Rubber hits the road: Could we decouple our economy from the Yanks?

This is not a reference to Michelin’s operations in Nova Scotia although they are top of mind when thinking about US exports and tariffs. We probably now need to a have a serious conversation about decoupling our economy from the USA. After decades of integration, at least we need to serious explore the two main options: trade more within Canada and develop other export markets.

Canada exports $13 billion worth of paper products to the US but it imports $8 billion. It is likely a lot of the imports could be replaced by products made in Canada. Yes, it doesn’t eliminate the $13 billion but it would be a start.

Canada exports $23 billion worth of refined oil products to the US but it imports $17 billion. Again, it is likely a lot of the imports could be replaced by products made in Canada. Yes, it doesn’t eliminate the $23 billion but it would be a start.

Canada imports from the US $10 billion in aerospace products (exports $12 billion).

Canada imports $8.4 billion in basic organic chemicals (exports only $4.6B).

Canada imports $8 billion in pharmaceutical products (exports $10 billion).

And there is a whole list of manufactured products where we import a lot from the US ($25-30B?) and export little including construction machinery, HVAC equipment, agricultural machines, electrical equipment, etc. It would be hard to replace those imports but we could look to attract global manufacturers here.

And then there are services. I don’t have the US data specifically but we had a $67 billion trade in services deficit with the rest of the world in 2019 and I assume a majority of that deficit is with the Yanks.

Examples include the licensing of rights for commercial use of non-financial intangible assets (except software and other copyright licensing). Phew. That’s a mouthful. We import $12 billion and export $4 billion.

Room or unit accommodation services for travellers. Canadians trying to get away from the cold. We spend $12 billion out there and others spend $6 billion here. If we substitute Aspen for Banff we could reduce this trade imbalance.

Air passenger transportation services. Import $10B, export only $5B. If Trump blows up our integrated economy maybe we will have less need to travel there by airplane.

Security brokerage and securities dealing services. $5 billion imports. $2.9 billion exports.

Office administrative services. $17 billion exports but also $19 billion imports. I’m not sure what that is but some of it is related to booking flights and hotel rooms, insurance services, etc.

Architectural, engineering and related services. I’ll probably go to my grave never understanding why we import $7 billion per year in these services.

The bottom line is that instead of just putting countervailing duties on Florida orange juice it might be time to seriously look at reducing the $400 billion worth of goods imports from the US and the likely $100 billion in services imports.

It’s stupid as there is no good reason why we couldn’t continue to have a highly integrated economy with the Yanks. Boston and New York are closer to Halifax than Calgary and Vancouver.

But Trump should be a wake up call.