Well it’s nail biting time as NAFTA negotiations head into extra innings. The economic risk from this is real and a function of Canada’s unwillingness or inability to diversify its economic dependency on the US. This can be done, evidenced by South Korea which is also a highly tradedependent nation, but one that has foreign markets for its products around the world, not just America. So with this reality staring Canadian trade negotiators in the face, what will a revamped NAFTA look like for Canada. No one knows at this this point, but it will undoubtedly be worse for Canada after, slowing economic growth and lowering standards of living for Canadians going forward. https://www.theglobeandmail.com/business/article-rates-currency-nafta-talksserve-as-risks-to-canadian-economy/
How should Canada respond? Not with retaliatory tariffs which would only further hurt our economy, but by doing what it should have always been doing since Confederation -pursuing pro-business policies domestically which will make Canada an attractive place for companies to locate. Dismantling interprovincial barriers to trade (I find it ironic and incredible that we’re negotiating a free trade agreement with the US, when we don’t have one here at home), passing legislation that ensures pipelines get built (our #1 export), significantly lowering marginal tax rates and encouraging entrepreneurialism through business-friendly policies.
Of course all of these recommendations are an anathema to Liberal governments, who have and continue to do exactly the opposite. We can’t do much about the Americans, but we can do things that will stimulate Canadian economic growth while we wait for a change in government south of the border. It should be pointed out that the previous Democrat-led government under Obama was no friend of Canada either, holding up Keystone II under the guise of environmentalism, when in fact it was all about economics. Bottom line, let’s get our own house in order and then go back to the bargaining table with a clearly articulated message: Canada is back -in business that is.
Hope everyone had a great summer!