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Policy Scholars, VCs Gather In Miami To Reboot The US Economy

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A recent panel discussion “The Geopolitics of Industrial Policy: All Carrot, No Stick?”at the Lincoln Reboot conference in Miami explored US national security and re-industrialization of the US economy. The group explored various definitions and iterations of industrial policy (government efforts to promote specific sectors of the economy) including its origin with Alexander Hamilton’s Report on the Subject of Manufactures (1791) advocated for the modernization of the American economy to break economic dependency on slavery in the South and supersede England in manufacturing.

Geoffrey Cain, Senior Fellow at Lincoln Network, author of The Perfect Police State referenced Vannevar Bush, co-founder of Raytheon, first tech policy advisor to a President (FDR), a progenitor of the Manhattan Project and the National Science Foundation. President Eisenhauer continued this with Apollo space program, interstate highways, and Cold War industrialization, important GOP policy strains which one can still see today. Another important US Big Science/Big Government project was ARPAnet.

This century’s industrial policy is networked, transdisciplinary, entrepreneurial, and international, though there were important entrepreneur scientists like the Intel founders Grove, Moore, and Noyce; Hewlett and Packard and so on. Today one thinks of computer giants like Steve Jobs, Elon Musk, Bill Gates, and Craig Venter with the human genome.

In the last half-century Democrats branded themselves as the party of science and tech and cited the government’s role to plan the technological economy, educate its students, and ensure employment for its workers (through unions). Republicans, on the other hand, have espoused a set of principles: freedom, property rights, and limited government. Notably the GOP advocated for simplification and reduction of taxes and incentives for investment and innovation. However the panelists showed how both parties have failed Americans on cybersecurity, making meaningful incentives to reshore chipmaking, and failing to provide an educational system to create America’s technological labor force

Semiconductors were a key topic of discussion, including the recent CHIPS and Science Act. The US once produced majority of the world’s chips. That has fallen to a single digit percentage today. While States announced new fab starts in New York (Micron), Arizona (TSMC), Ohio (Intel), Texas (Samsung), this level pales in comparison to what Taiwan, Singapore, South Korea, and Japan produce. Julius Krein, Editor of American Affairs, described a failure of bipartisan policy to achieve meaningful competition, and opined on whether venture capitalists could manage the chip investment better. Heritage Foundation tech policy fellow Dustin Carmack noted the failure of the Act to bolster security. US policy could hobble China in semiconductors but greenfield domains like AI, robotics, autonomous driving, supercomputing and the Metaverse are up for grabs.

A key critique of semiconductor policy is that allow US companies to sell the means of production to China, albeit with some restrictions. Far from decoupling, the US has increased interdependence with China for technology, eg Apple’s partnership with Chinese military fab YMTC, to say nothing of the most visited domain by Americans, TikTok.

Panelists explored whether states can do a better job. Florida governor Ron DeSantis’ Executive Order 22-216 prohibits Florida state and local government entities from procuring technology products and services from companies owned by, controlled by, or domiciled in China. Florida’s economy rivals the GDP of Mexico, and DeSantis’ simple but significant policy not to buy Chinese government products and services outperforms the efforts undertaken at the federal level with its piecemeal restrictions and systematic workarounds.

A penal on Florida vs. California debated how industrial policy is playing out today, as people and capital flee blue states for red states like Florida, Texas, and Arizona for enterprise and freedom from tax. The conference opened with wunderkind Miami Mayor Francis Suarez who detailed Miami’s transformation to the “capital of capital.” In recent years Miami has accrued more than $1 trillion in assets under management in addition to some $40 billion in direct investment in the city’s economy (whether from fintech entrepreneurs or Latin American immigrants who buy houses and set up accounts at the local Bank of America branch with certificates to transfer the value of gold held in banks in Peru).

The emerging Titanium Economy and its associated manufacturing renaissance across the US was billed as a solution, but sadly most federal policy makers fail to recognize its promise.

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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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