How U.S. protectionism is helping to boost Canada’s economy
Published by CME Manitoba on April 07, 2017
By Chris Kauenhofen, CPA, Partner, BDO
It’s been an interesting year politically, with the UK voting in favour of Brexit and Donald Trump taking office south of the border. So much volatility has proven to be puzzling for Canadian exporters and manufacturers, who are struggling to navigate such a rapidly changing trade economy. If President Trump moves ahead on his campaign promise to create policies that focus first and foremost on American interests, how will that impact global trade? What these policies will look like and how they’ll play out remains to be seen, but as the uncertainty surrounding his “America First” approach grows, it appears to be helping Canada become a more attractive investment amongst global investors.
Under the Trump administration, the U.S. has already pulled out of the Trans-Pacific Partnership (TPP), threatened to leave NAFTA, and appears reluctant to negotiate with Europe. Canada, on the other hand, has taken the opposite approach and is focusing on building stronger trade relationships. We’ve signed the TPP and enjoy a robust free trade agreement with Europe. Our leaders are interested in enhancing NAFTA and are looking to help Canadian businesses capitalize on opportunities that are emerging as a result of booming middle-class populations in China and India.
“Globally, the situation is volatile,” said Mike Gillespie, partner and National Manufacturing Leader at BDO Canada. “Trade challenges are intermingled with geopolitical challenges to a higher degree than at any time in recent memory. Canadian manufacturers and exporters are wise to avoid volatility in this regard, regardless of the opportunities.”
While avoiding volatility is important, maintaining our relative stability is another quality that will help Canada continue to catch the eye of global investors. Though Canada has always been a good alternative to the U.S. for multinational investment, our stable political climate, strong finance, healthcare and education systems offer peace of mind to investors concerned about the rising volatility south of the border. And while the 2017 Federal Budget was less dramatic than many predicted, it did leave Canada’s corporate tax rate untouched, which should create even more benefits for Canada on a global scale.
“The government did not want to overplay its hand,” says John Wonfor, partner and Global Head of Tax with BDO Canada. “That caution may help Canada become even more attractive for foreign investment.”
While it’s still unclear exactly what the Trump administration will do and what consequences their policies might have on the global economy, it appears that brighter skies are ahead for the Canadian economy as we continue to make the most of the precariousness brought about by the “America First” mentality.
For more information on this topics please visit www.bdo.ca
About the author
Chris Kauenhofen is a partner with BDO Canada’s Winnipeg office, providing advice to entrepreneurial-minded businesses. He is an assurance specialist and has planned, managed and supervised numerous small and medium enterprises and not-for-profit assurance engagements. Chris also has extensive experience working with owner-managed businesses, and agricultural, manufacturing and non-profit organizations.
Found in: US Business