Even in the age of Trump, there are U.S. trade opportunities for Canada

by Mai Nguyen (feat. Colin Robertson)

Canadian Business
January 9, 2017

Fluidconcepts has produced office furnishing for MGM Studios, H&R Block and Variety magazine, among other U.S. clients. Indeed, while the workspace designer and manufacturer may be based in Oakville, Ont., roughly 60% of its sales take place on the other side of the border. So the U.S. election results have caused some anxiety for Byron Leclair, the firm’s president.

President-elect Donald Trump plans to renegotiate or “break” the North American Free Trade Agreement and scrap the Trans-Pacific Partnership, which would have further reduced trade barriers. Despite the threatening rhetoric, Leclair is not overreacting just yet, opting to hold a wait-and-see position. “It’s speculation at this point, as it always is,” he says. “Right now we are focused on keeping contact with our U.S. customers and letting them know we value our relationship.”

That’s the best course of action for any Canadian business owner right now, says Colin Robertson, a former diplomat and vice-president of the Canadian Global Affairs Institute. “Canadian companies need to remind their American counterparts that this relationship is working for both parties,” he says. “Likewise in Congress, there are both Democrats and Republicans who see the value of closer trade relations with Canada because it serves America’s prosperity.”

The Ottawa-based Canadian Manufacturers and Exporters trade association has advised its 10,000-plus members to avoid any drastic business decisions based on hunches. Senior vice-president Mathew Wilson has faith in the unparalleled relationship between Canada and the U.S.“We don’t just import and export with the U.S. We build things together,” he says, still adding that now is as good a time as any to start thinking about trade diversification.

Putting aside what might or might not happen, there are still some promising export opportunities between the two nations. Energy exports, specifically crude, experienced a year of flat growth due to the Alberta wildfires, but they’ll see a 12% gain next year as demand catches up with supply, according to Export Development Canada (EDC). Consumer goods, a star performer this year thanks to a weaker loonie and robust American spending, will continue to grow next year, albeit moderately, in areas such as household appliances, clothing, and jewellery.

One industry with a shaky but still promising outlook is forestry. About 70% of softwood lumber exports go to the U.S. and 2017 could bring hefty U.S. duties on Canadian timber, increasing costs for producers at home. However, the rebounding U.S. housing market provides some optimism; demand for construction materials such as lumber and wood panelling is expected to stay strong.

“One thing that Canada has to offer to the U.S. is proximity,” says Robert Pelletier, EDC’s U.S. chief representative. “If you think of transportation costs or just-in-time inventories, we certainly have an advantage. That’s not going to go away despite changes in policy.”

Homegrown companies also have one more advantage in their arsenal: the Canadian brand. Says Pelletier: “Companies really like working with Canadian firms because the country is known for reliability and quality.”