OTTAWA: Canadian exporters are scrambling to find ways to avoid a potential 10 per cent import tax promised by U.S. President-elect Donald Trump, including the possible shifting of production or supply lines south of the border. Amid warnings from the Bank of Canada that protectionist policies brought in by Trump could drive companies to invest in the United States rather than Canada, executives said their search for options has already begun.
Canadian exporters are not alone, with global business leaders talking up the benefits of local production to shield themselves from criticism from Trump, who was sworn in as president last Friday. “We’re a Canadian company, we like to build things in Canada and export them … but you can’t sell stuff and not make money,” said Jim Rakievich, chief executive of Edmonton-based McCoy Global, which makes oil and gas industry equipment. We could move our production down into the U.S. fairly quickly, we could absorb that production (in our U.S. plants) if we had to.”
National Bank Financial estimated a 10 per cent border tax could cause Canada’s total goods exports to the United States to drop by about 9 per cent, with non-petroleum goods sinking almost 11 per cent. Exports are expected to drive about a third of Canada’s economic growth in 2017, behind only consumption and government spending, according to the Bank of Canada’s forecast this week. The United States is Canada’s largest export market with about 74 per cent of all goods heading south. Canadian companies with U.S. affiliates may be best placed to weather a shift in tariffs, if they can shift production or investment to their U.S. plants to avoid an import tax. Foreign affiliate sales to the United States rose to $298.4 billion in 2014, the latest year for which data is available, from $285.8 billion in 2013, according to Export Development Canada.
