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OTTAWA – A new bank report says the protectionist policies of Donald Trump‘s U.S. administration could chop the rate of growth for Canada’s gross domestic product by as much as 1.5 percentage points.

The analysis by the National Bank Financial Markets says Trump’s arrival could be good for Canada’s energy sector because of plans to revive the Keystone XL pipeline.

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But any benefits there will likely be offset by big losses in exports, says the report, because of possible changes to the North American Free Trade Agreement and proposed new border taxes threatened by the new U.S. government.

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If the U.S. imposes a 10 per cent border adjustment tax on imports, it would result a nine per cent drop in Canadian exports, causing a 1.5 percentage point decline in GDP growth, the report adds.

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It singles out Ontario and New Brunswick as potentially facing the most significant impact, since growth in those two provinces has come mainly from exports to the U.S. and not internal trade with other regions of Canada.

The report suggests Trump adviser Stephen Schwarzman’s recent reassurances on NAFTA should not be taken at face value because the softwood lumber dispute might unleash a round of tit-for-tat tariffs.

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“The softwood lumber dispute may be like a litmus test for Canada-U.S. relations under Trump,” it says.

“How harsh the U.S. moves may give some idea about how hard-line America aims to be when renegotiating NAFTA.”