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The Donald and How He Could Trumpify Your Trade

With Donald Trump poised to assume what’s known as the “Most Powerful Position in the World”, many are wondering, “What next?”  In over 25 years as a customs brokerage firm, we’ve never witnessed such an about-face politician in terms of their policies regarding trade, or anything else for that matter. Naturally, many of you are concerned about what this could mean for the future of your imports, so let’s take a deeper look at the potential outcome for trade in 2017 and beyond.

One of the problems with electing someone to political office who has never held such a position before is that we have no record of their positions on any topic. We only have their campaign rhetoric, and when it comes to Donald Trump, that includes such nuggets as “I will build a great, great wall on our southern border and I will make Mexico pay for that wall” or “Free trade is terrible. Free trade can be wonderful if you have smart people. But we have stupid people” and “One of the key problems today is that politics is such a disgrace. Good people don’t go into government.”

So what will President Trump mean for international trade? Well, in a video released on YouTube, Donald Trump states that on Day 1 of his Presidency, he will issue notice of intent to withdraw from the Trans-Pacific Partnership (TPP). TPP is considered one of the most ambitious free trade deals ever, encompassing 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA and Vietnam) that make up 40% of the global economy. Japanese Prime Minister Shinzo Abe is quoted as saying “TPP is meaningless without the United States”. Canadian Minister of Trade, Chrystia Freeland called the TPP deal in its current form impassable without the U.S. So unless President Trump reconsiders, TPP’s survival would require extensive negotiation between its remaining 11 signatories.

TPP is just one of many trade deals Trump has his eye on changing. With Trump’s focus on NAFTA, Canada has a lot to lose. Although low-wage Mexico seems to be bearing the brunt of Trump’s trade focus, NAFTA also includes Canada and any changes Trump makes to NAFTA will have massive repercussions north of the border. In 2015, 75% of Canada’s exports went to the U.S., the majority of which enjoyed reduced duty under NAFTA, not to mention roughly 2.5 million Canadian jobs depend on trade with the U.S. Donald Trump has made numerous mentions regarding NAFTA, maintaining that it is the “worst trade deal ever agreed to, signed, in the history of the world”. He then went on to say “if we don’t get the deal we want, we will withdraw from NAFTA and start all over and get a much, much better deal than we ever had before”. Following his election, Canada’s Ambassador to the U.S., David MacNaughton, said, “any agreement can be improved on”, signalling a willingness to open negotiations.

So if Donald Trump’s words are to be believed, free trade with the U.S. is something that will be problematic moving forward. With the U.S. being Canada’s largest trading partner, should Trump manage to withdraw from NAFTA, the consequences would be severe. Canada would see a loss of jobs across a variety of sectors, an increase in the cost of goods, and an overall increase in the cost of living. We are keeping abreast of these issues and will keep you notified of any changes that should arise as a result of the Presidency of Donald Trump.

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