Unless you’ve been living under a rock, you’ll know that Donald Trump won the U.S. election on Tuesday night at approximately 12 a.m.
Many of you might be devastated, others delighted. Either is understandable. What isn’t understandable is indifference. And why is this? Because, whether we like to admit it or not, Canada and Kelowna are intricately linked to the U.S. As such, our fate depends on their leaders.
In other words, what happens in the United States doesn’t stay in the United States. A Trump presidency will have dramatic effects on our Canadian economy and the local economy in Kelowna.
Let’s face it, the majority of us aren’t too happy about a Trump presidency. According to a recent poll by Insights West, 80 per cent of Canadians believe a Trump presidency will be bad for Canada. Some went even further; 34 per cent think Canada should seriously consider severing diplomatic ties with the United States should it vote for Trump.
So, we’ve got some pretty strong views for a nation that’s known worldwide for diplomacy, maple syrup and saying sorry. Are these views justified? Should we be waiting on the edge of our seats, nervous about what might befall our country come Jan. 20 while we strategically plan an exit strategy?
Let’s look at some the Trump policy hot spots and evaluate how this will affect Canada and Kelowna.
As a Trump victory became a reality, currencies across the globe started to wobble. Since last night, the US currency has fluctuated massively. At around 11 p.m. EST, the U.S. dollar dropped two per cent, kindling fears of the economic and political instability that a Trump presidency promises.
“The depreciation of the U.S. currency is indicative of fear,” said Dr. Julien Picault, professor of Economics at UBC Okanagan. “As such, investors in the U.S. are selling currency and assets to minimize their potential losses.”
However, as Canada’s economy is dependent on the U.S. market, our currency hasn’t looked too rosy. Overnight, the loonie tanked on global markets, falling as low as 73.89 cents U.S. It has since returned to levels closer to what it’s been since the U.S. presidential election campaign began.
Since the shock of a Trump victory has settled in, we seem to have regained some composure. However, with both the U.S. and Canadian dollar weaker than they would have been with a predictable Clinton presidency we still have to ask the important question: how does this affect us?
Currency matters because it affects our exports, which in turn affects our production levels.
“In theory, a lower exchange rate should help Canadian companies that export,” said Dr. Picault. “However, recent spells of depreciation of the Canadian dollar did not affect exports as much as expected. So the direct effect of a depreciation may be limited. On the other side, imported products may become more expensive for Canadians as a result of the depreciation.”
So, we might sell more products abroad due to our cheaper U.S. dollar. Simultaneously, foreign goods will be more expensive. So you know those German Gummy Bears and Toyota trucks? They could increase in price.
However, Dr. Picault foresees another alternative.
“We could see Canada gain a competitive edge in foreign markets,” he said “With a world that loves Trudeau and dislikes Trump, Canada could come across as the preferable trading partner.”
In other words, due to currency complications and the protectionist trade policies supported by Trump (more on that later), we might see less Americans buying our Okanagan wine, however, we could see more English, Japanese or even French sipping our vino.
Contrary to Clinton’s promise to invest in green energy, Trump is very skeptical about the global threat posed by climate change. Okay, "skeptical" might be an understatement…
The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.
— Donald J. Trump (@realDonaldTrump) November 6, 2012
Throughout the Trump campaign, he promised to reinvest in coal manufacturing. Coal is generally considered one of the most devastating industries to our environment. He has also promised to cut costs by deregulating the oil and gas industry, a deregulation that has historically contributed to significant disasters such as the BP Oil Spill.
Trump has also promised to eliminate Obama’s Climate Action Plan and cancel the Paris Climate Change Agreement.
Many are arguing that these policies will send the U.S., and by extension global environmental diplomacy, back decades.
Donald Trump “would set the world back decades" on climate change, say ex-environmental regulators who served under Nixon, Bush
— Climate Home (@ClimateHome) August 10, 2016
However, don’t lose hope completely. While Trump promises to reinvigorate certain sectors, he might not succeed.
Additionally, Trump has pledged to pass the Keystone XL pipeline.
If I am elected President I will immediately approve the Keystone XL pipeline. No impact on environment & lots of jobs for U.S.
— Donald J. Trump (@realDonaldTrump) August 18, 2015
This pipeline is a 1,900-kilometre, 90-centimetre-diameter crude oil pipeline that will transport oil from Hardisty, Alta to Steele City, Neb. While a 2015 Pew Research Centre poll showed that the majority of Canadians were against the pipeline, with a U.S. president firmly backing the endeavor, it is likely to pass. This should have a significant effect on our energy sector and the price of energy in Canada and Kelowna.
Trump’s overall presidency, is likely to affect us all on a global scale.
“Following Trump’s election, there will be substantial and lingering economic uncertainty which will have an impact on our resource industries,” said Dr. Hanna. “Some economists I see are now predicting a recession within a year. If that happens, and it may well be an over reaction at this early point, it is unlikely a Trump administration will be able to manage or respond to the impacts, that would affect Canada and our resource industries, but we may be able to weather it as we did the last one.”
Overall, this could have poignant effects in Kelowna, as the stress from climate change marks our landscape. For example, it is argued that the dramatic increases in overall temperature in the region have contributed to warm winters and less snowfall. According to Adapting Natural Resource Management to Climate Change in the Thompson-Okanagan Region, winter in our region has warmed significantly, extreme rainfall and dry conditions increasing while snowpacks have decreased.
In other words, we could be looking at fewer powder days on Big White and Silver Star.
Trump has clearly objected to both the Trans-Pacific Partnership (TPP) and the North American Free Trade Alliance (NAFTA).The Trans-Pacific Partnership will create the world’s largest trading bloc, including the United States, Japan, Canada and other Pacific nations. A free trade agreement with these large economies would help us gain a competitive advantage in the global marketplace. This is because, without the barriers to trade such as tariffs and quotas, we would be capable of importing and exporting goods for less, and do it more frequently.
A failure to ratify this agreement would spell a lost economic opportunity for Canada.
Trump has also vocally objected to NAFTA. In Trump talk, it's the “worst trade deal ever signed in the history of the USA”. At least that's what he said in a live speech in Pennsylvania.
As Trump follows protectionist trade principles, a "renegotiation" of NAFTA means eliminating free trade and imposing tariffs. In other words, no more cheap American and Mexican products like Hershey's Cookies n Creme. Also, we're likely to miss out on the billions of dollars of electronic equipment, machines and furniture exported by Mexico annually.
“Canada and Kelowna benefits from free trade,” said Picault. “While free trade can hurt certain markets, overall it has had a positive effect. As such, any restriction on trade with the US and we will suffer.”
According to Global Affairs Canada, after NAFTA was signed in 1994, the North American economy has more than doubled in size. The combined GDP (gross domestic product) for Canada, U.S. and Mexico has increased from $8 trillion to $20.6 trillion. Labour productivity in Canada has also increased by 14 percent. 78% of the products created by this increased labor productivity are exported to our NAFTA partners. It is not illogical to predict that free trade across the pacific will have the same positive effects.
In other words, goods from Japan will cost more due to the price of limited trade while our goods will cost more to the Japanese. Therefore, we’re less likely to buy their goods and they’re less likely to buy ours. As an economy that exports most of our wine to the United States, this could be hurt by trade barriers between our economy and the U.S. economy.
We also export a significant proportion of our wood products to the USA and Japan. In 2013, the U.S. was the largest importer of B.C. softwood lumber exports and Japan was the third largest. Therefore, limited trade between these two nations could hurt our lumber industry.
We've barely scratched the surface when it comes to how Trump will affect Kelowna. We've also done some speculating, after all much of these predictions are dependent upon a highly changeable leader who has offered very few details on the policies he promised to deliver.
Or perhaps you're a skeptic. Trump is after all a businessman, perhaps he'll perceive Canada as his greatest partner and bless us with exceptional treatment. Anything is possible.
Furthermore, Trump will take the helm of a government known for stagnation. Perhaps he'll meet barriers at every turn and nothing will be accomplished.
In summary, "perhaps" is a very common word when predicting how President Trump will affect us. And we're not sure how we feel about that.
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