Trump victory and Canada’s interests

Political analysts, media outlets and in particular pollsters have a lot to account for following the election predictions. Many miscalculated Donald Trump’s unprecedented victory. The results demonstrate Trump connected with voters, reflected a large portion of disenfranchised voters discontent with government and a desire for change in Washington. His support and advocacy for working Americans resonated and gave the voters voice. As the anti-establishment candidate Donald Trump has drawn a new political map and path forward for the Republican Party, at least for the next two years.

For many Canadians, there is a significant disconnect with America’s choice for President. Hilary Clinton was hugely popular here. There was wide spread excitement amongst many political pundits that she would be the first female President, including by many political actors in Canada. Prime Minister Trudeau will be challenged navigating the US-Canada relationship needing to separate his political agenda from Canada’s interests. While it is clear the relationship with the Democratic and the Liberal party is strong, the Trudeau pivot is underway. We expect Prime Minister Trudeau will wisely take time before moving forward with Canada’s priority list to the new administration.

With a clear and definitive victory, it is prudent for Canadian businesses and our political leaders, to understand the voter coalition Trump so successfully orchestrated. To ignore the underlying motivation behind Trump’s support such as government reform, tougher immigration rules, lower corporate and personal taxes, would be a mistake and could significantly alter Canada’s position vis a vis the US.

Canada, for the most-part, was not in Trump’s cross-fire during the campaign. Different from Trump’s concerns expressed over Mexico, Syria and China, the Canada-US relationship was not a major pre-occupation for the President-elect.

Prime Minister Trudeau will have to determine how to relate to the Trump administration and align Canada’s interests accordingly. In particular, the Trudeau government will need to navigate the climate change agenda, efforts to promote liberalized trade and protect Canada’s interests if the re-negotiation of NAFTA proceeds. Minister Dion, Freeland, Ambassador McNaughton and the Global Affairs team will certainly earn their keep over the next number of months assessing the competitive impact on Canadian business while we see Trump move forward with expected corporate tax reductions, increased protectionism and reduced regulatory burdens. On the flip side, Canada’s approach to re-building needed public infrastructure through the Infrastructure Bank and Canada’s approach to attracting foreign investment align and provide the Trudeau government with opportunities to sync their interests with the Trump team.

For Canadian business, working with the Trump agenda now in control and reflected by the Presidential, House and Senate is crucial. The voter coalition and its representatives will be reflected on the legislative floor. Business, on either side of the border, will need to connect with the congressional and senate representatives and account for and promote trade and investment in communities that affect their workers. Adjusting to the Trump reality will require both the Canadian government, provincial Premiers and Canadian business to work collaboratively on the Canadian agenda with precision and focus. At the outset this should likely include trade, thinning of the border and pipelines. For business, demonstrating how Canada and the US positively work for and improve US workers standard of living will require cross-border alliances reminiscent of the early days leading up to the FTA.

Global Affairs Canada, in the interest of prudence, will be working to prepare a scenario where NAFTA is re-opened. While Trump’s issues lie primarily with Mexico and tariff issues, negotiators will scenario plan, which means Canadian business should be prepared. Prioritizing company interests, what needs to be protected, potential areas to be negotiated for improvement and altered will take time. Canadian business should start preparing the case for change in the event the NAFTA is to be re-negotiated. Business should also anticipate TPP to fall off the table. While no one expects Canada to be first-up on the Trump priority list, Canadian companies should take the time, in lock step with the government to prepare the case for a new trade era with key allies such as the UK and Australia.

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