Skip to main content

Donald Trump campaigned heavily against NAFTA in last year’s presidential election and has shown no signs of backing off his protectionist agenda.Evan Vucci/The Associated Press

U.S. corporations operating in Canada are warning that U.S. President Donald Trump's protectionist trade policies could hurt their cross-border business while uncertainty about the future of NAFTA is impeding investment decisions.

In a survey of 53 companies to be released Monday, U.S.-headquartered firms said their biggest concerns about the bilateral trading relationship involve U.S. protectionism. These worries include the potential for major changes to, or even abrogation of, the North American free-trade agreement and the prospect for Buy American provisions.

NAFTA, Trump and Canada: A guide to the trade file and what it could mean for you

The survey was conducted by Nanos Research for the American Chamber of Commerce in this country (AmCham Canada), which represents many of the leading U.S. multinational firms that have subsidiaries here. The American chamber is holding a meeting Tuesday with business leaders and officials from the three NAFTA countries as negotiators huddle in Ottawa for round three of the talks.

Some business leaders say they see evidence of a "chill" on investment decisions as companies await a clearer sense as to whether the NAFTA talks will founder and Mr. Trump follows through on his threat to abrogate the treaty, or it faces a major overhaul with some protectionist demands from the United State built into it, or it undergoes only modest changes.

Corporate leaders in Canada, Mexico and the United States are increasing their lobbying efforts to maintain the key elements of the existing NAFTA, and to extend liberalization to areas such as digital data flows and worker mobility. However, Mr. Trump campaigned heavily against NAFTA in last year's presidential election and has shown no signs of backing off his protectionist agenda.

Some companies are hesitant to make new investment decisions pending the conclusion of the NAFTA talks, AmCham Canada president Rick Tachuk said. "We have heard from some companies that they're just going to sit back and see where the dust settles. So that's concerning because uncertainty is not healthy for the business environment," he said.

One Canadian government source said Mr. Trump's Twitter bombast is putting a chill on cross-border business. The official, speaking on condition of anonymity, recounted talking to Canadian businesses that were considering making investments in the United States but decided not to because of the risk that NAFTA could be shredded.

The source said Ottawa is not particularly concerned by Mr. Trump's threats in and of themselves – the Canadian view is that what matters is what happens at the bargaining table – but is worried about the effect they have on business.

In the AmCham Canada survey, U.S.-based companies were asked to state their biggest concern about the bilateral relationship. Some 38 per cent cited NAFTA-related issues; 19 per cent pointed to the Trump administration generally and 11 per cent cited Buy American provisions that block Canadian operations from bidding on U.S. federal and state projects. Only 2 per cent said their biggest concern was the state of Canadian competitiveness.

Despite the trade worries, respondents remain upbeat about the short-term prospects. Some 41 per cent expect to expand their work force in the next six months, compared with 49 per cent who said it will stay the same and only 10 per cent who said it will decline.

General Electric Co. is actively lobbying on NAFTA through the Canadian Manufacturers & Exporters and has an internal group with officials in Mexico, the United States and Canada watching the negotiations, said GE Canada's vice-president of government affairs Ross Hornby.

The global company is shutting down a manufacturing facility in Peterborough, Ont., but insists that move in unrelated to NAFTA. It is also building a plant in Welland, Ont., and investing in new businesses across Canada.

"On NAFTA generally, GE's position has been 'do no harm,'" Mr. Hornby said.

He said a revamped NAFTA should include an energy chapter, to ensure there is a liberalized, North American market for energy, as well as measures that prohibit local content requirements such as Buy America provisions.

Cargill Inc. chief executive David MacLennan said he's worried about the possibility that the Trump administration will simply walk away from NAFTA if he cannot win major concessions from Canada and Mexico.

"There's definitely a chance. I'd be at a loss to handicap it – the easy answer is to say it's 50/50, which is really a proxy for saying 'I don't know.' I don't think anyone really knows," he said in a telephone interview Friday from Minneapolis, Minn.

The agribusiness giant estimates roughly 10 per cent of its revenue – $11-billion (U.S.) – is related to NAFTA trade. Cargill ships everything from beef to canola to corn-based sweeteners across the NAFTA zone. Its Winnipeg-based Canadian arm employs 8,000 people, including at abattoirs in High River, Alta., and Guelph, Ont., and at several grain- and canola-processing plants.

Mr. MacLennan's desire is that the renegotiated NAFTA mostly preserves the status quo for agriculture.

"Our hope is that it's 'no harm,' that we don't go backward, that the agreement is kept in place, that there is stability, that there is certainty in the form of the agreement for farmers," he said.

Mr. MacLennan, who met earlier this week with Commerce Secretary Wilbur Ross and has spoken by telephone with Agriculture Secretary Sonny Purdue, said the U.S. administration understands the agriculture industry's point of view. He said they are trying to balance the need to not hurt sectors that depend on free trade with their desire to help the suffering manufacturing sector.

Another Canadian government source said Ottawa's negotiation strategy includes a plan to lean on pro-NAFTA American businesses, state governors and members of Congress to put pressure on the Trump administration when there are holdups at the bargaining table.

Mr. MacLennan said he has not personally spoken with Canadian officials but should they come calling, his company will be happy to use whatever influence the company has to break logjams.

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 7:00pm EDT.

SymbolName% changeLast
GE-N
General Electric Company
-2.55%175.53

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe