Chrystia Freeland, who marshalled Canada’s troops during the North American trade wars of 2017-19, revisited her greatest rhetorical hits when she returned to the field of battle last week, threatening to hit back if Donald Trump goes ahead with punitive duties on Canadian aluminum this weekend, which he surely will.
“We do not escalate, we do not back down,” Freeland, now the deputy prime minister,
said
(again) in front of cameras in Ottawa on Aug. 7.
The suggestion that an alleged surge in unwrought aluminum from the Canadian operations of global behemoths such as Alcoa Corp. and Rio Tinto Ltd. represents a threat to American security was “absurd,” just as it was when the United States targeted Canadian metal in the spring of 2018 on the same grounds.
“I think Canadians will agree with me, it’s very important to react,” Freeland said.
So here we go again. Prime Minister Justin Trudeau’s government might have turned the other cheek and left an industry dominated by a few massive corporations to fight its own battles. Instead, Trudeau took the bait. That means Canadian consumers will be punished with higher prices in order to “protect” exports that were worth some $609 million in June, or about 1.2 per cent of the $47.8 billion in goods and services that Canada sold abroad that month,
according to Statistics Canada’s most recent figures
.
If the deputy prime minister is comfortable going into this new fight with refried talking points, then I’m going to recycle some old columns. This Canadian doesn’t agree that it’s “very important” to react. We’re suffering from this tit-for-tat nonsense, all for the benefit of a few industries whose lobbying muscle exceeds their contribution to gross domestic product.
The tangle over revising the North American Free Trade Agreement was disappointing because Canada’s “wins” were scored by legacy interests, such as auto-parts manufacturing and milk production. That means that during negotiations, Freeland cashed her chits on economic engines that have probably maxed out, rather than insist on rules that might benefit sectors more closely aligned with the digital economy.
It’s fine that supply management was preserved, and that the makers of auto parts and their unions got much of what they wanted, but what advantages did companies such as Amazon.com Inc. and Facebook Inc. retain? We have little idea, because the Canadian political class put farmers and autoworkers ahead of everyone and everything else.
All the momentum in trade is in services, which represented 24 per cent of total trade in 2019, compared with 19 per cent in 1995, according to a
report
published this week by Western Union Business Solutions and Oxford Economics. Those numbers are based on official statistics, which tend to undervalue services because things such as research and development get wrapped up in the price of goods. The Western Union study estimates that services actually represent about 55 per cent of total trade.
The trend is the same in Canada. The value of commercial services exports surged to $6.8 billion in February, roughly equivalent to oil exports and greater than auto exports, according to Statistics Canada data. That was six months ago, before COVID-19 changed everything. There is no longer any contest. The recession hammered exports of every kind, but commercial services had recovered to 85 per cent of their February value in June, while oil shipments stood at thirty per cent of their worth at the start of the year.
“Services have been under the radar,” Roy Farah, head of North America at Western Union Business Solutions, said in an interview earlier this week. “To a certain degree, that’s a good thing,” he added, given the Trump administration’s tendency to harass exporters of tangible goods such as steel, automobiles, airplanes and wine.
Instead of getting bogged down in a new trade war over aluminum, we should focus on the future.
A friend of mine runs IMBA Medical Inc., an Ottawa-based developer of billing applications for physicians that realized its software could be rejigged to help hospitals, schools and other institutions manage all the new COVID-19 requirements. IMBA started cold calling U.S. school boards by the dozens and is starting to get traction. That is what trade looks like now. The Western Union study projects that global trade in services will increase 30 per cent by 2025.
Instead of getting bogged down in a new trade war over aluminum, we should focus on the future
Canada is good at the services game, but not great. Western Union and Oxford Economics identified Japan, South Korea, Australia, New Zealand, Saudi Arabia and the United Arab Emirates as “hot spots,” while the U.S. stands out because of its size and collection of world-beating companies. Canada and some other rich economies are in the second tier.
“It wouldn’t take much for Canada to get where Japan and the U.S. are,” Farah said. An emphasis on education and research and development is key. We’re strong on the former, while the latter is a matter of reallocating resources. Farah also noted that the cost of telecommunications here is “much higher” than in other countries. “This is having a big effect on technology readiness,” he said.
Fixing that problem will require a tough fight with the telecom oligopoly. The payoff would be far greater than another scrap with Trump over aluminum.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
