TORONTO — Finance Minister Bill Morneau is suggesting the upcoming federal budget will have the room to deal with whatever economic shifts could ensue as the Donald Trump administration takes over in the U.S.
Morneau, who met Friday with a dozen private sector economists in Toronto, provided no details when asked about how Trump’s election win has impacted the budget preparation process.
But he said he will exercise prudence as he plans upcoming investments “to ensure that we have the capacity to deal with the environment that we find ourselves in.”
There has been some concern that the new U.S. administration could spell trouble for the Canadian economy, particularly if border tariffs are implemented.
Craig Alexander, chief economist at the Conference Board of Canada, has said that Trump’s promise to boost infrastructure spending and cut corporate and personal taxes would fuel U.S. economic growth, which would benefit Canada.
However, any moves to introduce protectionist measures and force business investment to return to the U.S. could harm Canada, Alexander said.
It remains to be seen whether or not such measures will be implemented.
But there were indications Friday from a spokesman for Trump that Canada’s automotive sector may not be spared from a border tax. Sean Spicer was asked whether an auto border tax could affect Canada.
“When a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico, or any other country seeking to put U.S. workers at a disadvantage,” Spicer said, then Trump “is going to do everything he can to deter that,” according to Bloomberg News.
A report Thursday by National Bank Financial Markets cautioned that exports of Canadian goods to the U.S. could fall by roughly nine per cent if Trump implements a 10 per cent border adjustment tax on imports.
Speaking to reporters following his meeting, Morneau said Ottawa plans to tout the importance of Canada-U.S. trade in discussions with the new administration.
“Canada is the number one export destination for 35 of the United States,” Morneau said.
“That’s providing critical impetus for U.S. jobs, and of course it’s positive in Canada as well. So that will be the frame for our discussions.”
Some of Prime Minister Justin Trudeau’s senior aides met recently with members of Trump’s inner circle.
“We have had early dialogue with the incoming administration, and that’s positive because we want to have a strong relationship with the new administration,” Morneau said.
“We will continue to present Canada’s interests, as we always have, in a way that will advance our cause, but we are not yet at a stage where we can talk formally with the new administration.”