See how a Trump presidency could be good for business in Canada by covering the potential benefits from trade collaboration, energy support while also touching on some of the challenges – tariffs, market volatility and immigration restrictions.
As Donald Trump returns to the White House, many wonder what impact this powerful man might have on businesses across the world. The U.S. policy under a Trump administration would have rippled across Canadian markets as one of Canada’s largest trading partners. Still, Trump’s previous presidency bled ripples through sectors ranging from manufacturing to agriculture, and Trump’s return offers the potential for both opportunities and uncertainty for Canada’s economy.
Here, we’ll look at how Trump’s presidency might impact Canadian businesses in a diverse manner.
Trump has an ‘America First’ policy that has typically prioritized U.S. manufactured and sold products. For Canadian companies exporting to the U.S., this is potentially daunting, but with opportunities also coming from companies that can quickly build up partnerships with the right in-region partners, it certainly provides potential.
During the negotiation of the USMCA (United States-Mexico-Canada Agreement), Trump’s administration may be supporting trade agreements that promote North American manufacturing overall. If Canadian companies are supplying the essentials needed by the U.S., they can maintain steady demand and work in collaboration, as is a U.S. best practice.
Trump’s message of self-sufficiency could also result in tougher tariffs or other trade barriers against Canadian exports. Under the previous administration, he imposed tariffs on Canadian major businesses, including steel and aluminum that destroyed their industries and cranked up the production costs. For Canadian businesses trying to export to the U.S., a similar approach could mean higher costs if Trump pushes for more tariffs on more products to protect their American industries.
As we calculate the welfare effects of both of Trump’s policies, we see that his policies would increase U.S. domestic production, reducing the need for Canadian imports. However, his environmental stance could also be at odds with Canada’s climate goals, prompting the two to clash on carbon regulations. Long-term investments in green technology by Canadian renewable energy companies could be thwarted if Trump continues to favour fossil fuels over green energy, as it would severely limit the U.S. market for Canadian green energy.
Trump’s promise to strengthen domestic manufacturing could make for partnership opportunities for Canadian manufacturers. Trump, for his part, wants to bring manufacturing back to the United States and reduce reliance on manufacturing abroad, particularly in Asia, and companies that integrate with existing U.S. supply chains could benefit. Filling supply chain gaps, Canadian businesses may find themselves better positioned to serve U.S. organizations seeking North American partners for their supply chains.
Trump’s ‘Buy American’ line, though, may put pressure on Canadian manufacturers who are extremely dependent upon U.S. clients. If Canadian businesses must switch to other markets, they may lose access to U.S. contracts if Canadian procurement policies are made more stringent in favour of American-made products.
Trump’s presidency should ensure strong demand for Canadian food and livestock exports by the U.S., which is a big buyer of Canadian agricultural products. Using Canadian agriculture as a key U.S. supplier, Trump’s policies could help ensure that we secure reliable and affordable food sources.
However, Trump has had a history of disputes over trade in dairy and other agricultural products. Canadian farmers are at risk of losing access to U.S. markets or having higher tariffs put in place if re-emerging trade tensions follow. Such price instability is possible for Canadian agricultural products at a time that heavily impacts farmers and consumers alike. Policy differences in food safety standards also may bring more hurdles, which extend export to the U.S.
The election of Trump to the presidency could see policies aimed at deregulating some industries, which could drive U.S. stock markets, it said. This might all make Canadian markets, and especially the companies with big buckets of investments in the U.S., better since cash the ripple on the stock market makes in a positive direction has been known to encourage more investments between the two countries.
Yet, while Trump’s policies are volatile, it could undermine the value of the Canadian dollar in the markets. A stronger U.S. dollar will make Canadian exports more expensive and so potentially attract less demand in the U.S. By contrast, should the Canadian dollar degrade, Canadian businesses importing from the U.S. would face import costs that increase in turn, impacting supply costs (or pricing strategies).
Such a stance by Trump may convince skilled workers to look to new opportunities elsewhere, which will be welcomed by Canadian businesses that require specialized talent. This increase in expanded access to a vast labour force could draw in the best of the best in tech and health care for Canadian companies, who would find their growth and innovation would flourish.
At the same time, more restrictive immigration policies, along with potential limits on work visas, could actually hurt cross-border talent mobility. That can affect businesses that depend on U.S.-Canada cross-border exchanges of workforces, particularly in the technology and research realms. Lastly, even for companies that operate on both sides of the border, streamlining a workforce across borders could be hard to manage if cross-border hiring is allowed or remote work becomes more limited.
The effects of a Trump presidency on Canadian businesses across most industries could be serious. There are opportunities for better coordination in energy, manufacturing, and agriculture, but existing tariffs, market uncertainty, and policy change are also potential impediments. As a result, Canadian businesses will be required to be agile, adapt to change, and become resilient to take advantage of the ‘good’ things and prepare for ‘bad’ things.
The ultimate effect of Trump’s presidency on Canadian businesses will ultimately depend on what happens with policy and how companies will seek to adapt to a growing uncertainty. Canadian businesses can manage their challenges and take advantage of the opportunities ahead with the help of close watching of U.S. policy changes.
