The outcome of the U.S. Presidential race is up in the air, but the ramifications for Canada of a Trump victory are dire.

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Diane Francis: A Trump win spells trouble for Canada Back to video

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Donald Trump is a Republican, a party and belief system that doesn’t exist in Canada and isn’t synonymous with being a Canadian Conservative. He is a protectionist suspicious of trade deals with Canada or any other nations. He plans to impose tariffs across-the-board. He is also an isolationist and would cut a deal with Russia, letting it keep at least some portion of Ukraine it now occupies. He would invoice Europe and Canada for neglecting to fulfil their NATO and other military commitments.

His two catch phrases “America First” and “close the border” represent real hazards for Canada. “Close the border” aims to stop the flood of illegal migration along the Mexican border, but also includes a Trump promise to deport millions of illegals now living in the United States. His “America First” slogan already resulted in a renegotiation of the three-way trade deal between the U.S., Canada, and Mexico, and could again.

Both these initiatives are troublesome for Canada.

The negative economic impacts on the world, and Canada, of protectionism and across-the-board tariffs would be significant. According to a recent report by Scotiabank, “It would lead to even greater economic harm north of the border, with a forecast peak decline of over 3.6 per cent in the level of economic activity relative to current forecasts, inflation that is 1.7 per cent higher than currently expected, and policy rates that are 190 basis points above the current expected path for the Bank of Canada.”

However, given the huge amount of American investment in Canada, Ottawa should be able to negotiate a “carve-out” from any new tariffs that would apply up here. But Trump will have the upper hand in any such talks and will dictate demands that would be costly to certain Canadian industries or sectors.

But, it is Trump’s immigration policies that present the greatest hazard to Canada. Estimates are that there are 10 or 11 million undocumented immigrants in the United States from around the world, mostly Central America. Scotiabank’s report suggested that “the deportation of roughly three per cent of the U.S. workforce would be highly damaging to the U.S. economy, with U.S. GDP falling by about three per cent, leading to lower inflation and policy rates. We think that the deportation of 10 million illegal immigrants is politically and logistically infeasible.”

Unfortunately, the Scotiabank report is too optimistic and Canada’s vast and unprotected border to the North is going to become a national issue. If Trump is elected,  illegal immigrants in the U.S. will have incentive to head for the northern border to avoid being deported back to Central America. This is problematic because Canada lacks the border security and military resources to prevent illegal crossings.

This means floods of people could arrive, claiming asylum, facilitated by smugglers. If that happens, Trump’s deportation scheme could turn Canada into the world’s largest refugee camp, bankrupting health, education, and welfare systems. Given Ottawa’s incompetence in immigration matters, it would take years to unravel such a massive backlog and cost billions in taxpayer dollars.

Another danger is that a Trump regime will nix electric car vehicle initiatives at home and in Canada, costing government backers and car companies billions. Also at risk is agricultural trade, from supply management to grain exports around the world.

“Trump has strong support in farm states and provided large trade compensation payments to farmers during a previous trade spat with China. American farmers are likely to receive greater support than Canadian producers should grain prices continue to retreat,” according to an article in The Western Producer. “Russia has become increasingly friendly with China. On canola, peas and barley, Canadian exports to China have been slipping with Russian product becoming increasingly competitive.”

Nine years’ of excessive spending, soaring debts, and security shortfalls by the Trudeau government will come home to roost. Canada is weaker than before and Trump will take advantage of that and more.

Financial Post

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