Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Report on Business

Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.


Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ROB INSIGHT section.


All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.


Learn more about Globe Unlimited and how to subscribe.

Economy Lab

'Stunning loss' of Canadian market share in U.S.: report Add to ...

Truck traffic is way down at many of the key Canada-U.S. border crossings.



The assumption is that the flow would pick up as the U.S. economy recovered. And it has, to some degree.



But a new report by CIBC World Markets economist Krishen Rangasamy suggests a lot of that traffic may never come back.



Canada, Mr. Rangasamy says, has suffered a "stunning loss of market share" in the United States for exports of most goods, with the exception of a clutch of resources. He blames the high Canadian dollar and the shift towards a service economy and away from manufacturing. Services, while more sheltered from global competition, are also inherently less exportable, he pointed out.



U.S. exports bounced back strongly in the third quarter. But Canada didn't get the benefit and its current account deficit was "shockingly large," he said.



The numbers are devastating. Between 2001 and 2010, Canada's share of U.S. imports has fallen to 9.1 per cent from 25.1 per cent in furniture, to 5.4 per cent from 10.1 per cent in electrical equipment, to 4.8 per cent from 10.3 per cent in beverages and tobacco products, to 2.2 per cent from 6.8 per cent in textiles, to 17 per cent from 30.3 per cent in printing, to 10.3 per cent to 18.1 per cent in fabricated metal, and to 19.9 per cent from 31.1 per cent in plastics and rubber.



It's a similar story in wood, paper, livestock and forestry products.



The lost market share represents billions of dollars worth of exports that may never come back.



So who's grabbing Canada's market share? In manufacturing, it's largely the Chinese. In 2009, China overtook Canada as the leading exporter to the U.S. Indeed, the Chinese are gradually squeezing Canadian companies out of key traditional markets in the U.S. - telecommunications equipment, electrical equipment, furniture, household goods and even shellfish, according to a recent report by Paris-based Euler Hermes Group, the world's largest trade credit insurer.



CIBC predicts that Canada's external trade balance is likely to stay "in the red" for several more years and the Canadian dollar will remain high.



This all puts intense pressure on Canadian manufacturers to become much more productive.



Follow Economy Lab on twitter





Follow on Twitter: @barriemckenna

 

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular