Where will Canada end up in the new US World Economic Order?

[dagger]

That Trump thread is so long I thought I'd create this one to focus exclusively on economic ramifications of what the Trump administration is seeking to accomplish. In other words, how might a protectionist economic and trade policy combined with immigration restrictionism affect Canada economically. Obviously there are many moving parts to be considered. But I assume that Canada will be impacted in several ways, some good, some bad, some which can be anticipated, and some not. I also assume that if push comes to shove, the economic protectionists like Trump and the anti-trade elements of the GOP will allow the US to ignore global obligations to organizations like the WTO, and therefore force an economic crisis in order to remake the US economy as they would like. In fact, the economic end game may include adversely affecting those parts of the US inimical to the nationalist agenda. This Washington Post article provides a useful context.

Who benefits from Bannon’s economic nationalism?

Stephen Bannon's White House role expands amid immigration turmoil

As nationwide protests against President Trump’s immigration mandate rage on, he reshuffled the National Security Council and put chief strategist and former Breitbart News chair Stephen Bannon in an unprecedented national security role. (Jenny Starrs/The Washington Post)

The Trump administration’s efforts to implement extreme security policies that harm American interests and values have hit a wall of institutional and popular opposition. On Russia, the Trump administration is already coping with congressional pushbackon any efforts to pursue an overly friendly approach.

So it is worth asking: What are the areas of international relations where the Trump administration faces less serious resistance? And what will happen there? I think the answer lies in foreign economic policy — for now.

The Trump administration has faced few impediments on implementing its trade agenda. To be fair, that’s because it hasn’t done that much as of yet. The one concrete action is that Trump withdrew from the Trans Pacific Partnership, leading to … hosannas from Senate Democrats. Not much else has happened on this front beyond a lot of rhetoric about tariffs and border adjustment taxes.

Still, there are reasons to believe that Stephen Bannon’s ambitious brand of economic nationalism will face fewer political barriers than his homeland security measures. On the security side of the ledger, Bannon has had to confront opposition from the courts, corporate America, the public, and even Cabinet officials within Trump’s administration. When it comes to trade, however, Trump has the power to implement trade barriers and not much in the way of opposition. You have to squint hard to any real opposition from Trump’s prospective cabinet. The loudest Democrats are just as protectionist-sounding as Trump. And while the public is not as protectionist as pundits believe, the loudest parts of the public are certainly enthusiastic about the idea of eliminating foreign competition.

That leaves corporate America, which is pretty split on this issue. Bannon’s economic formula is simple. He wants massive domestic deregulation, corporate tax cuts, infrastructure and defense spending, and high protectionist barriers to importing goods, services, and people. Other countries will respond with measures that hurt American exports as well, but I don’t think this bothers Trump’s White House team one little bit. When Peter Navarro talks about deglobalizing America’s manufacturing supply chain, you know you’re in for an administration that wants to radically reshape the American economy.

If implemented, what would be the political and economic effects of this agenda? To use the language of political economy, Bannon’s economic nationalism is an effort to reward non-tradable sectors at the expense of tradable sectors. Infrastructure spending, deregulation, and protectionism will benefit sectors like, say, housing, or coal and oil. Trade and immigration barriers will hurt sectors like tech, commercial aviation, and higher education. Within manufacturing, less competitive firms might receive a boost as well. Other sectors, like agriculture, will face severely mixed effects.

There’s an interesting pattern at work here. This kind of economic nationalism boosts the parts of the country that went for Trump in the 2016 election. In theory, boosting domestic energy and manufacturing helps Appalachia, Texas, and the industrial Midwest. The areas of the country that would be hard hit from such policies are on both coasts — i.e., the places that really did not like Donald Trump. Fans of William Riker’s “minimum winning coalition” could argue that Trump’s foreign economic policies might be designed to cement the fragile coalition that got him elected.

Of course, this assumes that the primary effects of Bannon’s economic nationalism are distributional in nature. Indeed, the behavior of financial markets to date suggested that the pluses of corporate tax cuts and fiscal pump-priming would outweigh and symbolic efforts at protectionism. But it’s beginning to dawn on some observers that maybe the Trump administration is actually serious about erecting all of these economic barriers to the outside world. We’re already seeing Silicon Valley planning to relocate foreign workers to Canada. If there are more immigration restrictions to come — and it seems like that is the case — then the United States economy could start feeling the negative effects of a massive brain drain.

If Bannon’s brand of economic nationalism just results in a redistribution of economic growth within the United States, then it could accelerate economic populism’s hold on the most important states in the electoral college. If it triggers a severe downturn, however, then all the clever political economy in the world won’t save Trump.

[Guest]

I see your post is from the Washington post https://www.washingtonpost.com/posteverything/wp/2017/02/07/who-benefits-from-bannons-economic-nationalism/?utm_term=.83b1bd5fc75f  Here are a couple of others but I will not quote them as they are quite lengthy. 

Here is a link to a long article from the Globe and Mail.

http://www.theglobeandmail.com/news/world/us-politics/canada-and-donald-trump-a-guide-to-whats-coming/article32788087/

and another from the CBC

http://www.cbc.ca/news/politics/trump-trade-softwood-dairy-1.3966926

I imagine the Dairy industry in Eastern Canada are extremely worried as up to now they have had the advantage of quotas and strict import rules that have lessened (removed) competition and resulted in artificially high prices for dairy products here in Canada.  The Industry expressed great concerns with the proposed TPP as it would apply to Dairy Products.

C

Quote

 

Canada is preparing to open the border to more American milk, without getting reciprocal access for Canadian dairy farmers in the United States, CBC News has learned.

Trade Minister Ed Fast will leave the campaign trail to join his counterparts in Atlanta on Wednesday, intent on concluding the Trans-Pacific Partnership trade talks. Chief negotiators from the 12 Pacific Rim member countries meet starting Saturday.

Conservatives want to conclude a deal before the Oct. 19 election and cast it as a win for consumers. But what Fast offers could seriously disrupt the supply-managed dairy sector.

If that happens, "there's going to be a war," says Yves Leduc from the Dairy Farmers of Canada. "The industry will never accept that.

 

 

[dagger]

Among the potential wins and losses for Canada.

Straight trade - NAFTA. It's unlikely we won't get sideswiped considering the current administration will covet our manufacturing jobs, and isn't likely to be concerned about retaliation by Canada since our exposure to the US market is much, much greater than US exposure to Canadian trade. So that's the big negative. And it is big, likely influenced by corporate tax reform that includes the so-called border adjustment that penalizes imports to the US.  Over time, it might be mitigated somewhat by new free Canadian trade agreements, especially if Canadian companies that rely on the US market are forced to look further afield for new markets. However, no sugar coating this is bad.

However, there will be other offsets. As you look at the article above, and follow the general sentiment among tech companies, Canada is going to be a major beneficiary of a tech relocation of foreign workers - many of whom are really bright people - to develop some new products and centralize their management in Canada rather than the US. Canada's corporate tax regime doesn't encourage offshoring of profits per se, so this is a net gain for Canada. And it could be huge. I know this would offend a lot of people, but a senior engineering job is worth a lot more than an assembly line job. Lots of poor countries have assembly lines; it doesn't make them rich. All those Mexican car plants pay low wages - that's the reason they exist. But engineering and technology jobs, "even low paying" ones, will start in a CAD 75,000 range (that's roughly the minimum set by the US H-1B visa program Trump is promising to trim, in part by reducing the number of visas and doubling the minimum salary to US$130,000). 

A restrictive immigration policy will also push a lot of doctorate level research done by foreigners to Canadian universities, which brings with it a lot of corporate research grants. It also assures Canada a lot of extra tourism and scholarly conference business, especially if US nationalism is expressed as anti-Europe or anti-China. That would help the airlines, maybe they would get a little less US business, while gaining more domestic and long-haul international. 

Agriculture can be a big winner, if Mexico and China decide to switch from US raw materials and feedstocks to other sources. China has already indicated if there is a trade war, it would drop US ag products for more from Australia and Canada.

http://www.forbes.com/sites/danikenson/2017/02/06/not-much-left-stopping-trumps-trade-war-with-china/2/#64e7ecae69d5

This is page 2 of a very long article on US-China trade, which references the latter point. 

None of this totally offsets a bad trade agreement with the US, but it can move the needle back somewhat in our favour. 

[dagger]

14 minutes ago, Malcolm said:

I see your post is from the Washington post https://www.washingtonpost.com/posteverything/wp/2017/02/07/who-benefits-from-bannons-economic-nationalism/?utm_term=.83b1bd5fc75f  Here are a couple of others but I will not quote them as they are quite lengthy. 

Here is a link to a long article from the Globe and Mail.

http://www.theglobeandmail.com/news/world/us-politics/canada-and-donald-trump-a-guide-to-whats-coming/article32788087/

and another from the CBC

http://www.cbc.ca/news/politics/trump-trade-softwood-dairy-1.3966926

I imagine the Dairy industry in Eastern Canada are extremely worried as up to now they have had the advantage of quotas and strict import rules that have lessened (removed) competition and resulted in artificially high prices for dairy products here in Canada.  

Not sure about that. If the US wants too much too soon, with Mexico and China also in the cross-hairs, it could be politically impractical to push Canada too hard in this first round. But the US admin has spoken in favor of a five year term for a new NAFTA, so I would see an end to supply management as a future goal, especially since Trump is so obsessed with "wins" on hard goods that he is willing to antagonize the agriculture lobbies. TPP was supposed to give the US a bit more access to our dairy markets, and the Harper government agreed to a financial compensation package for farmers. That's now off the table with TPP basically dead.

[dagger]

There also could be an indirect benefit if foreign-trained physicians opt for Canada because they can't get into the US. The US has an enormous reliance on foreign trained doctors. What is intriguing, however, is how many foreign trained doctors are willing to relocate to rural parts of the US. If they did so here, that would be a boon for under-served parts of rural Canada, and help provide the "necessities of life" often missing to sustain local new business development.

This is a New York Times article, re-published by the Seattle Times

 

 

[mo32a]

Except that their qualifications will not be recognized and they will be driving cabs.

[dagger]

23 minutes ago, mo32a said:

Except that their qualifications will not be recognized and they will be driving cabs.

Except that many of those on the outside now because of the Executive Order are already US qualified.

[Guest]

16 minutes ago, mo32a said:

Except that their qualifications will not be recognized and they will be driving cabs.

Thankfully that is true, not all medical degrees are equal and not all training is up to our standards.  

Quote

Assessment routes for international medical graduates

International medical graduates are people who have completed their postgraduate residency training outside Canada or the United States. Applicants do not have to live in Canada or hold Canadian citizenship to be eligible for Royal College exams.

Approved-jurisdiction route is for international medical graduates who have completed specialty training outside Canada or the United States in an approved jurisdiction.

The Practice Eligibility Route for specialists applies to internationally trained physicians practising as specialists in Canada without Royal College certification.

The Practice Eligibility Route for subspecialists is for Royal College Fellows who

• are practising in a newly approved subspecialty;
• are practising in a subspecialty that is converting from accreditation-without-certification status to certification-by-examination status; or
• have not completed formal accredited postgraduate medical education in the subspecialty because no accredited training programs existed in Canada at the time of their training.

Practice-ready assessments are for international medical graduates in Canada with certification from an international jurisdiction, who apply through their provincial licensing body for a practice assessment.

 Here is the link to "The accepted Jurisdictions" http://www.royalcollege.ca/rcsite/credentials-exams/exam-eligibility/assessment-imgs/jurisdiction/accepted-jurisdictions-e

[Don Hudson]

Canada is not the only country which sees the new opportunities for enticing skilled, technical, engineering and science personnel...

 

 

[FA@AC]

Since I don't know enough about economics to speculate on how specific measures taken by the U.S. government might affect us, I'm more inclined to wonder about the effect on Canada and other countries if Trump's policies send the U.S. economy down the tubes.

Cut taxes while spending gazillions of dollars building useless walls and hiring masses of officers to round up illegal immigrants?  Cause massive inflation by imposing steep tariffs on all imports including those of materials used by U.S. manufacturers?  Make it difficult/impossible for U.S. businesses to hire foreign talent?  None of it makes any sense to me.

The above is always assuming that Trump's plans actually see the light of day.  I think that many of them won't.

[moeman]

17 minutes ago, FA@AC said:

Trump's plans

Plans?

 

[dagger]

17 minutes ago, FA@AC said:

Since I don't know enough about economics to speculate on how specific measures taken by the U.S. government might affect us, I'm more inclined to wonder about the effect on Canada and other countries if Trump's policies send the U.S. economy down the tubes.

Cut taxes while spending gazillions of dollars building useless walls and hiring masses of officers to round up illegal immigrants?  Cause massive inflation by imposing steep tariffs on all imports including those of materials used by U.S. manufacturers?  Make it difficult/impossible for U.S. businesses to hire foreign talent?  None of it makes any sense to me.

The above is always assuming that Trump's plans actually see the light of day.  I think that many of them won't.

The wall is not going to be built. Mitch McConnell said this week Congress won't fund it.  I suspect the Trump/Bannon plan will create winners and losers, in equal measure, but it's too early to tell one from the other. The US business community is splitting down the middle over the border adjustment tax.

[FA@AC]

5 minutes ago, moeman said:

Plans?

 

Ravings?

[FA@AC]

4 minutes ago, dagger said:

I suspect the Trump/Bannon plan will create winners and losers, in equal measure, but it's too early to tell one from the other.

I'm sure there'll be the odd winner, but even if Trump hadn't already brought considerable chaos it'd be difficult to imagine such a cuckoo clock as President not being a net negative for the economy.

[Super 80]

2 hours ago, dagger said:

However, there will be other offsets. As you look at the article above, and follow the general sentiment among tech companies, Canada is going to be a major beneficiary of a tech relocation of foreign workers

I doubt that very much. The salaries offered by "tech" in Canada are not internationally competitive.

[Guest]

2 minutes ago, Super 80 said:

I doubt that very much. The salaries offered by "tech" in Canada are not internationally competitive.

compared to?

[dagger]

1 hour ago, Super 80 said:

I doubt that very much. The salaries offered by "tech" in Canada are not internationally competitive.

Actually, Canadian based tech companies are lining up for these people, and US tech companies already have Canadian operations that can be expanded.

[Super 80]

1 hour ago, Malcolm said:

compared to?

The US, UK and Europe.

21 minutes ago, dagger said:

Actually, Canadian based tech companies are lining up for these people, and US tech companies already have Canadian operations that can be expanded.

I'm sure they are, but I don't think they're going to single this group out for uncharacteristically generous compensation.

[Guest]

35 minutes ago, Super 80 said:

The US, UK and Europe.

I'm sure they are, but I don't think they're going to single this group out for uncharacteristically generous compensation.

 According to the following article the US is mainly bringing in "low" paid techs rather than hiring the more expensive home grown techs. So it would seem to agree with what Dagger posted.

http://www.msn.com/en-za/news/other/trump-is-right-silicon-valley-is-using-h-1b-visas-to-pay-low-wages-to-immigrants/ar-AAmBObZ

[deicer]

http://www.theglobeandmail.com/news/british-columbia/bc-tech-sector-to-get-surge-of-talent-fleeing-silicon-valley-insiders/article33845299/

 

[Don Hudson]

B.C. has an election coming up. We'll see how our politicians handle this possibility.

[Super 80]

22 hours ago, Malcolm said:

 According to the following article the US is mainly bringing in "low" paid techs rather than hiring the more expensive home grown techs. So it would seem to agree with what Dagger posted.

http://www.msn.com/en-za/news/other/trump-is-right-silicon-valley-is-using-h-1b-visas-to-pay-low-wages-to-immigrants/ar-AAmBObZ

B.C.’s tech sector is booming—but its workers are underpaid

http://www.canadianbusiness.com/innovation/bc-tech-sector-pay-stats-2015/

If you want to believe this is the event that is going to make "Silicon Valley North" come into it's own that is entirely up to you. But a lack of investment and a lack of competitive salaries that alienates the best and brightest from Canada is unaltered by this. To say nothing of the housing market that makes Canada potentially unappealing to a globetrotting professional.

[Guest]

More re why we don't accept qualifications issued by some foreign Governments:

Hundreds of medical licenses cancelled over India exam scam

• 6 hours ago
• From the section India

http://www.bbc.com/news/world-asia-india-38965725

India's Supreme Court has cancelled the licenses of 634 doctors embroiled in a medical school admissions scandal in central Madhya Pradesh state.

Hundreds of candidates were found to have cheated to gain admission to medical colleges between 2008 and 2013.

The Vyapam scandal has seen thousands of arrests and many mysterious deaths.

Vyapam is the Hindi acronym for an office that conducts examinations for government jobs and medical school admissions in the state.

In its verdict, the Supreme Court said the accused had engaged in "acts of deceit" and "mass fraud".

• Federal probe into India exam scam
• India's 'deadly' medical school exam scandal

The scandal involved leaking question papers, rigging answer sheets and hiring bright students as impersonators to sit for candidates, as well as selling medical school seats to the highest bidder.

Anything between 1m rupees ($15,764; £10,168) and 7m rupees was paid for a seat, correspondents say.

More than 2,000 people have been accused in connection with the scandal since 2012.

Some 33 people - mostly accused in connection with the scam - have died in the past three years, raising suspicions of foul play. It is not clear how many of the deaths are linked to the scandal.

[DEFCON]

Are US based physicians & tech workers expected to follow the flood of Hollywood entertainers headed this way?