Close X
Friday, November 1, 2024
ADVT 
International

In 2017, Canadian Economy Will Get Its First Taste Of The Trump Era

Darpan News Desk The Canadian Press, 22 Dec, 2016 11:35 AM
  • In 2017, Canadian Economy Will Get Its First Taste Of The Trump Era
OTTAWA — The Canadian economy exits 2016 with bruises from the still-tough adjustment to weak crude prices and scars from the devastating wildfires that singed the oil patch.
 
It enters 2017 with lingering challenges and a potential new obstacle that could attract more attention than the rest: the economic unknowns of a Donald Trump presidency.
 
While it remains to be seen what will become of the U.S. president-elect's vows in areas like taxation, trade and investment, their implementation could have significant impacts for Canada.
 
Canadian policy-makers say they will closely follow developments after Trump takes office Jan. 20.
 
For now, decision-makers like federal Finance Minister Bill Morneau are reserving judgment on how changes would affect the country.
 
"Looking towards next year, the change in the U.S. will of course present us with a different economic environment — it's too early to have a clear view of the impacts," Morneau said in a recent interview.
 
"But what I can assure you ... is that we're working to understand the new administration's economic policies and to present how we can work together with them to enhance their growth and our growth; because our view is that we do better if we are open to helping others."
 
For example, Trump has vowed to drop the tax rate for top-income earners by six per cent and by three per cent for middle-income earners. 
 
He promised to bring the U.S. corporate rate, one of the highest in the world, down to 15 per cent from 39 per cent. Such a cut would make the U.S. corporate rate far lower than the average effective rate in Canada, where it's about 26 per cent when federal and provincial rates are combined.
 
Prime Minister Justin Trudeau was asked in a recent roundtable interview with The Canadian Press about the potential impact of Trump's promised tax cuts on Canada's efforts to bring in foreign investment dollars.
 
"Let's not respond too much to hypotheticals," Trudeau said.
 
"Obviously, you have to be thoughtful about potential paths, but I'm not going to react to an administration that's not actually in place yet."
 
Trudeau said while taxes are always a consideration, he argued that Canada is attractive to investors for other reasons, including its well-educated workforce, openness to immigration and stability.  
 
University of Calgary tax-policy expert Jack Mintz has said Canada's ability to lure business investment and top talent would be threatened if the U.S. moves ahead with Trump's vows to significantly cut tax rates for U.S. corporations and for the highest income earners.
 
Trump has also made it clear he wants Buy American rules in his planned $1-trillion infrastructure program, which could leave out Canadian companies.
 
To add to the unknowns for Canada, Trump has called for the renegotiation of the North American Free Trade Agreement.
 
But some experts say the expectations of Trump's business-friendly promises are poised to lift the U.S. economy, which would help Canada.
 
Dan North, a senior economist for financial services firm Euler Hermes North America, said U.S. business confidence has climbed since the election, in large part due to the prospect of corporate tax reductions. As a result, North said his company bumped up its 2017 U.S. growth projection to 2.4 per cent from 2.1 per cent. 
 
"We have a fair amount of confidence that we're looking at a pretty solid year in the U.S. next year, which of course should translate into higher demand for Canadian exports," North said.
 
Former Bank of Canada governor David Dodge agreed in a recent interview that he expected faster post-election growth in the U.S. to be a positive for the Canadian economy over the short term.
 
Over the medium and longer term, however, Dodge thinks Canada could struggle in areas like trade, attracting investment and, in particular, tax competitiveness.
 
"It's an enormous challenge, I think, for Ottawa," he said.
 
"It is a very unfortunate problem that the minister of finance will have to deal with."
 
In 2017, the central bank will remain focused on whether Canada's disappointing export performance can show real signs of life, current governor Stephen Poloz said earlier this month, during his final news conference of 2016. 
 
Poloz said the bank will also look for the economy to continue to adjust to the sting of low oil prices and for the expected pickup in U.S. growth.
 
When asked, he declined to discuss what new policies might be introduced in the U.S. and how they could affect Canada. He did, however, say that uncertainty among companies expanded during the election campaign and he believes that sentiment remains "undiminished."
 
Still, after what Poloz called a "challenging year" in 2016, he sounded cautiously optimistic for 2017.
 
"We have enough confidence that we're on track, but we need to continue to monitor that," he said. "Of course, the economy and the world economy have shown the capacity to disappoint in the past."

MORE International ARTICLES

Shashi Tharoor's Home Robbed, 'Swachh Bharat' Award Among Stolen Items

Congress leader and Lok Sabha MP Shashi Tharoor's house in the posh Lutyens area here was burgled and valuables including an "antique Nataraja idol" have been stolen, police said today.

Shashi Tharoor's Home Robbed, 'Swachh Bharat' Award Among Stolen Items

Indian Spiritual Guru's Birthday Cake Sets Guinness Record in US

Indian Spiritual Guru's Birthday Cake Sets Guinness Record in US
A new Guinness World Record has been set in the US for most candles on a birthday cake - where a staggering 72,585 candles were lit on the occasion of late Indian spiritual leader Sri Chinmoy's 85th birth anniversary.

Indian Spiritual Guru's Birthday Cake Sets Guinness Record in US

Pak Court Warns Nawaz Sharif On Plea Challenging His 'Knighthood'

Pakistan Prime Minister Nawaz Sharif has been warned by a court after his counsel sought repeated adjournments in submitting a reply on a plea challenging the honourary 'knighthood' title given to him by Queen Elizabeth II.

Pak Court Warns Nawaz Sharif On Plea Challenging His 'Knighthood'

UK Lawmaker Calls On India To End Demonetisation Stress For NRIs

UK Lawmaker Calls On India To End Demonetisation Stress For NRIs
Britain's longest serving Indian-origin MP Virendra Sharma has called the Indian government to end the uncertainty surrounding demonetisation of Rs. 500 and Rs. 1,000 notes for NRIs and PIOs.

UK Lawmaker Calls On India To End Demonetisation Stress For NRIs

PIA Aircraft Crashes Enroute To Islamabad, No Survivors, Singer Junaid Jamshed Dead

PIA Aircraft Crashes Enroute To Islamabad, No Survivors, Singer Junaid Jamshed Dead
Pakistan International Airlines (PIA) said PK 661 lost contact with the control tower en route to the capital, Islamabad, from the northern region of Chitral.

PIA Aircraft Crashes Enroute To Islamabad, No Survivors, Singer Junaid Jamshed Dead

Woman Sentenced To 1 Year In Jail For Impersonating Ex-boyfriend On Facebook, Sending Herself Threat

Woman Sentenced To 1 Year In Jail For Impersonating Ex-boyfriend On Facebook, Sending Herself Threat
The Orange County District Attorney’s Office said in a statement Stephani Renae Lawson, 25, allegedly created a Facebook account impersonating her ex-boyfriend, using it to send numerous threats to her own account.

Woman Sentenced To 1 Year In Jail For Impersonating Ex-boyfriend On Facebook, Sending Herself Threat