Today's discussion:

Is Canada betting too much on the U.S.?

Canada is massively dependent on the U.S. as they are by far our largest trading partner. Canada should hedge its bets and more aggressively pursue trading arrangements with others. Instead of continuing to resist opening our highly protected and low-productivity sectors—like dairy—we should embrace as many markets as possible.

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Comments (10)

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The Hub Staff

Trevor Tombe contextualizes the relationship between Canada and U.S., and how dependent Canada is on its neighbour also being the country’s largest trading partner. What are your thoughts on the markets Canada should embrace? What do you think about this trade relationship?

8th February 2024 at 7:39 am
Paul Attics

Trade policy is complicated, even for those tasked to manage it across a nation with thirteen-plus jurisdictions and many many industries. In principle, however, trade decisions should be made based on what is best for Canadian citizens, including the fostering of a vibrant economy. This should be a given.

It seems that niche, although large, industries have captured the political class (regardless of party) that allow them to maintain chronic situations that are not in the best for Canadians or our economy (vehicle, mobility services, and dairy come to mind)…and this problem is repeated at the interprovincial level as well.

A recurring and important theme here at The Hub.

8th February 2024 at 7:37 am
Kim Morton

Our trade with the US is much like being a small business contracting to one large company. It is convenient , but can be disastrous when that company has a change of management, or marketing problems. We need to encourage trade with other countries if for no other reason than to keep the US from squeezing us on price, but shipping costs can be substantial, and we may be required to import things we don’t really need to to keep the export market open. I think we need to take a serious look at interprovincial trade barriers first, and our marketing boards, both of which add needless cost to consumers while doing little for productivity.

8th February 2024 at 8:58 am
Paul Attics

Being next to America is like being a small but prosperous business with one main, and very large, customer. It is great and should continue to be great but there is great existential risk (very low likelihood, catastrophic impact). The risk can only be somewhat mitigated by trading more with other nations. It should still be pursued. Opening our protected markets is likely a necessary part of this.

Joining the US as new states would be another effective risk mitigation, obviously not currently realistic in any way, nor would I support, but an option. It would certainly balance their electoral college distortions…

Other mitigations?

8th February 2024 at 7:41 am
Xiaoming Guo

Our problem is too close to the US and far away from heaven. Do we remember why we have Canada? Because we don’t want to be America. What did we do at that time? We built the Pacific Railway as our National Dream. Now we are divided and conquered. Our infrastructure runs north-south. The fastest route from Toronto to any city in the West, Regina, Calgary, Edmonton, Sasscachewn, or Vancouver, is through the US. It is sick that we would cross 3 or 4 states from Toronto to Winnipeg faster than driving within Canada, between the neighboring provinces. Not to mention the pipeline and hydrol grids. The Interprovincial trade has more obstacles than trading with the US by each province. We are a vassal state that provides resources and markets to the US.

8th February 2024 at 11:19 am
Steve

An important first step to diversifing trade is to do away with all tarriffs. Our industries need to be competitive with the world. Tarriff elimination gets rid of unproductive industies that are unable to adapt and lowers costs for the competitive. Focus on consumers, not producers.

8th February 2024 at 1:39 pm
Michael F

Years ago when I was graduating university I asked my favourite history professor where he thought the world was going in broad terms. He responded by saying the world would probably move to a series of trading blocs based on geography and politics. One such bloc would be the Americas. It makes sense for logistics etc. However it is probably not wise for us to rely on the US market so much and integration into the US economy for many reasons. The US has always been a neighbour and friend but at times they are a trade bully. It would be wise for Canada to enage in other trade relationships and agreements. Especially with emerging economies like Brazil and the Pacific Rim.

8th February 2024 at 11:58 am
Lauraine

Trevor, yes we are top heavy on the US but the solution is very complicated, one of which may be that we process more of our own resources into products needed in this world. Zwagstra is typical frasier material.

8th February 2024 at 12:47 pm
Stephen

Canada is blind in politics….. and political naivete abounds in Canada.

8th February 2024 at 7:24 pm
Alfred Napolitano

The problem is that we need to develop a lot more competitive goods and services to trade, not simply trade pacts. Trade pacts will not do enough. We need to shake off our socialist tendencies and embrace capitalism, competitiveness and gumption. We need a more adventurous banking sector, not one that we are proud about simply because they do not go broke. We need innovative and desirable products and services. That’s the way forward. Great products and services will allow us to control our destiny. But on the trade pact side, we certainly should not be held back by our dairy industry protections and other tariffs that hurt many more Canadians than they help.

8th February 2024 at 6:13 pm