Now that a Trump presidency is a reality, there is much speculation about the impacts that Trump’s election promises (if put into action) would have on business in Canada. We live in and work in a global economy now. Big shifts in policy in any major country in the world is going to affect the global economy. We saw this with the Brexit vote in the UK and as Trump puts his plans in action in the USA, we will see the trickle down effects all over the world.
Trump has stated that he does not support NAFTA and would renegotiate the trade deal. This may or may not happen, that remains to be seen. But a renegotiation of NAFTA would have impacts on business in Canada and would create HR challenges.
NAFTA allows free trade between Canada, the US and Mexico. Tariffs on covered goods traded between Canada and the United States became duty free on January 1, 1989, in accordance with CUSFTA which was carried forward under NAFTA. In 2008, tariffs on all covered goods traded between Canada and Mexico were eliminated. Canada and the U.S. have one of the world’s largest investment relationships with bilateral investment stock totaling almost CA$836.2 billion in 2015 . The USA is Canada’s largest trading partner and many Canadian businesses rely on the much larger US customer base to sell their products and services to.
So what would happen if the US takes on a more protectionist attitude and starts to limit foreign access to their markets? Trump has stated that he does not support some of the trade deals in place in their current form. BC lumber producers could be affected as the current agreement with the US has expired and renegotiations under a Trump led government could mean higher duties. On the other hand, Trump has stated he supports the Keystone XL Pipeline which could bode well for the oil industry in Canada.
There are lots of unknowns right now but there is sure to be an effect on jobs one way or another. If protectionist policies do get put in place in the US, Canadian industry will feel the effects on the job front. It may get more expensive to sell into the US if there are more duties and regulations in place which would require companies to cut costs elsewhere. This could result in job loss. In the short term Canadian companies may start to take a more conservative approach to hiring and growth over the next few months as they wait to see what actual policies and changes get put into place by a Trump government. Capital investments may get delayed and from a HR perspective, this may mean more temporary or contract positions rather than full time engagements.
For individuals that wish to expand their work experience in the US market, this may become difficult if there is a push in the US to keep jobs at home and to hire Americans. It is currently not easy to relocate and work in the US but it could become even more difficult. And if the Canadian economy starts to feel the effects of being squeezed out of the US market, Canadian consumers will behave more conservatively and lower their spending too.
It is difficult to predict how this change of government and policy will materialize but I think both businesses and individuals will behave more conservatively until we get a clear indication of the direction of Trump’s policies. This could mean a slowdown in growth and a reluctance to spend or proceed with large hiring initiatives. Canadian businesses will also be evaluating their expansion plans and looking to other markets to try and diversify some of the risk of doing business with the US. It is time for all Canadian businesses to re-evaluate their business strategies and plans.
Many of us were convinced that a Trump presidency was not going to happen so the big lesson for all of us (business included) is to be prepared for the unexpected.
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