In a report released yesterday, CIBC's Chief Economist Avery Shenfeld warns that Canada faces "a major downside risk" if Donald Trump introduces corporate tax changes that are biased against imports.

In a negative scenario, Shenfeld suggests the Canadian dollar could come under pressure. "The shock to U.S.-bound exports would engender a much steeper slide in the Canadian dollar, well beyond 1.39 Canadian dollars per U.S. dollar we expect to see on monetary policy differentials," he says.

As Alberta climbs out of recession, CIBC predicts that Canada will record a 1.8% increase in real GDP this year and 2% in 2018. Much of this growth is expected to come from the energy sector, which should offset lower gains in housing and consumption as indebted households come to grips with higher inflation and tighter mortgage borrowing conditions.

Shenfeld also says he and his team are not entirely convinced that there will be any large-scale fiscal stimulus in the US, partly because Tea Party conservatives are likely to insist on spending cuts to pay for tax reductions.

"For corporate Canada, the instinct would be to judge a becalmed outlook as reason to eschew active hedging for now," says Shenfeld. "But the potential for a Trump in the night bump suggests looking for opportunities to hedge against a pullback in commodities, a weaker Canadian dollar, and a rise in long term rates."