Fitch Ratings is warning that Canada could lose our AAA credit rating due to possible protectionist measures in the United States, as increased unpredictability and a potential slowdown in cross-border trade could damage our economy.
Adding to the problem are the large deficits being run-up by the Trudeau government.
As reported by Bloomberg, Fitch ratings says, “Countries hosting U.S. direct investment, at least part of which has financed export industries focused back on the U.S., are at risk of being singled out for punitive trade measures.”
Canada is among those nations with the highest amount of direct investment from America in the manufacturing sector. This puts us at significant risk.
Canada is already facing higher debt yields, meaning we are paying more to borrow the same amount of money. This makes running deficits even more expensive. This creates a serious problem, especially considering reports that the Trudeau government’s deficit spending is not helping grow the economy – and much of the money is being wasted.
Canada facing economic risks
Low growth, over-reliance on exports, and rising debt and deficits all put Canada’s economy at risk. Adding to all these issues, is the fact the government is planning a carbon tax that will make things even worse.
When you include the threat of US tariffs and reduced exports, it becomes clear that Canada is facing a tough economic road ahead.
Policy changes are clearly needed – including lower taxes to increase domestic demand. Unfortunately, our government seems committed to the failed policies of the past, and Canadians will pay the price.
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