If you’ve followed economics at all in recent years, you’ve probably heard a familiar lament: The central banks have done all they can in the absence of stimulus.

That refrain gets to the core of the monetary policy conundrum that’s plagued central bankers since the Global Financial Crisis. There’s a limit to what historically low interest rates can achieve if they’re not complemented by sustained, meaningful fiscal stimulus.

While extraordinary monetary policy has inflated rate-sensitive sectors, such as financials, real estate and utilities, it’s failed to lift economies as a whole. Instead of investing for growth, companies that were chastened by the downturn and uncertain about the future have chosen to hoard cash, repurchase shares, or find growth via acquisition rather than generate it organically.

Meanwhile, government efforts at stimulus have proved ham-handed, at best, and undemocratic, at worst, when they weren’t being sidelined in favor of austerity measures.

Although Canada is in the midst of implementing its own fiscal stimulus, policymakers up north still cast a hopeful eye toward their neighbor to the south. That’s because the U.S. is the destination for roughly three-quarters of Canada’s exports, which account for nearly a third of the country’s gross domestic product (GDP).

In other words, a vibrant U.S. economy would give Canada a big boost. But U.S. GDP growth has been largely underwhelming since the downturn.

While the U.S. economy has expanded by an average of 3.2% annually over the long term, it’s averaged a relatively sluggish 2.1% over the past five years. Looking ahead, growth is expected to more or less maintain the current pace through at least 2018.

Meanwhile, Canada is expected to see a modest acceleration off of last year’s cycle low. But don’t get too excited: GDP growth is projected to rise to 1.9% by 2018. Sure, we’ll take whatever improvement we can get, but that’s a far cry from the 2.5% growth that’s said to be the minimum threshold to remove excess slack from the economy. 

It’s tempting to believe that we’re just settling into the new mediocre that’s characteristic of mature, developed-world economies. But it wasn’t so long ago that both countries enjoyed consecutive years of GDP growth in excess of 3%.

The Stimulus Factor

However, Donald Trump’s ascendance to the presidency comes with the promise of fiscal stimulus that could provide the sort of growth shot that’s been sorely lacking.

While Trump’s proposed $1 trillion infrastructure plan has commanded the most attention, the details suggest that it could fall well short of that lofty target.

Even if that number ends up being reality, it can take at least a few years before such spending starts to reverberate throughout the economy, if not longer. Gone are the days when supposedly shovel-ready projects were truly shovel ready—there’s simply too much red tape at all levels.

Instead, corporate tax cuts seem to be the most likely form of stimulus to see swift implementation and perhaps yield the quickest effect. And certainly such tax cuts would be far more democratic than the cynically orchestrated boondoggles into which other forms of fiscal stimulus tend to disappear.

The question, of course, is whether U.S. businesses still have sufficient animal spirits left to redeploy such savings into growth.

After all, the extraordinary circumstances in which we’ve found ourselves for most of the period since 2000 have almost become ordinary. And that could skew decision-making even when circumstances finally change. Still, it never hurts for businesses to be able to allocate more of their own money as they see fit.

A more business friendly regulatory environment would also be a boon to industry, though like infrastructure spending, this could take a while to achieve its desired effect.

On the whole, corporate tax cuts and a less onerous regulatory regime should restore some lost mojo to the U.S. economy—and perhaps give Canada a boost as well.

The markets seem to think so, even though they’ve gotten a bit carried away. Since the election, the S&P 500 index has gained 5.5%, while the Canadian benchmark S&P/TSX Composite Index has climbed 4.3% on a price basis in U.S. dollar terms. Clearly, equity markets have gotten a bit of a Trump bump.

Yes, But …

Of course, there are also significant caveats. For one, a politician as unconventional as Trump might remove uncertainties in some areas, but create new uncertainties in others.

Even a president whose party will control all three branches of government does not enjoy unlimited political capital. So it will require an extremely disciplined legislative branch to move quickly on these goodies, given the propensity for distractions to emerge in the executive.

Outside of Washington, Trump’s very unpredictability could end up keeping the atmosphere of uncertainty alive for businesses, perhaps limiting the effect of proposed stimulus. After all, you never know when a populist president might single your company or industry out for a social-media thrashing.

Although Canadians can hope that the net effect of these policies will inject new vigor into the U.S. economy, there is one area that poses substantial risk: trade policy.

But when Trump criticizes longstanding trade deals such as NAFTA, he may be thinking more of Mexico than of the Great White North. As economists with CIBC note, that means there’s a possibility that Canada could gain market share at Mexico’s expense, if that country’s exporters are heavily penalized while Canadian firms are exempted.

Even so, there’s no certainty of that outcome. Meanwhile, near-term uncertainty about trade policy could stymie investment, even if such fears prove unwarranted.

Thankfully, equity markets don’t march in lockstep with the economy.