IMF: Canada faces risks from US Trade policy

As reported by Reuters, Canada faces extreme risks from US tax and trade policies according to the International Monetary Fund (IMF).

Key quotes

"In the preliminary findings of its annual review of the Canadian economy, the IMF said that interest rates should be raised only gradually, even as inflationary pressures are building and that the Bank of Canada’s approach appears to be broadly appropriate. The Bank of Canada has raised rates three times since July 2017 and there are growing expectations that the central bank will hike again this July.

“However, economic anxiety is high due to trade tensions, uncertainty about the outcome of NAFTA negotiations, and the impact of the U.S. Tax Cuts and Jobs Act on Canada’s medium-term competitiveness,” the IMF said in a statement.

There is “considerable” uncertainty over what impact U.S. tax reform will have on Canada, which could make Canada a less attractive place for investment in the medium-term, the IMF said.

As well, the prolonged renegotiation of the North American Free Trade Agreement (NAFTA) could dampen investment. If NAFTA talks fail and tariffs revert to World Trade Organization rules, Canada’s long-run economic growth could be 0.4 percent lower than it would be otherwise, the IMF said."

- Reuters

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