Canadian business leaders should “batten down the hatches” and get ready for the hurricane that the Trump presidency could bring to Canada and the global economy. In an exclusive interview, Canadian auto dealer interviewed the Canadian-American neo-conservative commentator about what he will discuss at his upcoming keynote at the CADA Summit on Feb. 15, 2017 in Toronto.
Frum, a former speechwriter for George W. Bush, says his talk will provide his business leader audience with “actionable information” based on his assessment of the likely impact of unified Republican control of the U.S. government under Trump — which hasn’t happened in peace times since the 1920s. This will result in “a new set of large possibilities” which will have good, bad and ugly consequences.
The Good: economic growth
“We are almost certainly going to see a big tax cut and a bigger deficit. I don’t think we will see a lot of spending restraint,” says Frum.
This stimulus will be applied to an economy that is already going reasonably strong. “The outlook is for a big takeoff in consumer demand, and with America being the locomotive of growth for a sluggish world.”
Frum also expects to see a reduction in the more burdensome regulations imposed during the Obama years.
The Bad: rising protectionism
Trade protectionist pressures will increase, but not just because Trump is a protectionist. Frum predicts the U.S. currency will continue to rise, putting additional pressure on U.S. manufacturers.
“There will be a lot of instability and unpredictability,” says Frum. “What will happen to the U.S. healthcare system? The Republicans have no plan.”
Corporations are already spooked by the prospects of Trump targeting them for attack, which Frum says he considers inappropriate behaviour for any President. “If a company hasn’t broken the law, then the President has no business criticizing a company. He should just be neutral. He is there to enforce the law, he’s not there to give colour commentary on every investment decision.”
For Frum, one of the big question marks is whether the U.S. economy can sustain expansion at a time of moderate unemployment, without leading to inflation. “Is inflation ahead? I’m going to talk a lot about that.”
The Ugly: Trump’s unpredictability
“With Trump you don’t only get policy uncertainty,” says Frum. “With Trump you have this X Factor and this is the real ugly part, of a highly unpredictable personality,” says Frum.
“Will there be scandal? What is really going on with Russia? Will America be consumed by its own inner demons over the next four years? That’s a real possibility,” says Frum.
Can Trump resist taking to Twitter to both attack and defend himself? “He’s not a highly-disciplined personality. Obviously. And he’s not going to have a highly disciplined communications strategy. That will be costly,” says Frum. “The Twitter thing is really bad. It’s bad in so many ways.”
Frum said the President’s voice is already very loud and has huge impact, and a responsible President “diminishes his voice.” Frum says a commentator can talk about the state of the stock market, for example, but when the President says something it can trigger global selloffs.
“The other possibility, is that over time people can tune you out,” says Frum. “Every word matters when you are President. The President’s words are actions. They should all be measured and weighed with extraordinary care.”
What advice does Frum have for Canadian business leaders?
“They can batten down their hatches. They can play for the long haul. They can respond to economic realities — rather than the daily headline,” says Frum. “Calculate the real risk of the pick up of interest rates and inflation, and be ready for a lot of policy uncertainty.”
Frum says business people don’t like uncertainty, but they had better expect it. “Be ready for more volatility. We are living in a world where if the President gets mad at a company, he will take to Twitter and insult the company and wipe off a billion dollars in stock market valuation,” says Frum. “It’s not a matter of whether you like it or don’t like it. If you are moving into hurricane season, prepare for hurricanes. It doesn’t mean you are pro- or anti-hurricane.”
Frum is a fixture on CNN and other U.S. television networks and doesn’t pull any punches or protect any sacred cows.
During the recent U.S. election, Frum very publicly broke from party ranks and voted for Hillary Clinton based partly on his assessment of Donald Trump.
Frum says he didn’t split from the party — he split from the candidate. “I have been a Republican longer than Donald Trump has. I am standing for things that are more integral to where the Republican Party has been.”
The CADA Summit is backed by an exclusive sponsorship from TD Auto Finance.
To register, visit: www.cadasummit.ca
The event is being held Feb. 15, 2017 at the Omni King Edward Hotel in Toronto.
The event always sells out, so sign up today!
