As the world continues to digest Donald Trump’s surprise win in the U.S. presidential election, in many ways it seems to be business as usual.
After see-sawing at the open, North American equity markets logged surprisingly strong gains after most market participants were said to have priced in a Hillary Clinton victory.
The U.S. dollar gained just over a cent on the loonie, and gold which typically increases in value in time of turmoil was down slightly.
Agricultural commodities posted losses, but market analysts suggested that had at least as much to do with a bearish USDA report that increased already record harvest estimates as the election results.
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Prime Minister Justin Trudeau issued a brief statement of just six lines congratulating the president elect, and noting “Canada has no closer friend, partner, and ally than the United States. We look forward to working very closely with President-elect Trump, his administration, and with the United States Congress in the years ahead, including on issues such as trade, investment, and international peace and security.”
Trump has repeatedly decried the NAFTA trade pact as a “terrible deal” and vowed to rip it up and pundits have questioned it’s future.
CIBC economists Avery Shenfeld and Royce Mendes wrote in a client note the morning after the election that Canada likely got swept up in the election rhetoric rather than being an actual target of the next president’s ire. They predict a more favourable outcome for Canada than Mexico if the pact is reopened.
“Canada and the U.S. could revert to a bilateral free trade arrangement that excludes Mexico,” they wrote, referring to the U.S.-Canada trade agreement that existed before NAFTA was ratified in 1994.
“That might help Canada reap market share stateside, but there are also risks that protectionist sentiments could extend to restrictions on some Canadian shipments to the U.S., given the political tide in that direction.”
They added Trump is largely concerned about competition from “low cost producers like China and Mexico,” giving Canada an opening to maintain free trade with the U.S.
One area where uncertainty has settled in is over the fate of environmental-based programs both in the U.S. and internationally.
The market for U.S. renewable fuel credits tumbled the morning after the election, losing five U.S. cents, falling as low as 77 to 78 cents each, according to brokers.
On the international stage, there are fears that Trump’s view that global warming is a hoax might lead other nations to scale back ambitions under a landmark climate change deal, while renewable energy stocks fell on world markets.
Trump’s victory over Democrat Hillary Clinton cast a cloud over delegates attending a 200-nation meeting in Marrakesh to celebrate the start of the 2015 Paris Agreement to limit global warming last Friday.
Trump has threatened to tear up the Paris accord for cutting greenhouse gas emissions, worked out in two decades of negotiations by countries as diverse as China, Pacific islands and OPEC oil producers.
Some delegates expressed concern that Trump, who in the past has dismissed climate change as a hoax, could cause other nations to reconsider their position on global warming.
“We will have a lot more hurdles,” said Ian Fry, head of the delegation from Tuvalu, a Pacific island state which fears rising sea levels. He said Trump’s victory could have a “domino effect on other nations”.
