Economists at the Bank of Montreal have calculated the potential cost to Canada’s economy as the US-China trade war unfolds.
If all the tariffs the US and China are threatening actually happen, it would shave 0.8 percentage points off Canada’s economy.
That amount of economic activity supports about 150,000 jobs, BMO senior economist Sal Guatieri wrote in a report last week.
Given that the Bank of Canada is predicting 1.2-per-cent economic growth this year, the trade war could shred two-thirds of Canada’s economic growth in 2019.
Canada would take an economic loss almost as large as the US because of our reliance on trade with our partner to the south, Guatieri said.
Canada will have to deal with weaker commodity prices, because they tend to fall when the U.S. economy weakens and because the Canadian dollar is linked to commodity prices, there’s a good chance the loonie would fall in that scenario. That would help make Canadian exports more competitive, helping the economy and offsetting some of the damage from the trade war.
Trump has long complained about the trade deficit the US runs with China, arguing it is the result of unfair and sometimes illegal trade practices, as well as theft of technology. -CINEWS