“Disruptive international trade policies have clearly shaken the confidence of Canadian exporters,” said Peter Hall, chief economist with EDC, in a news release on Thursday. “One-third of respondents are already negatively impacted by protectionist measures now in place, and an overwhelming majority sees no resolution of major global trade issues within the next year.”
EDC said all five components of its index were down again, continuing the decline seen in the 2018 year-end survey. The slide was broad-based, led by a weaker outlook for international business opportunities, but also reflects softer expectations for the Canadian and global economies.
Taken together, the drop of 5.3 per cent brings the trade confidence index down to 69.8, almost four points below the series’ historical average, it said.
However, it noted one bright spot: the recent decision from the United States to reverse the steel and aluminum tariffs, which were still in place when EDC conducted this survey in March and April. The Trade Confidence Index found the tariffs were having negative impacts for some companies in those industries directly affected; they reported seeking alternate markets and suppliers – including sourcing locally to avoid the tariffs – as well as raising prices, it said.
“The removal of North American steel and aluminum tariffs is great news, raising the likelihood of the trade agreement between Canada, the U.S. and Mexico (CUSMA) passing into law – which, at the time of our survey, showed that a slim majority of respondents, 55 per cent, expected CUSMA passage in 2019 or 2020,” said Hall.
“Indeed, uncertainty during the NAFTA negotiations and the on-going CUSMA ratification process appears to be causing an investment hesitation among some Canadian exporters, who are awaiting additional clarity on the rules of North American trade.”
The survey also found: 34 per cent say protectionism is affecting their export and international investment strategies and 31 per cent say the U.S.-China trade dispute is negatively affecting their export and investment activities.
More than 90 per cent of respondents either said they expect protectionism measures to worsen (47 per cent) or stay the same (45 per cent) over the next 12 months.