Canadian analyst argues that a Trump win of the US presidency would be net benefit for Canadian economy

Matthew Barasch, Canadian equity strategist for RBC Capital Market, argues that if Donald Trump wins the presidency of the United States in November this would be a "net positive" for both the Canadian economy and Canadian stocks.

Barsch bases his prediction on Trump's pro-oil policies, and proposals for lower tax rates. Barasch notes that reports about a Trump presidency should be taken with a grain of salt: “We would be very cautious with those who suggest that markets will crash and dogs and cats will live together upon a Trump victory as these types of stories often sell newspapers, but have little connection to reality." He made the remarks in a note to his clients.

Barasch claims that Trump's tax cuts would in the near term probably give a boost to the U.S. economy, which would mean more exports to the U.S. from Canada, increasing GDP. He thinks that Trump's policies would lead to higher interest rates as economic growth and deficits increase. This along with less onerous regulations on banks and insurance companies could increase their profits.

Trump has vowed to revive the Keystone XL pipeline project that could help the energy and materials sector. Trump also would increase infrastructure spending which would help stocks such as railways. Trump's restrictive immigration policy could help attract talent to Canada and could boost our technology sector.

However, as Barasch notes, Trump vows to renegotiate NAFTA, and he also rejects the TPP, and this could hurt Canada in the long run. It remains to be seen if Trump would actually follow through on these promises. Barasch remarks: “Any move to roll back NAFTA would weigh on [consumer staples and discretionary stocks] that rely on significant access to the U.S. market, with auto parts a notable standout.”

It's possible that a Trump victory will also lead to an increasing number of Americans coming to Canada as they fear what Trump might do to the U.S. There are already reports of Americans making contingency plans to flee north. There are also reports warning of the difficulties associated with moving to Canada. There have been periods when significant numbers of Americans moved to Canada. In the 1960's thousands of Americans fled to Canada to avoid being drafted for the Vietnam War.