Donald Trump’s landslide victory has shaken Canadians and rattled the loonie, but on balance will be beneficial for the country, notably its natural resource sectors.

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Diane Francis: Trump victory good news for Canadian economy Back to video

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Trump has promised to impose tariffs on trading partners, but Canada’s biggest exports will spared for two reasons. First, the countries’ resource sectors are integrated as a result of cross-ownership and mutual supply chains that have been built over decades. So are their automotive industries. These binational oil and auto partnerships are the cornerstone of both economies.

More importantly, Canada is the biggest supplier of energy to the United States. Slapping tariffs on Canadian energy imports would only serve to increase the cost of living and cause harm to American industry. This is why president-elect Donald Trump will carve out exemptions for Canadian oil and gas, according to former U.S. commerce secretary Wilbur Ross.

Trump is placing energy as a priority. He has reconstituted his “drill baby drill” slogan and will execute this strategy throughout his second term. This will automatically increase the size and importance of Western Canada’s oilpatch.

It may also result in new pipelines getting built to transport Alberta oil into the U.S. President Joe Biden killed the Keystone XL pipeline on his first day in office. Trump will likely make a similar project a national priority. Alberta and Saskatchewan would reap a bonanza as a result.

Canada’s mining industry also stands to benefit. Canadian companies have made much progress in reducing emissions in the mining, refining and transmission of fossil fuels and are among the world’s leaders. As energy production increases, Canada’s economy will grow, too.

With such prospects, the question is: why has the loonie sagged? According to a Canadian Press report, “The biggest driver of the split between the Canadian and U.S. dollar is the diverging economic outlooks, and the interest rate decisions linked to those. That’s because the higher the central bank interest rate, the more worthwhile it is to hold that country’s currency. Canadian economic growth is looking weaker than the U.S.”

A slumping loonie makes imports more expensive and is costly to snowbirds and Canadians who are living or travelling in the U.S. But a lower Canadian dollar also brings benefits to Canada’s tourist industry and will increase profits to exporters in industries such as oil and gas, mining and forestry.

Canada can also pin economic hopes on Ontario’s emissions-free nuclear power industry, which is quickly becoming a world leader, creating new export opportunities. The province is a pioneer in the development of small module reactors that are safe, transportable and affordable. This technology will be exported around the world.

So Trump’s victory is good news for Canada’s economy. Our immense resource endowment will once more lift Canadian living standards and opportunities for years to come.

Financial Post

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