Well, President Trump is at it again. This time he has launched an all out trade war with the second largest economy in the world — China. As of next week, virtually all of the imports from China to the States will be under increased or new tariffs. In turn, the Chinese will retaliate by placing new tariffs on American imports to that country worth billions of dollars.
What does this mean for Canada? The Bank of Canada predicts that the U.S.-China trade war will shave 0.8 percentage points off the Canada’s Gross Domestic Product (GDP). Already, various Canadian agricultural exports to China, such as granola and soy beans, are down or non-existent because of an extradition request by the Americans and subsequent arrest in Vancouver last December of the Chief Financial Officer Meng Wanzhou of Huawei Technologies Co. The decision to proceed with the extradition process sets in motion proceedings that could drag on for months and possibly years, inviting further retaliation measures by the Chinese government and costing Canadian suppliers billions of dollars. The American request has also resulted in the questionable arrest of Canadian citizens in China by its government.
As a result of the trade war, it is estimated that the U.S. itself could lose a full percentage point off its GDP, possibly costing some 1.5 million jobs. In turn, due to Canada’s close reliance on trade with its partner to the south, the Bank of Montreal predicts that some 150,000 Canadian jobs could be affected down the road by the resulting decline in economic activity between the two countries. In addition, the U.S. continues to refuse to eliminate the existing tariffs on steel and aluminum coming from Canada and Mexico. To date, U.S. refusal to do so has prevented both countries from ratifying the proposed new North American free-trade deal which would benefit all three countries.
Good political, defence, cultural and economic relationships between Canada and the U.S. are longstanding. Hundreds of thousands of Americans and Canadians work and live on both sides of the longest border in the world. Together, we have made a robust and viable North American economy, with 70 percent of Canada’s trade being with the U.S. However, this relationship has been damaged by the recent actions of Trump administration, although hopefully not beyond repair. Under the current circumstances, all one can do is reiterate that with friends like this, who needs enemies!
FROLITICKS 