Trump may scare off new investment in Canada, says manufacturing group
The Canadian PressGeneral Manufacturing Trump
CME leader says U.S. president's focus on manufacturing investment will “cause massive problems for the economy in Canada."
Mathew Wilson, senior vice president of Canadian Manufacturers and Exporters, said the federal government needs to do more to attract investors because many companies – including long established, wholly-owned Canadian operations – are actively eyeing the U.S. as their base of future operations.
“I can’t see any major corporation wanting to be the subject of a Twitter feed,” Wilson said in an interview. “He (Trump) has shown that he will use his voice as loudly as possible to drive investment to the U.S.”
Wilson said he is seeing a “chilling effect” on investment outside the U.S. as companies from across Canada approach him with a frank warning.
“If the U.S. is going to reduce the cost of doing business and make it easier to do business, and they’re going to be protectionist and our primary market is already the U.S., then maybe we should be looking at moving our operations.”
He said Trump’s “laser focus” on increasing investment in manufacturing “is going to cause massive problems for the economy in Canada.”
Wilson wouldn’t name the names or companies doing the inquiring, but he said they run the gamut, from large corporations with operations in the U.S. to small, wholly-owned Canadian firms with no U.S. footprint.
All are paying attention to Trump’s every utterance, and are trying to assess risk accordingly, said Wilson.
That assessment comes as a new bank report warned Monday that Trump’s protectionist policies could chop the growth rate of Canada’s gross domestic product by 1.5 percentage points.
While Trump could be good for Canada’s energy sector because of plans to revive the Keystone XL pipeline, any benefits will likely be offset by big losses in exports, the National Bank Financial Markets analysis says.
That’s because of possible changes to the North American Free Trade Agreement and proposed new border taxes threatened by the new U.S. government.
“Should policy-makers fail to reach an agreement to exempt Canada from upcoming U.S. trade barriers, Canada’s exports and hence economic growth would take a significant hit.”
If the U.S. imposes a 10 per cent border adjustment tax on imports, it would result a nine per cent drop in Canadian exports, causing a 1.5 percentage point decline in GDP growth, the report notes.
It singles out Ontario and New Brunswick as potentially facing the most significant impact, since growth in those two provinces has come mainly from exports to the U.S. and not internal trade with other regions of Canada.
The report suggests Trump adviser Stephen Schwarzman’s recent reassurances on NAFTA should not be taken at face value because the softwood lumber dispute might unleash a round of tit-for-tat tariffs.
“The softwood lumber dispute may be like a litmus test for Canada-U.S. relations under Trump,” it says.
“How harsh the U.S. moves may give some idea about how hard-line America aims to be when renegotiating NAFTA.”