Why Trump's threats could give Canada a trade advantage it never sought

June 13, 2018

The head of the U.S. Federal Reserve may be the world's most powerful central banker, but U.S. President Donald Trump has put him in an awkward position.

And contrary to the president's promise to increase U.S. exports, if Fed chair Jerome Powell raises interest rates today — and markets are making a 100 per cent bet that he will — odds are he will make it harder to sell his country's goods abroad.

Meanwhile in Canada, Trump's latest tough trade talk is already giving us an international trade advantage as the U.S. dollar rises on world markets and the loonie falls.

Trade fears offer loonie advantage
There is every reason to think that if U.S. hostility continues, the spread between the two currencies could increase further.

But it's not the kind of advantage Canadians would have asked for. It would be a signal of an economy in trouble.

If our own central banker, Stephen Poloz, believes escalating threats of major trade disruption are more than talk, he would have every reason not to follow U.S. interest rates higher...

... with more than 70 per cent of our trade crossing what has been the world's longest undefended border, a serious and protracted trade war with our American cousins will have real economic consequences, and Poloz will be forced to take that into account...

Paying withering tariffs or finding new sources for those cross-border goods would be a long and expensive process not just for Canada, but for U.S. businesses all along the frontier...

This was written by Don Pittis for CBC News' June 13, 2018 edition.


Accessible to: 
Everyone
Topic(s): 
Rules of Origin & Trade Agreements / Trade Agreements
Information Source: 
Canadian News Channel
Document Type: 
Email Article