Canada’s Handelsdiversification -Push will only be compensated in ‘partial compensation’ in US trade ‘in US trade’
The export from Canada to the United States has fallen considerably since the beginning of this year, which shows that it will be difficult for Canadian companies to completely replace American demand, although there has been a noticeable pick -up on the market to other markets.
Ryan Greer, Senior Vice-President Public Affairs and National Policy at Canadian manufacturers and exporters, said that this increase will “only partially compensate for the loss of trade in the US in the short to medium term”.
“Our member manufacturers are looking for new customers and some of them find them,” he said. “But we have to take into account that about two -thirds of what we produce and sell to the US are not completed consumer goods; these are intermediate goods, so the parts, ingredients and components used in American production processes.”
Although he has 15 free trade agreements with 51 countries, according to Royal Bank of Canada, almost 80 percent of all Canadian exports are sent to the US.
Between January and April of this year, Canadian exports to the US fell by 26 percent, according to tax and business consultancy Blick Rothenberg Ltd.
“The most dramatic and immediate impact of the rates of US President Donald Trump is a serious disruption of Canada’s export performance,” said Melissa Thomas, director at Blick Rothenberg.
She said that this fall in export “means one of the most important trade contractions in recent Canadian economic history.”
In January, trade between Canada and the US rose when companies tried to continue the inventory for Trump’s rate announcements. With a few exceptions, Greer said the majority of that inventory was sustained.
As it looks now, there is still a 50 percent levy on Canadian steel and aluminum, a rate of 25 percent on cars and a levying of 35 percent on goods that do not comply with the Canada-Mexico agreement (CUSMA).
But Greer said that even some manufacturers who are exempt from rates under Cusma start to see a decrease in demand from their American customers because of the uncertain trade policy environment.
“They have heard from an American customer who has been told by their parent company to try to just find something that they have bought from a Canadian supplier for many years,” he said. “To compete against potential trade or tariff changes, or future policy changes from the US administration in the short term.”
In June, exports to the US fell by 12.5 percent compared to a year ago, but exports to other countries rose by 14.7 percent.
In March, Export Development Canada launched his trade effect program to help Canadian exporting companies adapt to the new global trade environment. The Crown Corporation has focused on the program for two years.
Todd Winterhalt, senior vice-president of international markets at EDC, said that companies of all sizes were initially in a wait-and-see approach because they hoped that the rates would be resolved in the short term. But he said they have now received about 800 questions from exporters and investors who seek financial help from the EDC when running their companies.
“We have seen 18 signed transactions for around a quarter of a billion dollars,” he said.
Winterhalt said that EDC also had two million visits on its site this year when it comes to tariff-related and market diversification information products. He said that a pivot to other markets can be difficult for many companies and that dependence on the American market will be difficult to replace, but there are a number of possibilities in the European and Asian markets.
“For most countries in Europe and many of the most important emerging markets in the Indo-Pacific, we have trade agreements and there are already great relationships,” he said. “Canadian exporters and investors can really use this to speed up that process (trade diversification).”
Prime Minister Mark Carney has said that the Canadian industries can sell more in the domestic economy and has promised that he has given Canadian materials priority in large infrastructure projects and demolished interprovincial trade barriers.
“We will not be able to replace all American demand and how interconnected our production sector is by simply diversifying or by British Columbia companies that buy more at companies in Ontario,” Geer said. “All of this said, we think there is a lot of play in the Canadian economy around the total landscape of domestic policy.”
But in the end he said, “The only way to solve our US problem is to solve our US problem.”
• E -Mail: jgowling@postmedia.com
