President Donald Trump speaks during an event at the White House to sign a new North American trade agreement with Canada and Mexico, in Washington on Jan. 29, 2020.Evan Vucci/The Associated Press
Todd Hirsch is a former bank economist and currently serves as the director of the Energy Transition Centre. Carlo Dade is director of the Trade and Investment Centre at the Canada West Foundation and a member of the Mexican Council on Foreign Relations.
In less than a year, the market that buys close to three-quarters of Canada’s exports heads to the polls. Whether Donald Trump is destined for prison or the presidency is an open question. But for now, the court of public-opinion polling has him in the White House rather than the jail house.
Given how much Canada depends on access to the U.S. market, and how much that access was harmed when Mr. Trump was in power, we must ensure we don’t get caught flat-footed again if history repeats.
Two-thirds of Canada’s GDP comes from foreign trade, three times more than for the United States. It’s how we earn money to pay for housing programs, social services and everything else. To paraphrase Manitoba Premier Wab Kinew, access to the U.S. market is the economic horse that pulls Canada’s social cart.
A Trump Presidency 2.0 is not the only impending danger to our livelihood. Elections in Mexico, whose President has been as bad as Mr. Trump, are also coming, as is a mandated review of the U.S.-Mexico-Canada Agreement on trade 18 months later. But Mr. Trump is the biggest factor, and he’s the factor that exacerbates all of the others.
Foreign Affairs Minister Mélanie Joly caused a stir in August when she said Canada had been considering a “game plan” for the aftermath of the next U.S. presidential election. Ms. Joly gave no details, but she’s not wrong to suggest we need a game plan. It’s time to start preparing.
This begins with understanding that, for all the chaos that seemed to stem from the lone Mr. Trump, the underlying shifts Canada faces aren’t idiosyncratic one-offs. They’re structural.
Despite decades of diversification talk, Canada has and will become even more dependent on our southern neighbour. The U.S. and Canadian governments have been pushing to reshore (or near-shore) economic activity back to North America as part of a long-term struggle with China. Security worries now almost completely trump economic concerns. Canada rushed toward China to diversify from the U.S., and then to India to diversify from China. Now both experiences have us rushing back to North America. Diversifying to other distant, more difficult markets is aspirational rhetoric, not real policy. We have to make North America our No. 1 priority.
In another shift, U.S. policy discourse is going from disrespectful to lethal. A candidate for the Republican presidential nomination on a televised debate called for a border wall with Canada. And his colleagues on stage (and the former president elsewhere) called for bombing Mexico. That candidates for an established party say these things lowers the bar, making it easier for these ideas to enter the mainstream and turn into policy. Mr. Trump’s earlier dabbling with tariffs has morphed into a promise to institute an across-the-board 10-per-cent tariff increase if re-elected.
There are practical things Canada could start doing now to prepare for and adjust to these structural shifts.
The first is to strengthen existing regulatory and administrative bodies such as the Canada-United States Regulatory Co-operation Council. It provides an administrative structure to align regulations on both sides of the border, which makes trade easier and gives a preference for business to trade in North America. Institutions with mandates and aligned regulations don’t disappear with the stroke of a pen and are a bulwark for a possible assault on trade between the two countries.
Secondly, we must pay utmost attention to the U.S.-Mexico-Canada Agreement. Presumably there is preparatory work taking place for its coming review; this could be bolstered by greater federal and provincial attention. It also means strengthening our relationship with Mexico. When it comes to reshoring, America has its eyes on Mexico, not Canada. If we want to remain relevant, we need to be loud and vocal at the table, and that means making the case in Mexico.
Next, we need all assets in play in the U.S. This means think tanks, business councils and academia on both sides of the border be activated, funded and co-ordinated to start flooding the field and playing offence. “Expert opinion” is under attack these days but it is still the one effective tool that we have. If done regionally and at the grassroots, instead of only from the capitals and coasts, this support can help local business leaders, economic managers and their employees stand against the loud fringes that oppose trade.
Here we also need the Western provinces to step up and do more. The Western premiers are the only ones in Canada not to meet annually with their U.S. counterparts. While premiers from the Atlantic provinces, Quebec and Ontario meet every summer, the Western premiers rarely attend the Western Governors’ Association annual meetings. If the U.S. shifts right, friends on the American prairies become more important.
We need to get serious about protecting our interests in the United States. This is a generational challenge requiring a generational response.
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.
