U.S. President Donald Trump isn’t likely to completely tear up the North American Free Trade Agreement (NAFTA).
But a panel of four high-profile businessmen asked by the Surrey Board of Trade to forecast how the Trump presidency would affect the business community in Canada agreed there will be a lot of uncertainty about cross-border commerce over the next several months.
Trump campaigned on renegotiating NAFTA, which he called a “catastrophe for (American) workers and our jobs and our companies.”
Given that declaration, some hand-wringing north of the border is to be expected.
“But there is opportunity in uncertainty,” said Chris Jacobs, managing partner of Opportunity Northwest, a Bellingham-based company which assists Canadian companies to relocate to or expand into the United States. “The U.S. market is still 10 times what ours is.”
The panel – which also included Robert Levy, managing director of Border Gold in White Rock; Stephen Murphy, executive vice-president of the Edmonton-based Canadian Western Bank; and Mike Holden, a chief economist with Canadian Manufacturers and Exporters – addressed 150 members of the Surrey Board of Trade last Thursday at the Sheraton Vancouver Guildford Hotel.
Tasked with predicting what the business community can expect from the first 100 days of the Trump administration, Murphy said it will take months for things to play out.
“Policy by Twitter increases uncertainty and uncertainty makes it difficult to make business decisions,” Murphy said.
Both he and Jacobs agreed B.C.’s softwood lumber industry is going to be hit hard in a renegotiated NAFTA.
“I think he wants to hold it up as a trophy,” said Jacobs. “I think he’s going to be really hard on the softwood lumber industry.”
Murphy added that Trump has a lot of support on the issue from within the United States.
“It’s an easy target, so I worry about softwood lumber.”
Panelists dismissed the idea that Trump would entirely pull out of NAFTA, a trilateral trade agreement between Canada, the United States and Mexico.
“This bilateral relationship between Canada and the U.S. is worth $866 billion in trade between the two countries,” said Levy. “The number of jobs that are linked to NAFTA and the intertwined economies aren’t something the United States is likely to pull out of.”
Jacobs cited Tom Donahue, the president of the U.S. Chamber of Commerce, as saying tearing up NAFTA would be devastating to the North American economy.
“(Another) reason is a lot more political. Free trade is a bastion of the Republican party. A lot of congressional Republicans are pro-free trade.”
But the forecast that NAFTA will likely remain in place shouldn’t mean there won’t be drastic changes. The agreement will likely be renegotiated and Trump isn’t interested in what’s best for North America, he is only concerned about U.S. interests.
“Renegotiating the entire trade agreement is long process. My guess is he’s going to go in with a little more of a scalpel than a sledge hammer,” Murphy said. “But he’s way less free trade than most Republicans. He’s very protectionist that way. And he approaches every negotiation thinking there’s a winner and there’s a loser.”
Holden predicted Canadian business with ties to the United States will face bigger challenges in the months ahead.
“It’s hard to imagine a scenario where six months from now, or a year from now, where we have better access to U.S. markets than we do right now. It’s an issue were are very concerned about,” he said.
Holden said Canada is not a target of Trump, as trade between the two nations is balanced. But he added Canada needs to make its position know to Americans and their president.
“The two economies are closely integrated,” he said. “It would take a long time to unravel. And we have to use our American counterparts to help send this message.”
Trump has threatened to impose a border tax on foreign goods headed to American markets, something which concerns Murphy.
“I would be worried about a border tax, that would have the biggest impact and is the biggest thing I’m worried about,” he told Surrey Board of Trade members. “Two-third of our agriculture products go to the U.S.”
In his power-point presentation, Murphy listed the value of goods exported from B.C. to the United States in the first 11 months of 2016. Forestry products worth $6.8. billion headed south, with energy adding another $2.9 billion to the total. Machinery and equipment was worth $2.9 billion, agriculture $2.5 billion and mining accounted for $1.3 billion.
“Should we be worried about Trump?” asked Murphy.
“It’s a Canadian thing to worry, but that’s healthy. And the short answer is yes.”