The next four years will be tense and unpredictable. Be prepared. Gordon Pape lists his five things to watch for in 2017.
Donald Trump is now president of the United States, and we're sailing into uncharted territory.
Perhaps he will turn out to be surprisingly good at the job. The stock markets certainly thought so in the weeks following his win.
Whether we like him or not, we all want him to succeed. The last thing the world needs is for the U.S. to be plunged into another economic crisis or, even worse, a major war.
Normally at this time of year, I offer my financial predictions for the coming 12 months. But with Mr. Trump now in office, all bets are off. Frankly, I don't have any idea what's coming. Beyond his mantra of creating more American jobs, Mr. Trump has shown little consistency in his policy statements.
I can, however, identify some key issues that I will be watching in the next few months that will provide insights into how the next four years will evolve. Here they are.
This is the No. 1 issue as far as Canada is concerned. About three-quarters of our exports go to the U.S. Any disruption in that flow will hurt our economy, perhaps grievously. Mr. Trump did not target Canada during the campaign, but he repeatedly denounced the North American Free Trade Agreement (NAFTA) as "the worst trade deal in history" and swore he would tear it up if he couldn't negotiate a better agreement.
The President's direct target was Mexico, but Canada would be collateral damage in any confrontation that weakens or abolishes NAFTA. The economies of our three countries have become intimately tied together since the deal came into force at the beginning of 1994. Any reduction in our exports to the U.S. would have a significant impact on our gross domestic product.
NAFTA isn't the only trade deal threatened by the new administration. Mr. Trump has said that he will never approve the Trans-Pacific Partnership, a massive agreement involving 12 countries including Canada. The President has called it "a potential disaster" that would cost the U.S. jobs. Canada continues to back the proposal, even without U.S. participation.
Even before Mr. Trump took office, there were signs that his protectionist policies could spell trouble ahead for Canada. The dispute over softwood lumber, which has been ongoing since the 1980s, raised its head again in late November when U.S. softwood lumber producers filed new anti-dumping claims against Canada with the U.S. Department of Commerce and the U.S. International Trade Commission. Commented Forbes magazine: "The lumber case provides an especially egregious example of how the United States—self-proclaimed champion of free trade—uses the threat of protectionism to strong-arm even its closest trade partner."
Unfortunately, we may expect a lot more of that from a Trump presidency.
One area in which Canada could benefit from Mr. Trump's win is a resurrection of the Keystone XL pipeline, which was rejected by President Obama in November 2015 after years of debate. The new president has said he "would absolutely approve it 100 per cent," although he added a rider that the U.S. would want more from any deal.
The question is whether TransCanada Inc., which first applied for a permit back in 2008, still wants to go ahead. The company says it does, but the cost has ballooned from the original $5.2 billion to an estimated $8 billion. If Keystone does proceed, TransCanada's other big proposal, the Energy East pipeline to Saint John, N.B., is probably dead due to its high cost ($15.7 billion) and the risk of overcapacity.
Pipelines are going to be a major issue in both countries over the next few years. President Trump must come to grips with the lengthy protest against the Dakota Pipeline at the Standing Rock Sioux Indian Reservation, which is intended to transport oil from North Dakota to Illinois for refining. In December, the Obama administration called a halt to construction after one of the longest standoffs in U.S. history. The new president wants the line completed, which could lead to more clashes between protesters and law enforcement officials at the site.
Meantime, Prime Minister Trudeau has given the okay to two pipeline projects in Canada, one of which—the twinning of Kinder Morgan's Trans-Mountain line from Alberta to Vancouver—threatens to turn into the kind of flashpoint that Standing Rock has become.
Next: From border security to China...
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