In the ramp-up to the U.S. presidential election, the two main competing candidates have debated everything from oil to trade policies in their campaigns. Both nominees, however, would have a negative economic impact on Canada if elected, creating a no-win situation for the country, according to a Nomura report released Tuesday.
“Even though it seems like a lot of people in Canada still imagine that [Hillary] Clinton will be positive…it’s not necessarily better,” Charles St-Arnaud, economist and FX strategist with Nomura, said in an interview with BNN.
St-Arnaud argued that while a win for the Democratic nominee would be less damaging to Canada than a victory for Republican nominee Donald Trump, “it would still be negative” particularly because of her opposition to the Trans-Pacific Partnership.
“Secretary Clinton has been saying that if she was elected, she wouldn’t sign the TPP agreement, which would allow free trade between Canada, the U.S. and a lot of pacific partners, which would, at the end of the day, help Canadian exports to diversify away from only North America,” he said.
St-Arnaud added that trade frictions between Canada and the U.S. would “flare up” under Clinton when it comes to supply management of eggs, milk and poultry, and the current softwood lumber dispute, which could result in new duties on Canadian softwood.
St-Arnaud also said, however, it would be more detrimental to Canada’s economy if Trump wins and is able to implement his proposed changes to the North American Free Trade Agreement, which evolved to its current form with the addition of Mexico in 1994 from the original Canada-United States Free Trade Agreement.
“Growth in the U.S. will be weaker in the next few years under a Trump presidency mainly because all the impact from increased cost in trade would lead to higher inflation – something that the Fed will have to react to and you will have higher Fed fund rates in the U.S. And that will cause a drag on the U.S. economy. So, you will have that spillover also coming to Canada,” said St-Arnaud. “I think the biggest issue is not knowing exactly what will be the ultimate solution between Canada and the U.S.”
Trump has routinely expressed his opposition to NAFTA and has said he would leave the agreement if elected. However, Wilbur Ross, one of Trump’s economic advisors told BNN last month that Canada will not be the main target if Trump reopens any trade deals and that Mexico is a bigger problem for the United States.
The race between Clinton and Trump is fairly close, with the Democratic nominee slightly ahead, according to the most recent state and national polls. The presidential election will take place Nov. 8th.