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Germany Says Failure to Back Ukraine Aid Could Hurt US Economy – BNN Bloomberg

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(Bloomberg) — German Defense Minister Boris Pistorius urged US lawmakers to approve additional military aid for Ukraine stalled in Congress, warning that failure to do so could damage America’s economic interests.

As well as potentially hindering security cooperation and harming US defense contractors, Kremlin aggression if left unchallenged could also weaken Europe more broadly and disrupt the bloc’s trading relationship with the world’s biggest economy, Pistorius said in an interview Saturday at the Munich Security Conference.

“One aspect among many others of our transatlantic cooperation is that we signed hundreds of contracts worth billions of dollars and we are about to prepare new contracts,” he added. “It’s obvious that the alliance for security brings many advantages — for both sides.”

German Chancellor Olaf Scholz and other western leaders have mostly focused on political and strategic arguments in justifying their calls for additional US military aid for Ukraine.

Now Pistorius — a member of Scholz’s Social Democratic Party — is striking a different tone by highlighting potential pain for America’s defense contractors if more US support fails to materialize.

Germany is increasingly concerned about such a scenario. Attempts to unlock the latest aid package worth more than $60 billion have been stuck for months, prompting increasingly urgent appeals from Ukrainian President Volodymyr Zelenskiy as supplies of ammunition and other materiel dwindle.

Read More: Biden Says Ukrainian City’s Fall Shows Cost of US Aid Delays

Those concerns were fueled by comments last week from former US President Donald Trump, who questioned the nation’s commitment to defend NATO allies.

President Joe Biden on Saturday blamed lawmakers’ failure to approve the aid package for the fall of Avdiivka, which handed Russia a significant victory after months of fighting over the eastern city.

Germany is ramping up defense spending following Russia’s full-scale invasion of Ukraine and a significant proportion of the investments from a debt-financed €100 billion ($108 billion) special fund are flowing to the US defense industry.

Among a raft of orders worth some €30 billion, Scholz’s government has earmarked €10 billion for 35 F-35A Lightning fighter jets manufactured by Lockheed Martin Corp. and is also buying 60 Chinook helicopters from Boeing Co. for about €8 billion.

Pistorius warned of the consequences of a Ukrainian defeat, not only for Europe but also for the US, saying Russian President Vladimir Putin’s invasion was a threat to the “rules-based international order.”

“Geographically, Europe is far away from Iowa or Wisconsin, but still it’s very close in terms of security policy,” he told Bloomberg. “Less security in Europe means less security for the United States,” he added. “We shouldn’t take freedom for granted. We have to defend it. We have to fight for it if necessary.”

Germany has been pushing its European neighbors to deliver more weapons to Ukraine and Pistorius said that he has seen evidence of commitments picking up.

Read More: Scholz Urges European Allies to Increase Aid for Ukraine

“The UK is also doing more and more and also France is increasing its support,” he said. “I’m absolutely confident that we will be able to achieve a lot of support during the months and years to come. But of course it’s not easy. Money is not limitless.”

French president Emmanuel Macron on Friday pledged additional assistance worth as much as €3 billion for this year after signing a bilateral security agreement with Zelenskiy in Paris.

Earlier in the day, Zelenskiy had signed a similar agreement in Berlin, where Scholz unveiled a new €1.1 billion package of air-defense and artillery systems, part of total a German commitment of around €28 billion.

Pistorius told delegates in Munich on Saturday that a commitment by NATO members to spend at least 2% of economic output on defense “can only be the starting point” and European nations need more capable armed forces as they expand their engagement around the globe.

After hitting the target this year for the first time, Germany could even increase military spending to as much as 3.5% of GDP, depending on “what’s happening in the world and in our economy,” Pistorius said during a panel discussion. He cautioned that budget constraints mean it will be challenging to find the money once the special fund is exhausted after 2027.

German defense contractors are also benefiting from the surge in government spending. Scholz and Pistorius last week took part in a groundbreaking ceremony for an expanded Rheinmetall AG ammunition facility in Unterluess in Lower Saxony.

“I consider it a remarkable and almost historic achievement of our government that Germany is now the biggest supporter of Ukraine after the USA,” Rheinmetall Chief Executive Officer Armin Papperger said at the event. “ Our country has thus assumed the leading role in Europe that many have always called for.”

In the Bloomberg interview Saturday, Pistorius urged Europe and the NATO defense alliance to prepare for “the worst case scenario.”

“I don’t like to look into the crystal ball,” he said. “I can’t predict if and when an attack on NATO territory might occur. But it could happen in five to eight years.”

–With assistance from Laura Alviž.

©2024 Bloomberg L.P.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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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.

The Canadian Press. All rights reserved.

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September merchandise trade deficit narrows to $1.3 billion: Statistics Canada

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OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.

The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.

Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.

Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.

Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.

In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.

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Economy

How will the U.S. election impact the Canadian economy? – BNN Bloomberg

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How will the U.S. election impact the Canadian economy?  BNN Bloomberg



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