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u.s. election 2016

President-elect Donald Trump delivers his acceptance speech in the early morning hours on Wednesday in New York City.Chip Somodevilla/Getty Images

Donald Trump's stunning upset over Hillary Clinton is a worst-case scenario for Canada's trade-dependent economy.

The New York real estate mogul's surprise victory unleashed turmoil in global financial markets early Wednesday. The Canadian dollar fell by about a cent against the U.S. dollar. The Mexican peso plunged by more than 13 per cent. Investors fled for the relative safety of U.S. government bonds and gold.

A severe drop in U.S. stock futures indicates that when North American equity markets open, they will reverse a rally that took place in recent days in misplaced anticipation of a victory by Ms. Clinton.

A Trump presidency is bad news for Canada if he manages to put his protectionist rhetoric into practice, dragging down growth, economists warn. That could undermine Canadian exports and the smooth functioning of the integrated North American economy, particularly in industries such as autos.

"Canadian companies should be prepared for a more protectionist America," warns Todd Evans, principal researcher at Export Development Canada, the federal government's export lender.

"With the slowdown in global trade, there are a lot of people who feel left behind and that's been driving anti-trade sentiment."

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Prior to the vote, JPMorgan Chase predicted the loonie could tumble if Mr. Trump wins to near 70 cents (U.S.) Wednesday from roughly 75 cents Tuesday.

Mr. Trump's ability to get things done will be helped the Republicans' showing in the U.S. Congress. The major U.S. television networks are projecting that the Republicans will retain their majority in the House of Representatives. The 100-seat Senate is likely to remain split roughly down the middle.

Mr. Trump is expected to push the most protectionist agenda of any U.S. President since Richard Nixon. He has vowed to rip up the North American free-trade agreement and slap massive new tariffs of 45 per cent and 35 per cent, respectively, on China and Mexico. An unwinding of NAFTA could also result in significantly higher tariffs on Canadian exports entering the United States – the destination for nearly three-quarters of Canada's merchandise exports.

NAFTA's demise would be the equivalent of a 10-per-cent across-the-board tariff on U.S.-bound goods and services, according to a recent analysis by the EDC. That would send Canadian exports plunging 4.5 per cent, trigger a nearly 4 per cent drop in GDP and cost this country 737,000 jobs, according to the report.

A general protectionist mood, in both the White House and Congress, could also lead to greater use of non-tariff barriers, such as "Buy America" restrictions on U.S. government purchases and contracts, according to Mr. Evans.

And Ottawa could find it much tougher to resolve a long-running fight with the U.S. over allegations that Canada unfairly subsidizes billions of dollars in softwood lumber exports.

Failure to ratify the Trans-Pacific Partnership – a trade deal linking Canada, the United States and 10 other countries – would be a "lost opportunity" for Canada because predicted export and income gains would not materialize, according to the EDC.

There are, however, elements of Mr. Trump's campaign platform that could be good for Canada. His plan for deep personal and business tax cuts, more oil development and increased infrastructure spending could prove beneficial by driving U.S. economic growth, at least temporarily, argues Matthew Barasch, Canadian equity strategist at RBC Dominion Securities.

"Many of his policy proposals would likely be positive for Canada, which still relies heavily on U.S. growth," says Mr. Barasch, largely discounting the potential hit to trade.

Three Canadian industries that should love a Trump presidency – financial services, energy and building materials – could do particularly well.

It's not clear how successful Mr. Trump will be in getting the U.S. Congress to go along with some of his more drastic proposals.

"We simply cannot know how much – or, more probably, how little – of a candidate's proposals will ever remotely see the light of day," Bank of Montreal chief economist Douglas Porter pointed out in a recent research. "It's extremely dicey jumping to quick conclusions over what impact the election will have on the economy."

Predictions of what would happen to the economy following other recent elections have proven dead-wrong, Mr. Porter said. Many economists boosted their growth forecasts for Canada after the Liberals won the 2015 federal election, anticipating a boost from infrastructure spending. Instead, the economy has been flat.

Likewise, analysts predicted that Britain would take a big economic hit after its decision in June to leave the European Union. It hasn't happened.

"Markets reacted swiftly to seemingly extreme events, only to walk those moves back upon sober second and third thoughts," Mr. Porter said.