Canadian railways positive about Trump despite concerns about lumber quotas

Canada’s two largest railways are positive about the impact of a Donald Trump presidenc.

MONTREAL — Canada’s two largest railways are positive about the impact of a Donald Trump presidency despite some concern about the possibility of quotas being placed on lumber exports.

Senior executives from Canadian National and Canadian Pacific railways told a transportation conference Wednesday they’re not worried at this point about the U.S. president-elect’s threat to alter the North American Free Trade Agreement.

CP Rail president Keith Creel said Trump’s attention in threatening changes to the trade deal is targeted mainly at Mexico, not Canada.

And he sees potential benefits if Trump moves forward with a US$1-trillion infrastructure program and cuts the U.S. corporate tax rate to 15 per cent.

A large stimulus program would increase demand for Canadian raw materials including aggregate, cement, steel and chemicals, helping the Calgary-based railway (TSX:CP), which derives 30 per cent to 35 per cent of its revenues from the United States.

“So we’re bullish on it in all honestly,” Creel told the Credit Suisse Industrials conference in Palm Beach, Fla.

“I think it’s going to be a good thing if he does what he said he’s going to do.”

Ghislain Houle, chief financial officer of Montreal-based CN Rail (TSX:CNR), offered similar positive sentiments but also expressed concern that the imposition of quotas that limit softwood lumber exports would hurt the railway.

He said the railway derives 15 per cent of its overall revenues from forestry products including shipments within Canada, to the U.S. and overseas.

The U.S. Lumber Coalition last week formally petitioned the American government to restore “fair trade” for softwood lumber. It’s seeking the imposition of duties and quotas to reduce lumber imports from Canada.

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