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Historically, a Republican-led Senate could be expected to be less protectionist on trade, and under the same scenario might work to ease the U.S. steel and aluminum trade tariffs — although it did not stop President Trump in this regard, Porter said.
On the other hand, Porter projected that a Democrat-led Senate could approve larger fiscal stimulus, perhaps in the US$2 to US$3 trillion range, with plans for major spending on roads and airports and also incentives to build a green energy economy, which could create opportunities for Canadian companies.
Opinions varied on what a Republican-led Senate would endorse in terms of stimulus.
Avery Shenfeld, chief economist at CIBC, wrote on Wednesday, that House Democrats may decide to “move in the direction of a smaller, but politically feasible bill,” but predicted it could be in the range of US$1 trillion to US$1.5 trillion. That would fall as the compromise point between the low-end, US$500 billion that Senate Republicans suggested before the election, and the high end US$3 trillion House Democrats floated, he said.
Shenfeld also suggested that with the campaign over, the dynamics in the U.S. Senate may shift, and Republican leadership may be more willing to allow a larger stimulus bill to come up for a vote.
“Although the final Senate results are not yet known, the Republican’s ability to retain a major influence in that body means that political change on other issues is also likely to be less decisive, even if the White House changes hands,” he wrote. “So those looking at the election as a turning point on climate change, energy sector policy, financial services regulations, taxation and other issues that have impacts on individual equities or other assets, can count on seeing less dramatic change, if indeed any changes are in the wind.”
