While the result of the U.S. presidential election came as a surprise to many people, it is important to remain clear headed and calm about the possible policy consequences of a Donald Trump presidency. An alarmist response to events this week is counter-productive.
After an initial decline, as reported by Reuters and other reputable sources, Wall Street and stock markets across the globe staged an abrupt recovery on Wednesday. The Dow Jones industrial average came close to reporting a record intraday high, though markets continue to fluctuate.
It is important to be aware that Canada’s economy is based on foreign trade. The U.S. is by far our largest trading partner, with some CA$2.3bn in goods and services crossing the Canada-US border daily. So how president-elect Trump approaches trade, especially the North American Free Trade Agreement (NAFTA) and the Trans Pacific Partnership (TPP), are issues we will monitor with the utmost care.
Based on his publicly expressed views, Mr. Trump does not appear to share the concerns of some people about climate change. It is therefore possible that he will initiate discussions to modify or eliminate regulations surrounding the production and use of fossil fuels. Reports suggest that he is unlikely to stand in the way of new pipelines bringing oil-sands crude from Canada to the refinery hub in the U.S. Gulf Coast.
It is also possible that Mr. Trump will review with U.S. allies the need to pay their fair share into the North Atlantic Treaty Organization (NATO). NATO guidelines say member states should spend at least 2% of their gross domestic product on defence. The contributions of most countries in the alliance, including Canada, fall short of that figure.
Finally, it is worth remembering that both houses of the U.S. Congress are now in the hands of Republicans. This means that Trump program initiatives on a wide range of issues will – after due Congressional discussion and refinement – likely enjoy a broad degree of support. Up for early consideration will be a proposed U.S. tax cut, focused on upper-income earners. And the future of the Affordable Healthcare Act (Obamacare) will be on the table, as will U.S immigration policy.
Rest assured that we at The Fahy Group will follow events judiciously and share our interpretation of the impact they are likely to have as they become evident.