Ever since Trump’s unexpected victory at the polls, trade has been a hot topic here in Canada.
With good reason: President-Elect Trump has spoken of renegotiating NAFTA, the trade deal governing Canada’s relationship with its biggest export market the USA. On occasion, he’s even vowed to pull the U.S. out of the agreement entirely.
In 2015, the U.S. took in $325.4 billion worth of goods and services from Canada, or about 75% of our total exports.
Given Trump’s ongoing heated rhetoric on NAFTA both during the campaign and in the short time thereafter, he’s unlikely to backpedal—though it’s important to remember that, to date, his ire has been entirely aimed at Mexico, not Canada.
But while NAFTA may be in for some changes, dumping it entirely would be trickier than Trump’s rhetoric suggests.
For one, there’s plenty of evidence that the U.S. has benefited greatly from a more-open northern border with Canada.
Since 1993, when NAFTA came into force, American exports of goods to Canada—including machinery made in the Rust Belt states (that also proved to put Trump over the finish line on Nov. 8)—have jumped 179%. And exports of services have soared 237%, according to the Office of the U.S. Trade Representative.
Canada is currently the largest export destination for both America as a whole (taking in 19% of U.S. exports) and 35 individual states, so there would likely be pushback if Trump did anything that jeopardizes U.S. companies’ access to Canadian markets.
Something else to keep in mind is that, according to David MacNaughton, Canada’s ambassador to the U.S., if the U.S. were to withdraw from NAFTA, the two countries would still be bound by the 1988 Canada/U.S. free-trade agreement, signed before NAFTA added Mexico to the bloc in 1994.
Still, in light of the high level of interconnectedness between the countries, any change in trade terms—and wider U.S. fiscal policy—would have significant implications for the Canadian economy.
Meanwhile, from where we sit as a collection agency operating in Edmonton, Calgary and the GTA we would encourage any chicken littles out there to simply relax, sit back, enjoy watching the s**t show the US political scene has become (if you’re into that kind of thing) and zero in on those things that are within your control to successfully manage your business (ie. customers, sales, payables, receivables, quality assurance etc.). The last thing one wants to do is to dwell on those things that are not within your control. In the event that the Trump presidency does become the demise of the free world and its economy the last thing one wants to do upon being sucked down into the economic abyss is play the victim card, blaming someone else for your failure while in retrospect realizing you did absolutely nothing to help yourself to survive (other than complain). Victim mentality has never paid well, nor will it in the future.