The two overriding objectives of the Trump Presidency will be job creation and economic growth, and all policies – from defense to energy — will be required to meet them. Not all will succeed nor will they all be implemented given America’s fragmented and fractious political system. The centerpiece will be a $1-trillion infrastructure scheme that will include repairing and replacing the country decaying bridges, airports and buildings. But energy will play a major role.
The President-elect wants jobs for coal miners, Keystone XL and more pipelines, more fracking and exploration even on protected federal lands and offshore. He wants energy self-sufficiency to eliminate dependency on the Middle East and rogue nations such as Venezuela. That ambition will, and must include – Canadians hope – Canadian oil and natural gas. To facilitate, he will roll back environmental regulations and is being pressured by extremists to pull out of United Nation’s Paris Agreement and gut the Environmental Protection Agency (EPA).
However, the pushback from such draconian moves would be counter-productive and cause a firestorm both at home and abroad. And Trump is not an ideologue, but a pragmatist who routinely walks back and contradicts campaign talking points.
For instance, days after winning, he wavered on pulling the plug on the Paris Agreement and conceded there is “some connectivity” between human activity and climate change. (In 2012, he began tweeting out that climate change was a “hoax” invented by China.)
Such attention getting is key to gaining political power, but the fact is that Trump owns many beachfront properties in Florida, and around the world, where oceans rising steadily would cause beach erosion and force expensive counter measures.
Trump’s tough climate talk will also face legal and other obstacles. The U.S. Supreme Court has upheld the EPA’s ability to regulate pollution, and has also determined that, technically, the government must address greenhouse gases, if the best science says they’re a threat to public health. Tampering with the EPA’s integrity will invite massive amounts of litigation by environmental organizations and others.
“Trump’s tough climate talk will also face legal and other obstacles.”
Already, major corporations have sent a letter to Trump, calling themselves the 360+ group, urging him and all leaders to support the Paris Agreement and move to a low-carbon economy. These include DuPont, Gap, General Mills, Hewlett Packard, Hilton, Kellogg, Levi Strauss & Co., L’Oreal, Nike, Mars Incorporated, Schneider Electric, Starbucks and Unilever.
Major shifts aside, there are actions that Trump can unilaterally undertake on the energy and environmental front within his first 100 days in office.
He can approve Keystone; open up more land and offshore for exploration; roll back many environmental regulations and trim or cancel payments to the United Nations’ Green Climate Fund designed to help the poor control their emissions.
He can also trash NAFTA and other treaties, but this is complicated. Under NAFTA’s terms any participating nation can unilaterally serve six months’ written notice of withdrawal but he hasn’t done so. Alternatively, he could negotiate changes with Mexico and Canada, but these would also require Congressional approval.
More likely is that he will use his threat to withdraw to garner concessions from corporations, and neighboring countries. Trump has already stated that he was told by Ford Motor Co. that an auto parts plant in Kentucky slated to be moved to Mexico would remain stateside.
Another campaign pledge is that he will levy an “offshoring” tax on goods imported by U.S. companies from offshore factories. “We’re going to get Apple to build their damn computers and things in this country instead of in other countries,” he has promised.
This in its totality is impossible, but the very suggestion signals to energy companies or others doing business in the United States, that sourcing goods, people and services domestically should be priority. So pipeline steel must be sourced in the United States, not China.
While Trump’s grand energy schemes may be welcome to some within the industry, they may not work.
Coal jobs, for example, have disappeared mostly because widespread fracking since the mid-2000s has enabled the economic recovery of massive reserves of natural gas, and that has driven down prices. This trend will only increase under Trump policies.
Likewise, building and producing dramatically more oil in the United States and Canada could also drive world prices down further, a disincentive to corporations placing 50-year bets. So the irony is that this pro-energy President may end up bringing some bad news for oil and gas prices and coal growth prospects.
Trump has also sent out mixed messages on his support of Keystone XL.
“I want it built, but I want a piece of the profits,” he said in May to an audience in North Dakota. “That’s how we’re going to make our country rich again.”
That logic, applied elsewhere, is untenable and, if applied to all imports, would be ruinous for Americans who import or export. In Canada’s case, most of its exports to the United States are intercorporate transfers between United States parents and branch plant operations. And harming Canada is counter-productive because the country buys more from the United States than the reverse, even more than does the entire European Union.
The notion of “getting a piece of the action” is so preposterous that it is simply shrugged off in the business community. But even if the international trading system remains intact, the Trump regime will place pressure on companies doing business in the U.S. or with the U.S. to retain, repatriate and create American jobs.
What’s certain is that Donald Trump will replace norms and international diplomacy with the “Art of the Deal” or no-nonsense negotiating strategies. This involves using everything from seduction to threats, trash talk, anger, baiting, insults, shame, guilt, bullying, enticements and fear. This is precisely how he drove 16 other Republican primary candidates off the stage and how he intends to create jobs and economic growth for the United States.