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Willy Kruh is KPMG's global chairman of consumer markets.

After years of unprecedentedly low interest rates, the Bank of Canada made the decision this summer to raise its key rate on two occasions. While historically, a rate of 1 per cent is incredibly low, raising it further is giving Canada's business community concern.

With speculation that the central bank could raise rates again this year, we have to go back all the way to January, 2009, to find the last time it was above 1 per cent. This means Canadian consumers and businesses have been benefiting from near-zero lending rates for almost nine years. Bank prime was 4.5 per cent just prior to that – a number that seems unfathomable to many today.

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Canada's C-Suite thinks the recent hikes will hurt their bottom line and more than two-thirds oppose further increases. On top of the C-Suite's concern for their own companies has to be concern about the health of Canadian consumers. With long-term low rates, consumers did exactly what the Bank of Canada wanted us to do – borrow and spend to get our economy out of the recession. But years of cheap money also meant we racked up debt at a record rate and today, for every dollar of household disposable income, Canadians hold a staggering $1.68 in debt.

While a half-percentage-point climb in mortgage rates isn't likely going to lead to a slew of defaults, it does mean consumers will have less money to spend elsewhere. Those recent hikes mean the annual cost of carrying a $500,000 mortgage went up $2,500 and, when added to higher payments to cover car loans, lines of credit and other debt, consumers are feeling the financial squeeze. With consumer spending representing close to 60 per cent of Canadian GDP, this is a dangerous tightrope to walk.

Canadian business leaders are also starting to worry about where the United States is headed on NAFTA negotiations. In March, there was a near unanimous viewpoint by the C-Suite that the U.S. administration would seek only minor tweaks. Now, seven in 10 believe there will be major changes to the deal and 40 per cent think it's somewhat likely the United States will terminate NAFTA altogether.

While only time will tell where the negotiations will land, the risk that NAFTA will be torn up should be a wake-up call to Canadian business about the long overdue need to diversify our trade globally. I had hoped that following a financial crisis that nearly crippled the United States and much of the global economy we would have seen more domestic firms get serious about venturing outside of Canada and trading with other markets, but that just hasn't happened. According to Statistics Canada, in 2011, 72 per cent of Canada's exports went to the United States. By 2016, that increased to 75 per cent. In absolute terms, the value of exports to the United States climbed about $63-billion over that period and by less than $2-billion with the rest of the world.

I believe the United States will always be our largest trading partner and greatest friend, but Canadian businesses have to look stateside far more often than they do now. Today, Canada has 11 free-trade agreements currently in force outside of NAFTA – but you wouldn't know it looking at the current percentage of trade with the United States. The new Canada-European Union Comprehensive Economic and Trade Agreement (CETA) holds great promise. Currently, this market represents only about 8 per cent of our exports. The Trans-Pacific Partnership (TPP) also holds great promise, with or without the United States.

No matter what the outcome of the NAFTA negotiations, the issues and rhetoric that have clouded these talks clearly demonstrate the perils of relying mainly on one trade partner.

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