What does the U.S. election mean for exporters? ExportWise interviews Allam Advisory Group CEO Omar Allam
Original article published by EDC ExportWise magazine on November 7, 2016 written by Jennifer Campbell
The U.S. election campaign to date has been called unprecedented, unbelievable and unfortunate, but “consequential” might be a more apt adjective at this point. To that end, we consulted three experts to tell us what a Trump win will mean for exporters, what a Clinton win will mean, and what you can do to in response to the results.
Here’s what Omar Allam, CEO and Founder of Allam Advisory Group had to say about the election.
What could a Clinton win mean for exporters?
In terms of a Clinton presidency, I think bilateral engagement will be viewed as positive for Canada-U.S. relations and a major step in the right direction for trade with Canada. There are issues that come with it because of the topic of international trade and the reluctance to come up with an informed opinion of where they want to go in terms of TPP. These global FTAs (Free Trade Agreements) that Canada is banking so much on — including the CETA with Europe and the TPP — will cause concern from an outward-looking perspective, but when it comes to overall co-operation, they’ll have a smoother ride.
Foreign policy is one of the many areas that sets Secretary Clinton apart from Trump — mind you she has the upper hand on everything since she is the former Secretary of State with a stronger foreign policy résumé. I was constantly reminded that a Clinton administration would compromise to find common ground and purpose to boost the U.S. economy and promote free trade with like-minded partners.
On NAFTA, Secretary Clinton may try to re-negotiate environmental and labour topics, but I don’t think they’ll pull out of NAFTA outright and don’t foresee major changes coming into play.
Secretary Clinton has a plan in place to grow the American economy and keep jobs in the country, encouraging companies to stay in the U.S. The question is ‘What does her foreign policy agenda look like and where does Canada fit into that picture?’ With Clinton, there’s a greater chance that markets won’t just crash and you won’t have a larger protectionist wall.
Secretary Clinton’s economic growth plan is aimed at increasing the national minimum wage, providing incentives for small businesses, encouraging companies to keep jobs in the U.S. and investing in infrastructure and creating jobs in manufacturing, clean energy, technology, innovation, small business and infrastructure.
U.S. allies such as Canada will play key and strategic role in the execution and unfolding of American foreign policy since we are a major partner in trade, security and defence.
What could a Trump win mean for exporters?
A Trump presidency will cause a lot of concern for Canadian exporters looking at the U.S. for the first time and those currently doing business in the U.S. because the rhetoric and information that is pushed out on a daily basis from the Trump camp isn’t factual, consistent or coherent.
Under a Trump presidency, you may see more foreign investment flowing from the U.S. because they will view Canada as a very competitive place to do business and establish operations. You might have companies that will see tax incentives that are better than they have and move here, and maybe even hope for Canadian citizenship. The potential is within the startup system in Silicon Valley and then other markets looking for opportunities outside the U.S. because of the uncertainty a Trump win will bring to American economy. Canada will have a more stable government in the eyes of many American citizens.
What should Canadian exporters be doing in response to a win from either camp?
All Canadian exporters should have a global strategy that will likely include the United States since many Canadian small- and medium-sized manufacturers and exporters consider the U.S. the gateway to free trade. On a daily basis, $2.4 billion worth of goods and services cross the border every day. Canadian exports to the U.S. were about $450 billion per year, representing more than 72% of all Canadian exports.
Canadian companies doing business in the U.S. also need to have a plan to mitigate the risks of a Trump or Clinton presidency, especially less experienced companies, because things are going to be unclear until the new government is formed. Having a game plan in place to look at other markets outside the U.S. is key for Canadian companies to succeed. Canadian business executives shouldn’t sit back and wait because that will take them more time, energy and resources to try to recalibrate and pivot into other markets.
The reality is that we can’t just bank on one or the other. Our choices of where Canadian companies have a competitive advantage in international markets will be put into question once again following shock waves sent by Brexit.
The U.S. is just one market — you can’t just put all of your eggs in one basket and not look at other markets because of the fear of the unknown or because you think it’s too expensive.
Companies need to have a risk-mitigation strategy that includes a currency exchange plan as part of that. Currency will fluctuate. If the U.S. goes into protectionist mode, you’re going to see a recession there. Look at what happened with Brexit. It shocked people, they weren’t prepared for it and the markets rumbled; the currency devaluated. There might be currency issues here.
Finally, you need to look at the pipeline of opportunity and then look at what both presidencies might mean: Can we shift to other markets?