In the month since Donald Trump won the U.S. presidential election, Canadian executives have had some time to adapt to the reality of a Trump presidency and explore how Canadian-U.S. business relations will be impacted.
Over half of Canadian C-Suite believes business will benefit from a Trump administration but surprisingly, only 13 per cent have a plan to respond or take advantage of the Trump effect.
And, while 85 per cent of executives in this quarter's C-Suite Survey agree that a Trump presidency will likely have a positive impact on the U.S. economy, its influence on Canada is less clear.
On the one hand, 69 per cent of survey respondents believe Canada's oil and gas sector will benefit from a Trump administration – a sentiment largely based on Mr. Trump's support for the Keystone XL pipeline. Similarly, 60 per cent of executives anticipate rising crude prices by the end of 2017, implying more good news on the horizon for Canada's energy sector.
Although this short-term win will garner optimism, the appointment of Rick Perry as Energy Secretary (a department he wanted to abolish in the 2012 presidential nomination race) will surely increase U.S. oil and gas production, which will compete with Canadian oil in the American and global marketplace.
Many also believe Mr. Trump will try to extract concessions from Canada in exchange for approving Keystone.
Over all, most believe Canada's economy will not see quarter-over-quarter improvement – with 59 per cent of C-Suite executives anticipating a slowdown in global trade.
The future looks equally unfavourable for cross-border trade, as Mr. Trump threatens to renegotiate or withdraw from the North American free-trade agreement (NAFTA) and end trade liberalization.
Although roughly 14 million U.S. jobs rely on trade with Canada and Mexico, Mr. Trump has blamed NAFTA for the declining U.S. manufacturing sector, which has lost over five million jobs since 2000 – although many of those were lost to automation. To stem this tide, Mr. Trump has talked about adopting a "Buy America First" policy – something that could greatly inhibit Canada-U.S. trade relations, particularly in such areas as softwood lumber and livestock.
While this news is less than encouraging, committing to a "Buy American First" policy will cost the U.S. consumer, and it's unclear if Congress will be prepared to fund this plan.
This means opportunities may still exist for Canadian businesses willing to position themselves as first-choice trading partners.
Canadian business needs a serious approach to investing in innovation, technology and automation, as well as playing a part in ensuring Canada has a deep pool of educated workers in the innovation-driving areas of science, technology, engineering and mathematics (STEM).
It's essential that Canadian business understands that there are a dozen new variables of risk given the geopolitical and institutional impact of a Trump presidency and the relative weight of these risks will evolve in the coming months as president-elect Trump takes office.
With only a small minority of Canadian businesses having a plan in place, there is urgency for the C-Suite to take note, develop a plan with contingencies, be proactive and compete.
Willy Kruh is global chairman of consumer markets at KPMG.