Trump has devoted the opening months of his presidency to blowing up the global economic order. Canada is getting harmed in the process.
If you like repeated stock market crashes that wipes out trillions of dollars in value, out of control inflation, layoffs across the board, increasing poverty levels, and the burning of economic bridges with other countries, then Trump has been one amazing president. After all, he has delivered on that economic mayhem and destruction in spades as he does everything in his power to blow up the American economy and Make America Broke Again.
For some analysts, the economic chaos that Trump has unleashed has meant that America is already in a recession thanks to the activities of the economic arsonist sitting in the White House. While many from outside of America may look at this reality with a great deal of schadenfreude (and, let’s face it, there are plenty of American’s who also share that emotion as it drives home the point, once gain, that Republican’s are terrible for America’s economy contrary to what the mainstream media in the US would have you believe), this economic vandalism by the president isn’t just isolated to the United States (however nice that would be).
There’s an old saying I’ve heard back in my day (and I don’t know how often it is said any more), and that is that “when America sneezes, Canada catches a cold”. There are, of course, variations of this verbiage, but the logic behind it is relatively straight forward. If something happens economically in the US, then Canada faces blowback as a result. If the US plunges into a recession, then often, Canada follows suit. Sometimes, Canada can do things to mitigate the damage and be in a less severe recession and, on a rare occasion, manage to avoid the technical definition of a recession by thin margins, but very often, where America goes, Canada ends up being dragged along both good and bad. Ultimately, it speaks to how close the ties are economically between the two countries.
All that still holds true today even though politicians in Canada are trying to figure out how to disassociate Canada’s economic dependencies from the US (something that should have happened decades ago, really, but “business as usual” attitudes and naval gazing at the problem got Canada into this mess in the first place). This by pushing for diversifying Canada’s trade to other countries like European countries. Making Canada more economically independent and not have all of our economic eggs in one American basket is obviously not going to happen overnight, but at least Trump committing economic suicide finally slapped some sense into our politicians on this matter.
For the short term, however, this reality is going to continue for a while. Indeed, with the US seemingly already in a Trump recession, that Trump recession is spreading across the border into Canada. Canada has no real economic defence against this. So, when I saw reports surfacing that shows that analysts are beginning to believe that Canada is already in a recession, it’s not at all surprising. The economic chaos in the US was going to spread across the border no matter what. It wasn’t a matter of “if”, but “when”.
The best that can be done by political leaders at this point is to figure out what can be done to mitigate the damage caused by Trump. After all, these warning signs have been around for quite a while. For instance, last month, BMO warned of this possibility:
Canada’s economy is bracing for a potential downturn as new U.S. tariffs threaten growth, investment, and employment.
That’s according to a recent report from BMO Economics which warns that trade uncertainty is already weighing on investment, with the Canadian economy particularly vulnerable due to its high reliance on exports.
“The shelf life of economic forecasts is now measured in days, even hours, due to the U.S. Administration’s unpredictable trade policies,” says report author Sal Guatieri , senior economist and director of economics at BMO Economics.
He further notes that uncertainty alone is affecting investment decisions, putting additional strain on businesses.
So, the writing has been on the wall for a while for Canada’s economic future. Not helping matters are the trade tariffs on computer chips and semiconductors. After all, technology is such an integral part of people’s daily lives these days. Having the critical components used to build such things, the prices of a heck of a lot of things are going to go up in this area alone. That’s only going to further increase economic strain in Canada.
