It’s all about U.S. President Donald Trump.
There is no escaping the guy since he took over the White House after being sworn in as the 46th president of the U.S. on Jan. 20.
Actually, it’s been hard to avoid him since he declared himself as a leadership candidate for the Republican Party back in 2015.
Even my eight-year-old son was talking about Trump in the midst of recently accepting birthday congratulations from his aunt. While she was impressed by her nephew’s knowledge of U.S. politics, it really speaks to Trump’s apparent over-sized ego and ability to manipulate his media message.
With Trump fixated on making America great again and creating jobs, his economic policies to do all that are puzzling to many economic prognosticators.
This past week, a group of economists with the Conference Board of Canada made a stop in Kelowna as part of a tour around B.C. to offer their insights into 2017.
While their general message was to look for slow but stable growth in B.C. for the coming year, and pretty much the same for Canada overall, the Trumpster remains a volatile wildcard who could upend that slow and steady as she goes outlook.
For Canada, the Trump outlook is mixed. While he wants to renegotiate yet unspecified aspects of the North America Free Trade Agreement, his focus seems to be less on Canada and more about Mexico at the moment.
He publicly slammed Mexico last week over a trade imbalance between the two nations and a lack of cooperation Mexico’s government has shown towards paying the cost to build a 40-foot high wall along their shared border.
Pedro Antunes, deputy chief economist for the Conference Board of Canada, said the general consensus seems to be that Canada is in Trump’s good books, citing one example being his executive order to reinstate the Keystone Pipeline proposal, which gives Alberta oil producers more cost-efficient access to U.S. refineries.
Antunes said the current Trump-spearheaded protectionist attitude of American industry could negatively impact the current softwood lumber talks, resulting in some form of tariff or tax on B.C. lumber exports south of the border.
But Artunes cited other campaign promises made by Trump about changing U.S. economic policy that should be on Prime Minister Justin Trudeau’s radar.
He said one significant factor holding back the growth of Canada’s economy is a shortfall of new capital business investment, as investors horde their cash rather than spending their accrued wealth in business and manufacturing project development.
“What is stimulating our economy right now is consumer spending stimulated by low interest rates,” he said.
With Trump advocating huge corporate tax cuts, a desire to eliminate non-business friendly regulatory and environment protection policies, and to make trade deals with individual countries rather than necessarily abide by NAFTA or the now cancelled Trans-Pacific Partnership trade agreement, all that leads to Canada’s uncertainty about increasing our own business investment, Artunes said.
And then there is Trump’s belief in Reaganomics—lowering corporate taxes from 33 to 15 per cent while increasing government infrastructure spending to spur the economy.
“It didn’t work in the ’80s and it won’t work now,” he said. “All that will do ultimately is increase the U.S. deficit.”
And if all that is not enough, there is Trump’s combative attitude towards China, which Artunes says makes no sense from an economic policy perspective.
“Why would you want to start a trade war with a country that will eventually become the biggest consumer in the world? If you look at the auto sector alone, in the early 1980s, there were a stock of about two million automobiles in the entire country. Today, 18 million cars a year are being purchased.
“Eventually they will become bigger than the U.S. for consumer spending. Free trade does work, and while there are some job losses and stress as adjustments are made, in the long run it is more beneficial to countries. It has helped bring millions of people out of living in poverty.
“But with the election of Trump, what happened with Brexit in Britain and the emergence of the far-right National Front party leader Marine Le Pen in France, the expansion of economic protectionism is concerning.”
As for the Okanagan from a Kelowna perspective, the CBOC experts forecast unemployment will decrease, housing starts will stabilize while non-residential construction will take a dip, and our valley population will continue to grow as Canadians migrate here at levels above the national average.
“I look for a two per cent economic growth rate for the Okanagan with tourism continuing to be a strong sector performer benefiting from the weaker Canadian currency,” he said.
Barry Gerding is the senior regional reporter for Black Press in the Okanagan Thompson region.
barry.gerding@blackpress.ca
