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In his corporate tax-cut quest, Trump should take cues from Canada’s GST

DAVID PARKINSON

Donald Trump’s new plan for deep cuts to corporate taxes might look like a naively simplistic conservative-populist gesture that fails to address some pretty basic fiscal and economic questions. And, in some ways, it is.

But at its root, it’s not much different from the Canadian model of the past two decades. And the most elegant solution to closing the fiscal gap created by Mr. Trump’s plan might also be a Canadian one: Something like a Goods and Services Tax.

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In the age of Trump, it’s time to change the global trade game

ANDREW JACKSON

Andrew Jackson is Adjunct Research Professor in the Institute of Political Economy at Carleton University, and senior policy adviser to the Broadbent Institute.

It is now three months into the presidency of Donald Trump, and policy makers around the world are still unsure how to respond to the new administration’s challenge to the liberal global order and the looming threat of “America First” trade policies.

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Lumber litigation is a game of ‘heads I win, tails you lose’ for the U.S.

BARRIE MCKENNA

It is easy to figure out how U.S. tariffs on Canadian lumber will affect Americans.

It’s going to make U.S. homes, renovations and furniture more expensive. Even before Monday’s move by the Trump administration to hit Canada with a preliminary 20-per-cent duty, the price of lumber was rising in anticipation of the looming dispute. Lumber is up 22 per cent since January, adding roughly $3,600 (U.S.) to the price of a typical new home, according to the U.S. National Association of Home Builders.

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Le Pen’s attack on ‘savage globalization’ ensures she stays a political force

ERIC REGULY

Marine Le Pen of the National Front almost certainly will not win the run-off election next month against Emmanuel Macron. Mr. Macron, of the centrist En Marche party, is headed to a coronation even though Ms. Le Pen came a close second in Sunday’s first-round presidential vote.

But that’s not to say she is finished – far from it. She will have earned record levels of support for the FN, which could do well in the National Assembly elections in June, allowing her and her party to emerge as the main opposition to Mr. Macron and his untested En Marche movement, which did not exist until a year ago. That means her messages will continue to shape debate, none more so than her attack of “savage globalization.”

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In Toronto real estate, short-term strain could help prevent long-term pain

DAVID PARKINSON

Okay, Torontonians (and Greater-Golden-Horseshoeians), we need to pinch ourselves. This dizzying dream of a housing boom – or nightmare, if you’re priced out of the market – is destined to end. History, and gravity, and a healthy cross-section of economic experts say so.

The key question, then, is how far prices will come down once the hot air goes out of the balloon. The answer may lie in just how much longer Toronto’s market remains in the stratosphere.

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How dairy farmers are trying to milk consumers with EU trade deal

BARRIE McKENNA

Donald Trump grumbles about what Canada’s dairy industry is doing to Americans. But it isn’t half as bad as what we’re doing to ourselves.

Take cheese, for example. Among the key concessions Ottawa made in its recent free-trade agreement with Europe was to allow more duty-free cheese into this country.

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Without good housing data, Ontario is fixing the wrong problem

BARRIE MCKENNA

On Thursday, Ontario unveiled a package of measures to cool Toronto’s sizzling housing market, including expanded rent controls and a 15-per-cent tax on absentee foreign buyers.

Next week, the province starts collecting data to determine the extent of speculative foreign buying.

Pick your cliché: It’s like trying to run before you walk, putting the cart before the horse or the tail wagging the dog.

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U.S. farmers sour on Canadian dairy: The final nail in supply management's coffin

KONRAD YAKABUSKI

It was clear for months before Donald Trump finally pointed his finger this week at “some very unfair” dairy policies north of the border that Canada was sleepwalking toward a trade dispute that would threaten, once and for all, the survival of supply management in the milk sector.

Politicians in Wisconsin and New York warned then-trade minister Chrystia Freeland last summer that a move by Canadian regulators to shut out U.S. imports of ultra-filtered milk could trigger a trade war that would bring the whole system of supply management crashing down. But such warnings were simply dismissed by Canadian officials as sour grapes on the part of a U.S. dairy industry upset that a once-lucrative loophole in Canada’s dairy tariff wall was being nailed shut.

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Trump’s ‘Buy American’ stance flouts 200 years of economic logic

DAVID PARKINSON

This week marks the bicentennial of the publication of one of the most important books in economic history. Judging how he marked the anniversary, I’m guessing Donald Trump hasn’t spent the week boning up on it.

On April 19, 1817, David Ricardo – who, like the U.S. President, was a tremendously wealthy businessman who launched a second career in politics – published On the Principles of Political Economy and Taxation. The book introduced the world to the concept of “comparative advantage” – the principle that has endured at the core of the free-trade argument ever since. It’s one of the seminal moments in the history of economic thought.

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How to craft a successful trade policy in the age of Trump

GLEN HODGSON

Glen Hodgson is a senior fellow at the Conference Board of Canada.

Trade policy, particularly with the United States, has been a central driver of Canada’s economic evolution and wealth creation. Today, that stability is at risk under Donald Trump’s administration. The detailed Trump economic agenda is still forming, but arbitrary U.S. trade action would threaten Canadian economic interests. Retreating from free trade would be a disaster for Canada, which has built its wealth on selling, buying and investing with other countries.

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For investors, the British election is nothing next to upheaval in the EU

ERIC REGULY

Shame on us, the press, for not figuring out weeks or months ago that British Prime Minister Theresa May would call a snap election this year. Why wouldn’t she be opportunistic?

The Labour Party, under the hapless Jeremy Corbyn, is sinking fast. Recent polls put Labour some 20 percentage points below the Conservatives. Ms. May might not win the June election by a landslide, but she almost certainly will add some bulk to her skinny parliamentary majority (the Conservatives have 330 seats out of 650).

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Reining in Toronto housing market will need delicate pas de trois

DAVID PARKINSON

Economist Derek Holt has a word of advice for the three levels of government that are looking for policy solutions to cool Toronto’s overheated housing market: Be careful what you wish for.

“Rich housing valuations already permeate much of the economy and behaviour, and taking steps against it at such elevated levels [in the housing market] risks seriously damaging the economy,” Mr. Holt, head of capital-markets economics at Bank of Nova Scotia, said in a note to clients on Tuesday morning.

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What spiders can teach entrepreneurs about tension and adaptation

Todd Hirsch and Rob Roach

Imagine you’re a spider. A scientist plucks you from your web, sticks you on a rocket, shoots you into space and lets you out at the International Space Station. She wants to see if you can spin a web in zero gravity.

What do you do?

If you were human, you’d probably lobby the astronauts to bring you back to Earth. It’s our instinct as humans to return to that which is familiar and comfortable.

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New Suncor report signals shifting climate

JEFFREY JONES

Suncor Energy Inc.’s new report on risks of climate change policies to its business would have been an unthinkable document to publish just a decade ago.

It suggests the age of the ever-expanding oil sands megaproject – the company’s foundation – has come to an end if technological developments in transportation and renewable energy continue apace.

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In Britain’s snap election, Theresa May’s real opponents are inside her own party

CARL MORTISHED

Carl Mortished is a Canadian financial journalist based in London.

When British prime ministers call a snap election, there is usually one objective: to trip up the opposition. In the case of Theresa May, who has just announced her intention to seek a general election in June, it begs the question of who she is hoping to wrongfoot.

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We all pay the price for ballooning student debt

CARL MORTISHED

Going to college is no longer just about getting an education. It’s a financial investment, akin to taking out a mortgage but with a nasty sting in the tail. Unlike real estate, you can’t sell the educational asset when you find that your ticket to fame and fortune has become an unaffordable nightmare.

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Buy Canadian isn’t the answer to Trump’s Buy American rhetoric

BARRIE McKENNA

Canadian officials are breathing a sigh of relief that New York has backed off putting Buy American restrictions on most state purchases.

But this isn’t the end of the story for Canadian companies that sell to federal, state and local governments in the United States. Not by a long shot.

Emboldened by Donald Trump’s America First rhetoric and widespread anti-trade sentiment, protectionist purchasing rules are spreading rapidly in the United States – the main market for Canadian exports. New and more expansive purchasing restrictions are likely inevitable.

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Reguly: Let’s hope United Airlines fiasco inspires some oligopoly busting

ERIC REGULY

I hope David Dao, the 69-year-old doctor dragged off the United Airlines flight screaming and bleeding, his nose and teeth smashed, will win millions in compensation – he is planning to sue the company.

I also hope his case unleashes a Peoples’ Spring against the choice-denying oligopolies that are smothering consumers in the United States and elsewhere in the wealthy world.

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U.S. tourism industry facing blowback from Trump’s ‘America First’ message

BARRIE MCKENNA

If Donald Trump is right that the massive trade deficit is a measure of how the world exploits Americans, tourism is where the United States gets its revenge.

But the U.S. President seems intent on screwing it up with his rhetoric and his actions.

When Mr. Trump says “America First,” much of the rest of the world hears, “Foreigners Not Welcome.”

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Canadian Free Trade Agreement is a disavowal of Confederation itself

BRIAN LEE CROWLEY

This is a big year for Canada. The country was founded 150 years ago in an act of supreme statesmanship. It is the 100th anniversary of the battle of Vimy Ridge, where we came of age in a sustained act of courage, heroism and determination. Governments in Canada are now claiming that their recently announced Canadian Free Trade Agreement (CFTA) deserves to keep such exalted company and will come into force on July 1, Canada’s 150th birthday.

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Newfoundland sinking to new low as Canada’s most indebted province

KONRAD YAKABUSKI

Besides being islands, Puerto Rico and Newfoundland don’t have a lot in common. After all, one is a tropical paradise with an average year-round temperature of 28 C., while the other is known to report snow in June, a month sometimes referred to by locals as Juneuary.

Yet, Canada’s easternmost province and the U.S. territory in the Caribbean do share one distinction. Both are broke and deeply in hock. Puerto Rico is currently closer to the brink than Newfoundland and Labrador, as the island and its mainland possession are officially known. But the Rock is sitting on a far more explosive demographic time-bomb that will not be easily defused.

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Poloz maintains interest rates won’t solve Toronto’s housing mess

DAVID PARKINSON

The Bank of Canada remains clear that it doesn’t want to use its interest rates to put the brakes on the runaway Toronto-area housing market. But at the same time, the path is in sight for the bank to contribute a rate hike or two to the solution.

In discussing its latest interest rate decision and quarterly economic outlook Wednesday, the Bank of Canada sounded perhaps more concerned than ever about a rising housing tide in and around Canada’s biggest city. It has now started to talk about the price surge as a “Golden Horseshoe” issue, reflecting its widening geographic spread in Canada’s biggest regional economy. Bank of Canada Governor Stephen Poloz used the word “unsustainable,” and said that “of course it’s vulnerable to a correction.” And he repeated the bank’s position that if the chips were to fall badly, this poses a meaningful risk to the stability of the country’s financial system.

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Foreign sellers pump energy assets back into Canadian hands

JEFFREY JONES

In a just a few short months, the market has done what governments had tried for years to do: secure Canadian energy resources in domestic hands.

Since December, Canadian buyers have snapped up $30-billion worth of oil sands and heavy oil assets. This represents an unprecedented stack of deals at a time when the industry faces weak commodity prices and its old bugbear – high capital costs.

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New age of corporate concentration requires more than just a policy fix

ANDREW JACKSON

Andrew Jackson is an adjunct research professor in the Institute of Political Economy at Carleton University in Ottawa and senior policy adviser to the Broadbent Institute.

Economics textbooks generally begin with a simple model in which prices of goods and services are determined by supply and demand in competitive markets and firms are “price takers.” Yet it is much closer to reality to view the world we live in as one in which a handful of very large companies dominate most markets and have the power to administer prices so as to earn well above average profits or “rents.”

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Why French bond markets may be headed for big trouble

ERIC REGULY

The European bond markets are getting the message. The French election is turning into a tight, four-way race – a cliffhanger – and two of the four leading candidates have no love for the European project.

Eleven days ahead of the first round of the presidential polls, bond investors are getting skittish. The best measure of their sense that political and economic risk is intensifying in France, the euro zone’s second largest economy, is the widening gap, or spread, between benchmark French sovereign bonds and their rock-solid German counterparts.

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Why Canadian bank CEOs shouldn’t lecture Trump on free trade

BARRIE McKENNA

Salvaging Canada’s historic trading relationship with the United States has become a rare national cause in the age of Donald Trump.

Everyone, it seems, wants in on the act – from chief executives and provincial premiers to ordinary Canadians.

The effort makes for some strange bedfellows. Former Conservative prime minister Brian Mulroney was in Ottawa last week briefing Liberal Prime Minister Justin Trudeau and his cabinet on how to deal with the U.S. President.

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Canada adds more jobs, but wage growth stalls

RACHELLE YOUNGLAI

Canada’s job market is booming, but wage growth has slowed to its lowest level in almost two decades.

Average hourly earnings increased 1.1 per cent over March of last year, with full-time earnings up 0.9 per cent – the weakest growth since 1998, according to Statistics Canada’s monthly labour-force survey released on Friday.

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Marine Le Pen waves adieu to fake populist Donald Trump

ERIC REGULY

Marine Le Pen, the election-bound Leader of France’s National Front, was thrilled when Donald Trump took the White House. The Americans had woken up, she said, predicting the Europeans “will wake up,” too, in 2017. She even made a ritual journey to Trump Tower in Manhattan, evidently to breathe the same air as the great man himself.

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For Theresa May, the real challenge will be preserving the U.K.

CARL MORTISHED

Anyone who believes the EU is a plodding bureaucracy that couldn’t run a bath needs to think again. The European Union’s opening gambit in the Brexit negotiations is a master class in how to run your opponent ragged while keeping your cards close to your chest.

Expectations that EU leaders would be herding 27 grumpy cats into a negotiating chamber has proved to be wrong. Instead, Britain was given a list of red lines and a dull procedure for the leaver to follow: first, agreement on the terms of exit; then (hopefully, if there is time) a trade deal. But within that long list of objectives and necessities, there were a few sharp objects. Each is specifically designed not to harm Britain but to cause anger and distress within that segment of the British population for whom Brexit means nothing less than Empire renewal.

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Canada’s employment may be growing, but it needs to get better, not just bigger

DAVID PARKINSON

After months of strong Canadian job growth, it’s almost beside the point whether Friday’s employment report for March will keep the winning streak going. The focus on the Canadian labour market has shifted from quantity to quality.

Economists aren’t expecting much big from Statistics Canada’s labour-force survey in terms of additional job growth, after the economy booked gains of 110,000 jobs in the previous three months, and more than 250,000 since last July. Most anticipate a pause in the month; the median estimate is an inconsequential 5,000 gain, and few would be surprised by a small decline. Nevertheless, with the economic data generally signalling accelerating growth, the upward trend in hiring looks pretty locked in.

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Ten ways the 2015-2016 recession changed Alberta

Todd Hirsch

Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of the forthcoming book, Spiders in Space: Successfully Adapting to Unwanted Change, to be released April 20, 2017.

It may not feel like it, especially for the unemployed. But by most measures, Alberta’s recession of 2015-16 is starting to lift. Business confidence is slowly returning and forecasters are expecting modest economic expansion this year.

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A low-carbon Canadian economy: How to get there

Glen Hodgson

The worldwide transition toward a low-carbon economy is well under way. Ambitious international targets are in place and policies are being actively debated, developed and implemented step by step to make the transition. Many businesses and institutions – notably in Europe, China and North America – are reducing their greenhouse gas (GHG) footprint. The more innovative firms and governments are exploring new growth opportunities in this lower-carbon world. Yet, progress is uneven across sectors, regions and governments, and the 180-degree turn in U.S. climate policy under Donald Trump risks slippage from the steps already taken.

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Canada's return to trade deficit gives BoC breathing room

DAVID PARKINSON

Canada’s economic resurgence took a blow to the midsection Tuesday, as a surprise return to a trade deficit in February sounded a note of caution about a core component of the country’s good-news growth story.

But for a Bank of Canada that has resisted embracing the faster-growth tale, the trade disappointment couldn’t have come at a better time.

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A trade deficit doesn’t mean you’re losing the game

BARRIE McKENNA

In the global trade race, February was a winning month for the United States. Its trade deficit with Canada and the rest of the world shrunk nearly 10 per cent to $43.6-billion (U.S.).

But it wasn’t good enough for U.S. Commerce Secretary Wilbur Ross, who says he won’t be satisfied until the score is reversed.

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Lookahead: Does the economic uptick have legs? This week should provide clues

DAVID PARKINSON

 

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In the Trump era, Canada might need NAFTA’s Chapter 11

BARRIE McKENNA

Now that the Trump administration has outlined what it wants in a renegotiation of the North American free-trade agreement, it’s time for Canada to post its own NAFTA 2.0 wish list.

For many, killing Chapter 11 would be a good place to start.

That’s the provision that allows companies to directly sue governments for damages – one of the most controversial and maligned parts of the deal.

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Maxed-out taxpayers limit fiscal choices in Canada

BARRIE McKENNA

Accountants will tell you that a switch goes off in peoples’ brains when they start paying more than half of what they earn in taxes. They feel angry and frustrated. Many look more aggressively for tax relief – legal or otherwise.

Five years ago, Nova Scotia was the only province with a top marginal income tax rate of 50 per cent. Today, that’s the case in seven out of 10, including every province east of Saskatchewan. In Ontario, Quebec, New Brunswick and Nova Scotia, top earners face an income tax bite of at least 53 per cent. This reality goes a long way toward explaining the ubercautious approach by Ottawa and many of the provinces during this year’s budget season.

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Canadian aluminum caught between China’s rise, U.S. protectionism

IAN McGUGAN

Aluminum, one of the world’s more mundane metals, has suddenly turned into a dramatic case study in how global trade tensions can cast clouds of uncertainty over a swath of the Canadian economy.

Part of the challenge to Canadian manufacturers of the metal is nothing new. It consists of a seemingly endless wave of low-cost aluminum from Chinese smelters. Over the past decade, the Asian giant’s surging production has clobbered competitors around the world and dragged down prices of the metal by nearly a third.

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Surprisingly strong economic data puts Bank of Canada on the spot

DAVID PARKINSON

Canada’s economy has hit the ground running in 2017. Now the Bank of Canada has little choice other than to play catch-up.

Friday’s real gross-domestic-product report showed that the economy expanded 0.6 per cent month over month in January, matching the strongest single-month growth since mid-2011. The gains were spread all over the economy: Manufacturing, construction, retail and wholesale trade, energy and mining all showed impressive growth.

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