The Trump effect: what’s next for the Canadian economy? (Part 5)

How the new administration could affect the tech sector

Last month, Donald Trump was sworn into office as President of the United States. Richter has covered how the new administration’s policies may affect Canadian businesses, from the rise of cybersecurity awareness to the renegotiation of trade deals.

President Trump has been vocal about protecting U.S. companies from international competition: will this protectionist agenda affect Canadian tech companies? Chris Arsenault, Managing Partner at iNovia Capital, shares his thoughts and insights on what’s next for the Canadian tech sector.

Risks for Canadian tech companies

There is concern that the new administration could put in place strong border tariffs for technology services or equipment. Yet, for Mr. Arsenault, this is not a scenario that is likely to materialize. “It is a bit harder to impose tariffs in the tech world, simply because tech is an innovative force for every company and all countries. No country wants to stop or reduce the pace of innovation.” What may be likely, though, is an acceleration of programs to favour U.S.-based solutions. “This could make things more complicated for Canadian tech companies that do business south of the border,” comments Mr. Arsenault.

The need for adaptation

The uncertainty surrounding the economic environment in the U.S. should prompt Canadian companies to adopt an agile way to do business. According to Mr. Arsenault: “We need to be smarter and adjust our business development strategies in order to extend our reach and build stronger relationships with other countries, for example. We need to adapt to these new realities and understand the impact for Canadian entrepreneurs.”

This changing reality might prove beneficial in some areas, such as recruiting. “High-end international talent is definitely something a Canadian high-growth company looks for. Are we seeing more people applying in Canada? Yes, but we don’t know if it is merely a trend or if it represents a new reality,” explains Mr. Arsenault.

You can’t stop innovation

Regardless of the economic policies that will be put forth by the Trump administration, there are economic forces at work that are not likely to weaken. “A lot of the traditional jobs are already being replaced by automation and artificial intelligence, for reasons related to efficiency, costs and security. It’s hard to believe that this will change. You can’t stop innovation, and nor can Trump!”

The energy sector, for example, will continue to evolve even if Donald Trump supports traditional energy sources, such as coal and oil. “As far as renewable energy is concerned, we are probably living the decade of change. I think the U.S. will put a lot of efforts in figuring out more options for energy and will diversify their domestic options, as they have done in the past 15 years,” remarks Mr. Arsenault.

More unknowns than threats

Chris Arsenault has a clear message for Canadian technology companies: “You have to adapt to the new reality. There are more unknowns than threats, and it’s better to understand them in order to mitigate the risks. By being smart and competitive, you can take advantage of the current situation, build new relationships and attract high-quality talent.”

Learn more: What does the future of the TPP mean for your business?

Stay tuned for new posts in our The Trump Effect series. Missed a post? Read on here:

Post 1: Insights: The US Corporate Tax Code
Post 2: Should we really expect an influx of U.S. citizens in Canada?
Post 3: What does the future of TPP mean for your business?
Post 4: Is NAFTA next?
Post 5: How the new administration could affect the tech sector
Post 6: Cybersecurity: changes on the horizon

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About Richter : Founded in Montreal in 1926, Richter is a licensed public accounting firm that provides assurance, tax and wealth management services, as well as financial advisory services in the areas of organizational restructuring and insolvency, business valuation, corporate finance, litigation support, and forensic accounting. Our commitment to excellence, our in-depth understanding of financial issues and our practical problem-solving methods have positioned us as one of the most important independent accounting, organizational advisory and consulting firms in the country. Richter has offices in both Toronto and Montreal. Follow us on LinkedIn, Facebook, and Twitter.

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