Germany and other ‘open economies’ also at risk, while countries like the US are less vulnerable in the longer-term.
For many years, Canada’s leaders, both in the political and business world, have repeatedly said Canada is a ‘trading nation.’
The term has become a self-fulfilling prophesy, as global trade has been opened up and our nation focused externally, even as inter-provincial trade barriers remain in place.
Of course, being a ‘trading nation’ is a choice, not an inevitability.
For example, it would be entirely possible (and wise) for Canada to impose tariffs on essential items, protect manufacturing and energy sector jobs, while eliminating inter-provincial trade barriers and cutting income taxes for working class and middle income people.
All of that would stimulate the domestic economy, encourage more trade within Canada, and reduce our reliance on foreign trade.
But that’s not the decision those in charge made.
Instead, even as taxes rise in Canada, our leaders obsessively seek more trade deals across the world, often at the expense of our sovereignty and self-sufficiency.
And now, amid a global economic collapse, Canada may pay the price for a long while.
According to an ING report, Canada is among the countries ‘with the most to lose,’ from the ongoing crisis:
“Germany and Canada are among the world’s major economies most exposed to coronavirus-related shocks because of their dependence on trade, according to a recent report published by analysts at ING Group.
The rapid spread of COVID-19 in the U.S. and the subsequent economic fallout could pose “significant problems” for Canada, the report said. Canada imported US$453 billion of goods such as cars, machinery and oil from the U.S. in 2019, according to data from the Geneva-based International Trade Center.”
Additionally, the report indicates “Open economies will suffer for a longer period of time from the supply and demand effects of the coronavirus,” the report said. “Even after the virus has been brought under control domestically, an open economy will continue to suffer from the virus because of falling demand in countries that are still struggling with the crisis.”
The U.S. economy will be somewhat more cushioned from trade shocks, the report said.”
Because trade is a smaller percentage of the US economy, also true for countries like India and Brazil, there could be less economic damage there in the long-term.
This should be a clear incentive for Canada to reduce our dependence on foreign trade over time. While some trade is beneficial, being dependent on it is not a good idea, and considering Canada’s abundance of resources, there is no need for us to be as dependent on trading with foreign countries as we currently are.
For example, we could easily ban foreign oil (with some exceptions for the US and Mexico), or impose massive tariffs on foreign oil, while directing those funds to support our energy industry workers and Canadian energy sector companies.
We could impose tariffs on foreign metals, medical goods, and key electronic components, while expanding those essential industries within Canada.
Those are all measures we could take, while still trading with other nations for luxury products and other items that are important, yet not essential to life.
This is the path we must take, or our economic weakness and vulnerability will deepen.