Former prime minister Pierre Trudeau once compared living next to the United States to sleeping with an elephant, observing that, “one is affected by every twitch and grunt.”
There was plenty of twitching and grunting on Tuesday, as Americans re-elected Democratic President Barack Obama over Republican challenger Mitt Romney. And reaction appears mixed on the Canadian side of the border.
“For myself, it was a major disappointment,” said Mike Drotar, Servus Credit Union’s vice-president treasury.
He fears Obama’s return to office will mean big government and high taxes, with adverse consequences.
“I think it will probably be more of the same sluggish economy for the next at least two years, at a two per cent growth rate, and more moderate oil prices.”
Higher U.S. debt will also affect the equity markets, warned Drotar.
“Going forward, you’ll see lower returns on the equity markets versus the Romney situation.
“If you start getting over around 120 per cent debt to GDP . . . eventually the markets are going to get really, really nervous.”
Garett Cupples, president of Red Deer’s GenTex Oilfield Manufacturing Inc., also has misgivings about U.S. voters’ decision.
“I think it was a step in the wrong direction,” said Cupples, whose company sells into the United States.
“I’m not sure the American economy can be turned around, but I believe had Romney been elected there might have been a chance of it,” he said, referring to the former Massachusetts governor’s success as a private equity executive.
Instead, Canadian business is likely to be hurt by a sluggish American economy.
Cupples said he’s considered expanding GenTex’s operations into the United States, but is unlikely to do so in the current situation. His business counterparts to the south feel the same way, he added, describing how they’re reluctant to invest capital in their operations.
“Everybody’s just sitting on their cash on the balance sheet in corporate America right now.”
Drotar and Cupples also wonder about the future of the Keystone XL pipeline, which Obama has postponed making a decision on.
Gayle Langford, president of the Red Deer Chamber of Commerce, was more upbeat about the election result. She said Canadian businesses already know what Obama’s policies and direction are.
“For most of us, as businesses, what’s really important is stability and predictability in U.S.-Canadian relations. That’s good for business.”
With Obama in office for another four years, Canadian business interests can build on past successes, said Langford. She offered as examples co-operation on the agricultural front, and even the Keystone project.
“We do have some confidence that we’re making progress on (Keystone).”
Langford acknowledged that businesses here are keeping a close eye on the U.S. economy, because they’re affected by it.
Cal Dallas, Alberta’s minister of international and intergovernmental relations, and MLA for Red Deer South, said his government was ready for Obama or Romney.
“We’ve worked hard to develop relationships with both the Republican and the Democrat side.”
He added that the Alberta government’s involvement with its neighbours to the south occurs “at a much deeper and broader level than focused on the president himself.” There may be some new government appointees that the province will now deal with, but otherwise it should be business as usual.
Dallas pointed out that Canada and the United States have one of the world’s most successful trading relationships. Nothing Obama’s administration has done over the last four years has jeopardized that, he said.
“We’re very happy with the co-operation, the spirit of engagement, the kinds of activities that are happening.”
Dallas even expects the president to tackle Keystone following a Nebraska Department of Environmental Quality public hearing and information session on the pipeline proposal on Dec. 4.