What's our Trump effect?

Concerns I raised Nov. 10 about the effect Donald Trump would have on Canada are even more concerning today.

In the Nov. 10 MP report, I speculated, among other things, that the Keystone XL pipeline approval was a strong possibility while the likelihood of seeing a national carbon tax in the United States was not. 

Given the recent inauguration of Trump, there is certainly a new level of concern for what this will mean to Canada, in particular to the many small business owners who depend upon, directly or indirectly, free trade with the United States.

We can only speculate what will happen, however, there is a pattern emerging to what direction the Trump administration is heading in trade renegotiations.

What is that pattern?

It appears those countries that most enjoy a trade surplus at the expense of the United States are potentially being targeted.

Mexico, as one example, currently enjoys a $60-billion trade surplus and already manufacturers such as Ford have announced they will abandon planned investment there and instead bring some of those dollars back into the United States.

While many around the world see this as protectionism across the border, it is viewed as nationalism in an effort to increase well-paying U.S. manufacturing jobs in the auto sector.

We should not overlook that here in Canada our Federal Liberal Government also just secured a major investment with Honda for upgrades to an automobile plant in Ontario.

The primary difference in approach is in Canada over $80 million was offered to Honda in joint Federal and Provincial corporate subsidies whereas in the United States, the Trump administration threatened an import tax to achieve a similar outcome.

China is suggested to also be a potential target of the Trump administration considering it currently enjoys a trade surplus of close to $370 billion with the United States.

The primary concern expressed from the Trump administration is manufacturers taking advantage of lower labour costs to move jobs outside of the United States into countries such as China.

Although seldom reported, this is not a new concern for the United States. Under the former Obama administration, the United States filed some 16 World Trade Organization complaints against China alleging unfair trade practices.

The Trump administration has suggested further increasing tariffs potentially as high as 45 per cent to encourage manufacturing investment to remain in the United States.

The Trudeau Liberal Government by contrast has expressed interest in going in a different direction by potentially establishing a free trade relationship with China, which currently enjoys an annual trade surplus over Canada of roughly $46 billion.

So where does this leave Canada with the United States?

From a trade perspective, Canada and the U.S. have a far more balanced relationship.

In 2015 Canada enjoyed a trade goods surplus of $15 billion, however, an offsetting trade deficit on services at $27 billion meant that overall the United States had a total trade surplus of $12 billion.

When one considers the total value of trade in goods and services between Canada and United States is over $660 billion, it is clear this relationship is overall working well for both countries. 

Likewise in Canada, there is typically no significant labour savings in manufacturing when compared to the United States.

Generally, lower corporate and small business taxes along with the preferable exchange rate have been Canada’s leading assets for attracting investment.

The Trump administration is not unaware of these factors and has committed to lowering U.S. corporate taxes to levels similar to here in Canada.

What is of concern is that Canada is increasing payroll costs through expanded CPP and implementing a national carbon tax — both increase costs that a competitor in the United States would not have to swallow.

I am more concerned that Canada will make itself less competitive for investment and harm jobs that will benefit other countries. It should also not be overlooked that many countries that enjoy a large trade surplus are not implementing carbon taxes or other cost increases onto employers.

Here in Canada, investment continues to decline while net new jobs are not increasing. Let us all hope this trend will start to be reversed in 2017.

As always, I welcome your comments, questions and concerns and can be reached at [email protected] or toll free at 1-800-665-8711.


Comments are pre-moderated to ensure they meet our guidelines. Approval times will vary. Keep it civil, and stay on topic. If you see an inappropriate comment, please use the ‘flag’ feature. Comments are the opinions of the comment writer, not of Castanet. Comments remain open for one day after a story is published and are closed on weekends. Visit Castanet’s Forums to start or join a discussion about this story.

More Dan in Ottawa articles

About the Author

Dan Albas, Conservative member of Parliament for the riding of Central Okanagan-Similkameen-Nicola, is the shadow minister of innovation, science, economic development and internal trade, and sits on the standing committee on finance.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best.

In British Columbia, Dan has been consistently one of the lowest spending MPs on office and administration related costs despite operating two offices to better serve local constituents.

Dan is consistently recognized as one of Canada’s top 10 most active members of Parliament on Twitter (@danalbas) and continues to write a weekly column published in many local newspapers and on this website.

He can be reached at [email protected] or call toll free at 1-800-665-8711.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories