North Delta businesses, and Canadian businesses in general, may want to hedge themselves against a potential surge of American protectionism.
That’s according to experts at PricewaterhouseCoopers (PwC), who forecasted such outcomes resulting from the Trump administration’s trade policies during a panel discussion and luncheon hosted by the Delta Chamber of Commerce on Jan. 25.
While the event was advertised as a discussion about how Canadian and U.S. budgets would specifically impact Delta businesses in 2017, the panel, made up of tax consultants Mike Shields and Jonathan Osten and U.S. immigration lawyer Douglas Cowgill, largely elaborated on the yet-to-be-seen state of U.S. trade, immigration and tax policy.
“I think the thing that has stood out to me most of all are the present vagaries of what we can really expect,” said Delta Mayor Lois Jackson. “If it unfolds as we think it may, in terms of the protectionist attitude of the United States, it follows that the Canadian businessman is going to be very careful with his export plan.”
Delta Coun. Robert Campbell said that while the presentation provided some interesting information, there was nothing new in it from a municipal perspective.
“I thought there might be a little more discussion of things that pertain to Delta businesses,” Campbell said.
Campbell added that although there are a number of businesses in Tilbury and on Annacis Island that do trade south of the border, how U.S. trade policy would affect each of them was “a question that only individual businesses can answer.”
PwC Tax partner Mike Shields talks about the inclination of U.S. President Donald Trump and Republicans in Congress towards comprehensive tax reform during a panel discussion at the Delta Town and Country Inn on Jan. 25. Photo credit: Kier Junos
Raphael Filosos, co-owner at Acrylco, a plastic fabrication distributor on Annacis Island, said he didn’t think his business would suffer due to its small amount of U.S. imports.
“It would be easy to find substitutes for our inputs,” Filosos said, adding that the company paid duties on imports before NAFTA and that, if it was renegotiated, he imagines that the worst case scenario would be that it pays them again.
Delta farm owners, however, may not be able to be so complacent.
Graham Bolton, senior relationship manager at Farm Credit Canada, said that Canadian farms source a “significant number of inputs from the U.S.”
Any increase in U.S. tariffs, which President Trump recently suggested may be coming, could lead to an appreciation in the U.S. dollar, but could exacerbate the challenges that farmers already face with a sagging Loonie.
Bolton said it’s not always easy for farms to find affordable non-U.S. substitutes for inputs. As for insulating themselves against exchange rate shocks, some farms can employ fixed price contracts with suppliers, if they can be so fortunate.
Besides the price, some U.S. firms produce goods with the Canadian market and its regulations in mind. Sourcing a crop spray, for example, outside of the U.S. might be cheaper, but pointless if the product isn’t approved for use in Canada.
At the luncheon, Shields said he couldn’t speak specifically to how protectionist U.S. trade policy could affect a farm, but he offered businesses in general should be wary about any U.S. contracts or any exports denominated in U.S. dollars.