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Open trade takes another hit

Open trade takes another hit

Posted on: 6/3/2019 | Author: ATB Financial's Economics + Research Team

​​Trade between countries has always been a dicey enterprise. The trend in recent decades has been to allow trade to flow relatively freely across borders. While not the perfect system, it has facilitated significant economic growth both here at home and on a global scale.

These days, that system is experiencing extensive collateral damage, with the U.S. lobbing tariffs at trading partners and continuing its head-to-head battle with China.

The situation looked more promising last month when the U.S. ended tariffs on imports of steel and aluminium from Canada and Mexico. This removed a key obstacle to the ratification of the US-Mexico-Canada Agreement (USMCA).

Then, on Friday, the U.S. announced it will be imposing new tariffs on all imports from Mexico until, in the words of the President, “the illegal immigration problem is remedied.” In addition to the negative impact this will have on North American supply chains, jobs and consumers, the new tariffs could scuttle ratification of USMCA by the Mexican Congress.

In the meantime, other obstacles continue to challenge global trade. China has been throwing up barriers to imports of Canadian products, such as canola and pork, U.S. steel and aluminium tariffs are still in place for countries other than Canada and Mexico, and a no deal Brexit is threatening the free movement of goods and services between Britain and the European Union.

Both Alberta and Canada depend on, and benefit from, open trade. So, hopefully these trade wars are temporary.

Tourism in Alberta, graph​ ​​

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