But that’s not all. On March 10, The Washington Post reported that momentum is building for another priority: a bill aimed at “countering China’s economic influence” with an array of investments to restore U.S. technology leadership, rebuild its supply chains, and improve industrial competitiveness. Although coming at a moment of spiking outcries regarding the treatment of Asian Americans at home, the new legislative discussion—and this commentary—speaks solely to the debate regarding China’s rising economic and geopolitical sway.
On first glance, a China-response bill—with its focus on international geopolitics and a faraway superpower—might seem like a shift away from President Joe Biden’s professed urgency about helping working families here in America. However, the emerging bill is emphatically not a shift of focus. Rather, it represents a serious effort to renew America’s economy by investing in the nation’s high-value, good-paying industrial economy, and so provide better livelihoods in more communities around the country.
China, after all, lies at the center of the U.S. advanced-industry competitiveness challenge, which has influenced so much of the nation’s pre-pandemic economic drift and division.
Between 1990 and 2007, surging Chinese import competition played a large role in “hollowing out” the U.S. economy both nationally and locally, as low-cost imports undercut American producers and drove massive declines in decent-paying U.S. manufacturing jobs, especially in the heartland.
At the same time, U.S. industrial slippage has been exacerbated by broader U.S. disinvestment, offshoring, and decline. Federal R&D expenditures—necessary for technology leadership—have slumped to levels lower as a share of the gross domestic product (GDP) than prior to the Soviet Union’s launch of the Sputnik satellite in 1957.
In the meantime, the U.S. has been running all-time-high trade deficits. The nation’s trade gap on electronic products hit $212 billion in 2019, while exporting only $18 billion in high-tech manufactured goods to China.
Such trends have been devastating for the nation’s economy and communities. Over the last 15 years, the share of U.S. employment in advanced industries has flatlined, meaning there are now relatively fewer of these good-paying, often accessible jobs.
What’s more, the presence of these critical industries—ranging from aerospace and chemicals to pharmaceuticals, software, and scientific research—has been dwindling in most American regions, contributing to stark regional imbalances. Fifty-eight of the nation’s 100 largest metropolitan areas have seen zero or negative employment growth in their advanced-industry sectors in the last decade, with most of those metro areas in the industrial Midwest and South. Since 1990, 71 of those metro areas have seen their concentration of advanced industries slip.
The result of this has been the slide of whole swaths of country into stagnation, with grave implications for the nation’s economic, social, and political health. At the economic end of the equation, such unhealthy trends are wasting talent, thinning regional supply chains, and depressing communities. In social terms, the current geographic imbalance contributes to inequality because it deprives millions of workers who live in the “wrong” places from quality advanced-sector employment in the “right” places. It also remains likely that the drift of these “left-behind” places has exacerbated the nation’s political divides.
All of which is why a response to China matters so much. Reclaiming shared prosperity—especially in the heartland—will require restoring the nation’s technological advantages in order to reduce U.S. weakness in the global economic competitions that are now harming so many communities.
For that reason, a variety of often bipartisan measures have either already been drafted or are being developed to complement legislation aimed at expanding federal R&D. For example, numerous Republican senators have co-sponsored bills with Democrats on a range of measures related to China, including shoring up U.S. supply chains, expanding production of semiconductors, and asserting U.S. leadership on 5G technology.
Central to the emerging package is a bipartisan bill that Sens. Chuck Schumer (D.-N.Y.) and Todd Young (R-Ind.) have introduced along with Reps. Ro Khanna (D-Calif.) and Mike Gallagher (R-Wis.) entitled the Endless Frontier Act. The bill proposes expanding the National Science Foundation into a renamed National Science and Technology Foundation and giving it $100 billion over five years to invest in technology research and testing. The bill also includes $10 billion to create 10 regional tech hubs that would position regions across the country to become global centers for the research, development, and commercialization of key emerging technologies.
Aimed at spreading tech growth into the heartland, these hubs pick up on ideas Robert D. Atkinson, Jacob Whiton, and I (as well as our colleagues Jonathan Gruber and Simon Johnson) have advanced on restoring the dynamism of up-and-coming inland metro areas. In that vein, the Endless Frontier Act, its tech hubs, and related measures represent an important recognition that rebuilding America’s strength abroad requires the nation to rebuild itself at home.
With that said, the emerging response to China isn’t perfect. For one, care needs to be taken to shape the many swirling potential topics—including R&D, 5G security, domestic semiconductor manufacturing, fair trade, and human rights—into a cohesive “mission.” Otherwise, the sheer number of these topics could turn any potential bill into a grab bag of disconnected reactions. Likewise, some leaders in the heartland worry that the national security framework of the bill could tilt the focus away from creating regional hubs and offsetting the “hollowing out” of the economy. On this front, the goal of speeding up the development of highly sophisticated emergent technologies could make it difficult for many noncoastal metro areas to benefit, since new investment funds could wind up flowing to the same coastal universities that are already dominant. For that reason, it is important for heartland lawmakers to insist on the regional focus of tech hub development.
Finally, it is critical that the any tech hubs program be both intentional and holistic in efforts to foster the emergence of prosperous new advanced-industry centers in America. If the goal is to create such new centers of inclusive growth, it will take more than injecting billions of dollars’ worth of R&D into selected universities. Lawmakers should therefore consider drawing into the Endless Frontier Act additional ideas from last year’s Innovation Centers Acceleration Act—an excellent parallel act sponsored by Sens. Chris Coons (D-Del.) and Dick Durbin (D-Ill.), as well as Reps. Joseph Morelle (D-N.Y.) and Terri Sewell (D-Ala.). Most notably, instigating the takeoff of advanced industries in heartland metro areas would be well served by adding in more provisions for complementing R&D with racial inclusion, workforce development, affordable housing, and high-quality placemaking.
In any event, the need to counter China’s rising global power now stands as an urgent prod to revitalize America’s drifting, uneven economy. Hopefully, the fear of falling behind will provide enough motivation to spur that work even in a hyper-partisan time.
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.
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.
