How to emerge as the safest port of Canada in a storm of global trade

When the trade war began in February, Canada seemed to be one of the most difficult hits in the country by American tariff. But in the head-spinning instability in three months, again, again, the threats have expanded, Canada has interacted extensive discounts and economic figures have been conducted significantly well.

A new report of the Chief Economist of RBC Francis Donald and Associate Chief Economist Nathan Jenzen found that Canada is now facing the lowest average effective tariff of any major American trade partner.

“While the economic route of Canada is challenging ahead, it seems much less trustworthy than a few months ago – a legend that is still to allow the Canadian psyche,” he wrote.

RBC found that 86 percent of the Canadian businesses sent to the US last year will still be done on duty under today’s rules. In April, the US Census Bureau figures show about 90 percent of Canadian exports to the US, which remained duty-free in April.

The authors wrote, “The average effective tariff on American imports from Canada was 2.3 percent – compulsorily above zero in January – but the lowest in any major American business partner, the lowest,” the authors wrote.

Therefore, they say, Canada has emerged as the safest port in a global storm – for now.

Still some disadvantages

This is not to say that trade war is not suffering losses. it is. Some of that damage have shown in economic data.

Statistical Canada numbers released this week revealed that the biggest decline in manufacturing sales was seen in the years.

“The total manufacturing sales declined by 2.8 percent to $ 69.6 billion in April, the biggest month-month shortage since October 2023 and the lowest level shortage since January 2022,” said in a release on Friday.

The unemployment rate has continued its tireless climb, now at seven percent. Outside the Covid-19 epidemic, this is the highest since 2016. Unceively, both manufacturing drop-off and job loss are concentrated in business-sensitive areas such as Southwest Ontario.

But the RBC team writes that the Canadian economy has so far organized significantly well.

They say that when the trade war began in March, according to the consumer spirit surveys, confidence fell.

“But the actual expenditure does not match that scale of data weakness.”

Strength with two major fronts

Yes, employment has weakened, but job posting on job search sites like Abject.com has shown signs of stabilization.

Canada also gives strength to having a lot of wiggy rooms on two major fronts: fiscal and monetary policy.

Fiscal policy is government expenditure. The monetary policy refers to the interest rates set by the Bank of Canada.

The Central Bank aggressively cut rates last year. Its significant overnight borrowing rate has already come down 225 basis points (from five percent to 2.75 percent). Governor Tiff McCalem has now grabbed unchanged rates for three direct meetings as he is waiting to see more data, but Donald says the bank has a room as to what and when another decline in rates is warrant.

“We think the central bank is now at the end of its cutting cycle and does not expect further cuts. But, it is stable on the economic development background and labor markets,” Donald and Jennzen wrote.

On the fiscal front, they say that the federal government has posted high deficit in recent years. But the level of relative debt is the lowest in the developed world.

Tapping in fiscal capacity can help in some very important growth.

“Action on the Enterprinial Trade Barrier can pay long -term dividends to help support investment and productivity growth.”

They declare tax policy changes, loan programs and recent defense spending that may promote development through next year.

Canada may benefit from American separatism

But an important factor in Canadian development prospects actually stems from rising separatism in the United States. She says

https://www.youtube.com/watch?v=nouhfujmybo

“Canada’s resources – agriculture, energy and important minerals – are rapidly deployed to support the needs of the global economy, especially it wants to expand AI/data and defense spending,” Donald and Jenjen wrote.

He shift “represents a moment to invest in itself for Canada and meet this requirement.”

The RBC report does not reduce the very real dangers facing Canada, nor does this trade reduce the effect of war and all its uncertainty is already happening.

But it offers an honest recurrence where Canada is still standing and how much this situation has changed in three whiplash-upright months of global trade.