Disclaimer: This article does not endorse either political party or presidential nominee.
Today is the American presidential election. We’ll soon know who the next leader of the United States is, and with that knowledge, we can begin looking at the new administration’s incoming changes.
Yesterday’s blog reviewed Trump’s platform; and in an effort to analyze both sides of the coin, I want to review Clinton’s platform to discuss what a Clinton presidency could mean for Canadian business. While we take no position on who should win, it’s important to understand how these policies could impact Canadians.
For the most part, a presidential election has a low-moderate impact on the Canadian economy. We’ll likely experience some volatility in the immediate aftermath of Nov 8th followed by a period of stability leading up to the January 20th inauguration. As most pundits have been saying – this election has been very difficult to predict and outcomes are not set in stone.
How Hillary Clinton’s Platform Could Impact Canadian Businesses
Similar to a Trump presidency, Clinton winning would bring both positive and negative impacts to the Canadian economy. Although I should state at the outset, all of this analysis is based on campaign promises and her electoral platform, it’s likely that actual enacted policies will differ.
Tax Rate Competitiveness
Hillary has proposed minimal changes to the existing tax code. The biggest changes we would expect to see would be increases on top earners. This type of position isn’t new to Canadians as current Prime Minister Justin Trudeau campaigned on a similar tone.
Hillary is proposing some significant changes to business taxation that would offer incentives or direct tax breaks for companies who create jobs or help bolster the middle class. This includes an income inequality reduction measure that would provide a 15% tax credit for companies that share profits with workers on top of wages and pay increases. Similarly, she aims to reduce red tape for small businesses to make it easier to do business in the U.S.
Benefits to Canadian Businesses: Minimal impact. The tax system would stay relatively similar to what it is, this will provide Canadian businesses with stability in dealing with U.S. companies.
Drawbacks to Canadian Businesses: A tax credit may incentivise more businesses to expand in the U.S. rather than in Canada. This may result in reduced domestic investment in business expansion.
Similar to Donald Trump, infrastructure investment has been a big part of Clinton’s campaign efforts. She has committed to significant infrastructure spending, and is planning to boost federal spending by $275B over five years while also creating a $25B infrastructure fund.
As Canadian companies export in very high numbers, access to high quality roads, railway systems, and transit linkages will help Canadian businesses. Although U.S. infrastructure does not currently present a significant roadblock to exporting, any investment here will act as a net positive.
Benefits to Canadian Businesses: Potentially improved market access, improved logistics to reduce shipping and transit costs.
Drawbacks to Canadian Businesses: N/A – the likely impact to Canadian business is net neutral.
International Trade Relationships
Clinton was a key negotiator on the Trans-Pacific Partnership, however she has changed her position recently expressing some scepticism over the deal. Additionally, if you dig into her voting record while holding office she has been for and against different trade agreements. The rhetoric surrounding her position continually comes back to negotiating deals that are ‘good for American workers’. Whether or not she ratifies the TPP or attempts to renegotiate NAFTA is unknown at this point. I suspect that if elected she will act cautiously on accepting new free trade deals given how contentious they are in the current political climate.
Benefits to Canadian Businesses: Assuming no major structural changes to NAFTA, Canadian businesses can continue to benefit from minimal trade restrictions with the U.S.
Drawbacks to Canadian Businesses: Delays or rejections of TPP could bring NAFTA into greater question and disrupt export business.
Renewable and Traditional Energy Investments
Hillary Clinton has been clear on her energy investment position. Her platform centres on renewable energy investments aiming for renewables to “power every home in America within 10 years”. Similarly, she hopes to slash oil consumption by 33% in the same time period.
This will likely result in additional investment in energy infrastructure, renewable energy development, and innovative business practices that reduce GHGs.
Benefits to Canadian Businesses: Access to a ‘renewable’ market where Canadian companies can sell systems, tools, and ‘green’ products.
Drawbacks to Canadian Businesses: This could have a big impact on the Canadian oil & gas sector which relies on the U.S. as the largest consumer market. Reduced U.S. demand for oil will have long-standing impacts on the Canadian resource economy.
Immigration and Skilled Labour Migration
A Clinton presidency would bring about significant reform to U.S. immigration policies. If elected, Hillary aims to reform immigration and citizenship policies in the first 100 days in office. She has a plan that will bring about sweeping changes to immigration policies in an effort to promote what she calls “fair”, “equal”, and “humane” immigration policies.
Most importantly she wants to provide a clear ‘path to citizenship’ for migrants – this will likely open up a space for skilled immigrant workers to continue working in the U.S. or to immigrate there.
Benefits to Canadian Businesses: Neutral – this may make it easier for Canadians working abroad but will likely have minimal impact on the way Canadian businesses operate.
Drawbacks to Canadian Businesses: May see increased competition for skilled immigrants, specifically in the tech space.
Government Priorities Shift After Federal Elections
Elections bring about a period of uncertainty and change. Perhaps more than with previous elections, the level of uncertainty has never been higher than it is in 2016. Nonetheless, the impact of either candidate on Canadian business will be fairly minimal, with some platform stances offering marginal benefit and some will result in marginal drawbacks.
Regardless of who occupies the White House, the president will need to contend with a number of domestic challenges in getting policy legislated – this includes working with the legislature and the senate to pass legislations. The largest outlier for Canadian business is how this election will change the business climate in the United States.
At the end of the day, the U.S. will almost certainly remain our closest trading partner and provide Canadian businesses with a friendly business climate.
Nonetheless, as the priorities of the executive branch shift so too will business investment priorities. This was true of the last Canadian election when an extremely progressive Liberal platform beat the Conservatives. Almost instantly the government change lent greater support for Indigenous communities, renewable energy, and youth employment. Some campaign promises were met with changes to the legislature, while new economic strategies were supported through Canadian government grants.