What does the U.S. election mean for exporters? ExportWise interviews EDC’s Todd Evans

What does the U.S. election mean for exporters? ExportWise interviews EDC’s Todd Evans

The U.S. election campaign to date has been called unprecedented, unbelievable and unfortunate, but “consequential” might be a more apt adjective at this point. To that end, we consulted three experts to tell us what a Trump win will mean for exporters, what a Clinton win will mean, and what you can do to in response to the results.

Here’s what Todd Evans, the Director of Corporate Research at EDC, had to say:

What will a Clinton win mean for exporters?  

She has talked about some trade issues, though nothing as radical as what Trump has said. She didn’t want a repeal of NAFTA but said we might have to revisit certain elements. She might want to play to her base and say she’s re-examining certain sections, but I think any impact would be primarily not from major systemic or long-term structural changes, but rather, more short-term uncertainty.

Both candidates have spoken negatively about the TPP. Trump has given an outright no; Clinton has said it has to be revisited. I wouldn’t rule it out under Clinton, but they may want to renegotiate it and then you have ask whether the other 11 countries agree to it being renegotiated? If TPP is not signed at all, it’s not a big loss for Canada — it’s more of a loss of potential growth. It just means the expected gains that would have come won’t be realized.

What will a Trump win mean for exporters?

A lot of reliable studies that have analysed the various Trump policies have determined that his win would have a negative effect on the U.S. economy, primarily in the form of lower GDP growth and, in some cases, the first couple of years of his administration could see outright recession. We know that will have a negative impact on Canada.

Big fiscal deficits and cutting taxes would drive up interest rates in the U.S. — that’s another negative impact on growth there and that would filter through to the global economy as well. There, you’ll see pressure on commodity prices as well. These things would also put downward pressure on the Canadian dollar, and that would act as a partial offset to any export weakness coming from slower growth, but we don’t think it will be nearly enough.

A Trump win could also become an issue for importers. A weaker Canadian dollar means higher prices. Our exporters also import a lot of their inputs so it’s kind of like a double-edged sword.

On the trade side, Trump has said some pretty provocative things — 45 per cent tariff on imports from China, 35 or 40 per cent tariff from Mexico, so that creates a lot of uncertainty about what he’d actually do. We’ve seen rising protectionism, for example, in Brexit. But again, you have to keep in mind that a lot of his comments have been directed at countries like China and Mexico where the U.S. has a large trade deficit. If he does come in with some very punitive trade moves, such as a repeal of NAFTA or large tariffs on imports; that would have a negative impact on North American trade and global trade.

What can Canadian exporters do in response to a win from either camp?

From a company perspective, it becomes a matter of ‘what can we do to protect our business and stay in business?’ You might see Canadian companies increasing their investment in the U.S. market to get around trade and trade restrictions. Maybe they’ll put more of their operations into the U.S. Or maybe if they tax Canadian goods to the U.S., they’ll be looking at becoming way more efficient producers.

At a sector level, we’re looking at what industries would benefit from what leader. Pharmaceuticals will come under increased scrutiny under Clinton, for example. She would continue with Obamacare, which is a plus for the health sector. Both candidates have said they’ll spend on infrastructure. With Trump, energy might benefit; defence spending is another one.

Either way, in the near term, there will be uncertainty. With Clinton, a lot of that volatility will go away quickly while with Trump, it would likely increase.

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