Trump win could be good for Alberta

Albertans know the feeling that comes with waking up to find their world turned upside down following an election.

That’s what happened Wednesday morning in the United States, after Donald Trump defied both the odds and the polls.

And as happened here in May 2015, the one question being asked over and over again is ‘How did this happen?’

Like the Orange Crush that swept out more than 40 years of Progressive Conservative rule in Alberta, Tuesday night’s results, broadly speaking, reflected disaffection and disillusionment with the establishment.

The result follows the surprising majority re-election of David Cameron in Britain, also in May 2015, the Liberal sweep across Canada and the so-called Brexit vote in Britain last June. Similar trends are brewing in Germany, France and Italy, which all face elections next year.

What it tells us is a new global political order is being established; a shift that’s unsettling to the postwar generation that grew up with the benefit of sound governance and the global peace dividend. There is nothing Canada, much less Alberta, can do to influence this trend, and so the question becomes what are the consequences of this tectonic shift and how are they best addressed? The news isn’t all bad. One continuing thread of conversation around Calgary was that a Trump election win would be good for Alberta’s oilpatch. And that’s effectively what was being said Wednesday.

Jack Mintz, from the School of Public Policy at the University of Calgary, said the Trump presidency could result in TransCanada’s Keystone XL pipeline project going ahead.

“That is a huge possibility and it is the best pipeline project from a netback point of view. That alone would be very positive for Alberta,” Mintz said in an interview.

It’s therefore no surprise TransCanada’s stock gained three per cent Wednesday, which likely means the overallotment option of its $3.2-billion share issue will be exercised, bringing the total amount raised to $3.5 billion.

Looking more broadly at energy, there are issues to consider, including the notion North American energy security is likely to move higher on the new administration’s agenda as the U.S. continues to import oil from countries outside the continent.

Among the names being floated as the next U.S. Energy Secretary is Harold Hamm, the chairman and CEO of Continental Resources and a major player in the Bakken.

The bellwether transaction to watch will be what happens to Motiva Enterprises’ Houstonbased Lyondell Basell Refinery, which is jointly owned by Royal Dutch Shell and Saudi Aramco. As of April 2017, Saudi Aramco will take full ownership of Motiva and assume control of the two largest refineries in the U.S.

Where Canada and the U.S. markedly diverge, of course, is on climate policy and putting a price on carbon.

While Premier Rachel Notley said Wednesday that her government will not waver from its commitment to a carbon tax, some suggested a sober second thought might be in order.

In addition to the U.S. Clean Power Plan, which will effectively become void, similar sentiment was voiced Wednesday with respect to the Paris Climate Accord, which has not been passed into American law.

There was no way President Barack Obama was going to succeed on this file, and now with the House, Senate and White House in Republican hands, it’s likely as dead as a U.S. Thanksgiving Day turkey.

Where progress will be made is at the state level, which means if Canada wants to continue along the path to price carbon, it must find a way to harmonize the various climate policies that are proposed or in place if it’s to ensure trade-exposed industries are treated fairly.

While Canadians are concerned about what happens on the trade file, a few matters bear mention.

One is that Republican administrations tend to be more open to trade than those of the Democrat persuasion.

Second, the notion of ripping up trade deals — particularly the North American Free Trade Agreement — pertains more to the agreement between the U.S. and Mexico than it does with Canada.

Third, observers were willing to give Trump the benefit of the doubt on the trade file, saying it’s more likely he’ll be interested in negotiating deals that he believes can be improved for the U.S. — without becoming entirely protectionist.

In other words, no one was suggesting a reprise of the Smoot Hawley Tariff of 1930 is imminent. Smoot-Hawley slapped tariffs on more than 20,000 products imported into the United States and is widely blamed for exacerbating the Great Depression.

That said, softwood lumber looks to be most vulnerable under the existing trade agreement. One seasoned observer said the softwood file “would be an easy one to give up” when it came to trade issues with Canada, and for Trump to be seen as proactive on trade.

There is the possibility a Buy-American policy could be put forward, which would compromise exports of both raw and finished goods.

Former prime minister Pierre Trudeau famously said being situated next to the U.S. was like sleeping with an elephant.

Trump wants to feed the elephant, and Mintz said initiatives such as tax reform, which he noted has not occurred since 1986, and a move to decrease regulation would be positive steps to stimulate economic growth.

“Tax reform would not have happened under a Democratic president,” he said. “The tax treatment of multinational corporations is a huge issue and something needs to be done. Moreover, if we see a decrease in personal and corporate taxes, it will put pressure on the Canadian government not to raise taxes.”

As always, a new administration comes with a huge degree of uncertainty, particularly in this case, where an outsider now has to fill 4,000 posts in the new government.

Every government around the world is grappling with the reality that the connections and institutional memory that existed from previous governments, including that of the 43rd president, are gone.

It all adds up to much uncertainty, which is bound to weigh on stock markets and the global economy, even if markets were up Wednesday.

It’s one thing to cloak the election results in the context of a growth-oriented administration, but when it comes to social issues — including health care, education, the rights of women and minorities, trade and immigration — there remains much to be feared.

On this, there can be no free pass.