MNI INTERVIEW: Trump Risks North American Recession- NS FinMin
MNI (KENTVILLE, NOVA SCOTIA) - The U.S. risks driving itself into recession with a tariff war alongside Canada and Mexico, Nova Scotia province’s finance minister told MNI, though he added the pain could lead to a restructuring of Canada’s economy including greater energy connections between the country’s east and west.
“I don't think that we will have a recession alone in this circumstance, I think that this will be self-imposed," John Lohr told MNI in his constituency office in Kentville. "If there is a recession, I think it will affect both nations and possibly Mexico as well. Is North America vulnerable to the recession? Yes.”
Lobster, Christmas tree and Michelin tire shipments from the province are hurt by tariff threats, according to Lohr. His Progressive Conservatives grew their majority government in a snap election focused on Donald Trump's threats and since created a CAD200 million contingency fund.
“The uncertainty itself has been very damaging,” Lohr said. "If more than CAD200 million is needed, we've said we're willing to do that. So we're very committed to protecting our own industries and seeing our own businesses thrive.” (See: MNI: Canada Must Spend On Tariff Fight, New Markets-Farmers)
TURNING INWARD
The province on Canada's Atlantic coast faces a double hit, with China recently imposing tariffs on seafood. China's move came in response to U.S. demands for Canada to match levies on Chinese auto products. Lohr said given his province's auto connections he respects why Canada needed to act on China.
Trump's threat to “permanently shut down” his neighbor's auto industry in favor of domestic production is by far the biggest danger, with much of Canada's factory output bound for the U.S. including from Michelin's three Nova Scotia sites. “They are operating in North America as if it were a very integrated economy. If tariffs really do have a long term-- Michelin I'm certain will have to look at how they do that,” Lohr said.
Trump's strategy isn't clear but will drive upgrades to Canada's economy such as diversifying export markets and breaking down internal trade barriers, Lohr said. That hopefully includes reviving east-west energy connections, allowing Atlantic Canada to buy Alberta crude instead of foreign oil, he said.
Nova Scotia is setting an example by ending what Lohr called three decades of inertia in developing natural resources such as uranium, mineral deposits, and wind energy.
HURT ON BOTH SIDES
After several provincial leaders criticized the Bank of Canada for being slow to cut interest rates, Lohr said its moves starting in June are welcome relief. As to whether more is needed he echoed the view of most investors, saying “a lot depends on what happens with the tariffs.” (See: MNI INTERVIEW: BOC To Cut More, Wary Of Inflation- Ex Staffer)
The traditional cushion for exporters from a lower Canadian dollar is more of "a wash" with many firms also importing U.S. materials, he said. One bright light is the province's film industry. “We've seen a tremendous resurgence in the film industry here in Nova Scotia, and the dollar is a big impact," Lohr said. "A lot of American companies who would be filming would get a lot better value for their money.”