hope for the best. Which, really, is all we can do at this point.