Small Business Tips Blog
The Democrats dislike him. Saturday Night Live writers love him. But how should Canada’s small business owners feel about "The Donald", now that, against many odds, he is the 45th President of the United States?
According to many business experts, it depends.
While many business owners (and probably most Canadians) were shocked by the results on the U.S. election night, few people could definitively say what Trump’s win would mean for Canada and its business community. According to David Herle, corporate strategist and owner of the Gandalf Group, a polling and research firm, President Trump is seen as a dramatic change, for good and for bad.
"Unfortunately," says Herle, "Canadian business expects the good to be largely for the United States and the bad largely for Canada."
It’s still too early in his presidency to see a clear future, although if the bumpiness of his first month in the oval office is any indication, we might want to fasten our seatbelts. Here are a few issues Canada’s business leaders are keeping an eye on:
NAFTA. During the election campaign, Trump called NAFTA "the single worst trade deal ever approved". Since taking office, he appears to have softened his stance, and he downgraded it to a "minor tweaking" when he met with Prime Minister Trudeau. While trade-experts question if "tweaking" without blowing up the whole agreement is even possible, businesses will continue to watch how this agreement with Canada’s largest trading partner will play out.
Cutting corporate tax. The new president has proposed reducing the corporate tax rate from its current 35 per cent to as low as 15 per cent. It’s a move U.S. businesses would welcome, but, in comparison, Canada would quickly become a much less attractive place in which to own and operate a business. American companies in Canada could be lured home, and international investors would have a pretty good reason to choose the U.S. over Canada. Congress needs to approve the reduction before this can become a reality.
Import taxes. "The implementation of import taxes by the new administration would present one of the greatest risks to Canada’s economy in the near term," says Dawn Desjardins, deputy chief economist with RBC Economic Research. About three-quarters of Canada’s exports go to the U.S.—many of which are used to make American goods. An increase in the price of Canadian goods means the price of the finished product in the U.S. could become too high and some trading relationships may not seem worthwhile. Some experts feel this would be a no-win for both sides of the border.
Difference in carbon costs. As Canada accelerates its efforts to reduce greenhouse gas emissions – by phasing out coal and putting a greater price on carbon – President Trump doesn’t appear to have the same concerns about air pollution. As Canadian prices go up thanks to growing taxes on carbon, some businesses may move to the U.S. to take advantage of the comparatively lower cost of doing business. "It has always been the strong belief of the Canadian business community that Canadian climate policy could not, for reasons of competitiveness, differ greatly from American policy," says Herle.
What will actually happen under a Trump presidency remains to be seen, however. As of yet, much of what has been proposed (or threatened) has yet to become a reality for a variety of reasons. So as Canadian businesses wait for the other presidential shoe to drop, there’s a few things business owners can do:
Know your business well. For example, assess how much your company depends on the American market, and think about how well you’d do if tariffs were put on products or shipping certain products became more difficult.
Think strategically about potential scenarios. The Trump presidency has created a lot of moving parts, so businesses need to stay one step ahead and be prepared for anything.
Continue to produce outstanding products. In the end, people will buy Canadian if our goods are of great quality. Exceptional Canadian businesses will still be exceptional no matter who is president, and that just may "Trump" any fears over an uncertain U.S. trade policies in the future.
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