MNI INTERVIEW: US 'Buy Local' Adds to Canada's Trade Slump

--Canada Export Bank Says Confidence At Record Low

By Greg Quinn

     OTTAWA (MNI) - U.S. protectionism such as recent "buy local" policies are

adding to Canada's plunge in exporter confidence beyond the economic slump

triggered by Covid-19, the deputy chief economist at the country's trade bank

told MNI.

     Firms were becoming alarmed about renewed U.S. tariffs even before threats

in the last week of aluminum levies, Stephen Tapp of Export Development Canada

said. America is also cutting back on imported medical equipment and food, he

said.

     "People are more concerned about producing nationally, producing locally,

and having domestic supplies ready," Tapp said. "More customers, particularly in

the U.S., are dealing out a buy local push."

     Exporter confidence plunged to a record low in EDC's semi-annual survey

published Thursday, falling to 56 from 69.3. There was a "radical jump" in firms

hurt by protectionism to 39%, Tapp said, citing 823 responses gathered last

month. 

     Worries about trade restrictions come days before the new USMCA takes

effect, and in a year where the Phase One U.S.-China deal was supposed to defuse

trade tensions. Instead, Canadian companies face another setback as China shifts

orders to American firms to meet the required increase of U.S. farm purchases.

"That's going to hit things like soybeans, lumber, seafood, pork, and those are

some of the things we export a lot of to China," Tapp said.

     --LOST GLORY

     Canada and the U.S. were the world's largest trade partners before China's

rise to the world's second-largest economy. Lost exports and U.S. oil

independence are big reasons why Canada's economic rebound from Covid will

likely take longer, including a near-zero rate policy from the central bank. 

     The EDC survey dates back to 1999 and one reason the index has hit new lows

is the breadth of the shutdown, hitting services as well as goods, Tapp said.

The Trade Confidence Index showed declines across all industries and regions of

Canada. 

     Pessimism also ruled questions about the economic recovery. Almost

two-thirds of respondents see their sales being damaged at least into next year,

and 67% the see global recession lasting for more than a year. 

     Some 44% see a W-shaped recovery, compared with 32% calling for a u-shaped

recovery and only 5% hoping for a V-shape.

     "The supply side may come back but the return of demand may take some

time," Tapp said.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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