Some Canadian economists are considering a unique solution to the challenges facing the G7 economy: the return of Donald Trump to the White House. Despite the threat of tariffs and political turmoil caused by the US president-elect, there are those who believe that a second Trump term could be the catalyst Canada needs to address longstanding structural issues that have hindered its economic growth.
William Foster from Moody’s sees this as a “stress test” for Canada, urging the country to realign its economic priorities and tap into its resources. Social-economic indicators reveal that many Canadians are struggling, with rising unemployment, high household debt, and stagnant wages.
Robert Asselin from the Business Council of Canada points out that Canada’s economy is overly reliant on consumption and real estate, leading to structural weaknesses. Bank of Canada governor Tiff Macklem acknowledges the mixed signals in the economy, with population growth and government spending propping up GDP.
However, challenges persist, with stagnant productivity, low wages, and a lack of innovation hindering Canada’s competitiveness. Alex Whalen from the Fraser Institute emphasizes the need for government restraint, tax reform, and a more favorable investment climate.
Jonathan Garbutt, a tax lawyer, criticizes the lack of support for innovation in Canada, urging entrepreneurs to seek opportunities elsewhere. Despite Canada’s strong trade relationship with the US, there are concerns that Trump’s protectionist policies could harm the Canadian economy.
The differences between Chrystia Freeland and Prime Minister Justin Trudeau over how to respond to Trump’s policies led to Freeland’s resignation. The upcoming election in Canada, with Conservative leader Pierre Poilievre leading in polls, adds to the uncertainty. Regardless of the election outcome, the challenges facing Canada’s economy are clear, with the need for significant reforms and a focus on productivity and innovation.