Economy

How the Trump effect is hampering Canadian companies now

The protectionist sentiments unleashed in the lead-up to the U.S. election is making things very uncertain for Canadian companies selling there

By Catherine McIntyre October 27, 2016

Republican presidential nominee Donald Trump waits behind his podium as Democratic presidential nominee Hillary Clinton makes her way off the stage following the third presidential debate at UNLV in Las Vegas, Wednesday, Oct. 19, 2016. (AP Photo/David Goldman)

When Mark Bedard needed more space for his fast-growing business earlier this year, he jumped on the opportunity to expand its presence in the United States. The move was influenced by the American election—not because the candidates inspired some sort of pursuit of the American dream, but rather because he feared looming protectionist rhetoric threatened his company’s prospects.

Bedard’s company, Chambly, Que.-based MTL Technologies, sells commercial refrigerators and freezers, and 96% of its business comes from the U.S. “What makes us nervous is Donald Trump talking about NAFTA and this protectionist stuff,” says Bedard. “That’s why we incorporated there—to have our foot firmly planted south of the border, just in case.”

Indeed, Trump has been campaigning on the popular promise to bring back jobs to the U.S. To do so, he has stated his intent to pull out of NAFTA, or what he calls “the worst trade deal maybe ever signed anywhere.” And that’s a scenario that, while seemingly far-fetched, would devastate the legions of Canadian businesses that depend on smooth trade with our neighbours to the south.

Donald Trump's anti-trade rhetoric exposes deep rifts in the global economy

While a Trump presidency is looking less and less likely, many Canadian companies with stakes in the U.S. are, like Bedard, feeling skittish about their business prospects in the lead-up to the November 8th vote. “There’s a huge level of uncertainty as to what the playing field will look like going forward,” says Steve Rhone, president of Mississauga, Ont.-based Weston Forest Products. Part of that apprehension stems from not knowing how Trump or even Clinton (who has, to a degree, latched onto American protectionist sentiments) would reform trade agreements. But in Rhone’s industry, forestry, the election has also stalled negotiations on the softwood lumber agreement between Canada and the U.S.—a deal that expired earlier this month. “There’s little motivation for the Obama administration to settle any of these things in its last few weeks,” he says. As a result, Rhone believes “exports between Canada and the U.S. have been a little bit challenged.”

Peter Kaufman is another Canadian entrepreneur whose business is feeling the effects of the election period. The founder and president of Buddy’s Kitchen, an Aurora, Ont.-based gourmet dog food producer and retailer, has noticed a dip in business from his American distributors in the last year. And while he says he can’t correlate the shift directly to the election, the protectionist rhetoric unleashed by the campaign is having very real effects. “I have absolutely had clients tell me their customers need to see a ‘Made in USA’ label,” says Kaufman. “The fear-mongering among the Republicans, in particular, has really made some independent Mom-and-Pop retailers [in the U.S.] move away from anything with a foreign name on it, and that includes ‘Made in Canada.’ It’s just safer for them, but it’s made it really difficult for us.”

Even for companies that haven’t seen an impact on their business to date, the fear of unknown, and potentially drastic, policy changes makes it difficult to make even short-term plans. “You worry about the impact on business, on trade, on the labour market, and on social cohesion,” says Daniel Tisch, president and CEO of Toronto-based Argyle Public Relationships. “One has to be concerned about the rhetoric against certain groups.”

Indeed, Zeeshan Hayat, CEO of Prizm Media in Vancouver, which provides digital marketing services for many U.S. clients, worries his own business could suffer because he is Muslim. “[Trump] has made reference to changes that would make it hard for me to travel to the U.S.,” says Hayat. “We travel there quite a bit for trade shows and visiting clients, so that would be difficult.”

While most business-owners we spoke with are doubtful that Trump will become president, all acknowledged it’s a possibility (“he’s made it this far!” Bedard points out), and one they need to plan for. “The challenge is, I don’t think you can predict what Donald Trump is going to do,” says Janine Taylor, president of Mississauga, Ont.-based promotional products design firm The Next Trend Designs Inc. Taylor notes that most companies can adapt to changes in policy, even big ones, with adequate warning—about six months to a year. “With Hillary Clinton, I believe that if changes were going to be made, we’d have the warning we need to adapt, and I’m confident we could,” says Taylor. “My fear with Trump isn’t what he’s talking about doing in January 2017 should he become president, its what is he going to do that we can’t even conceive of yet,” she adds. “That’s the scariest part of this election.”

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