Cultivating new trade relationships and breaking down inter-provincial trade barriers are good ideas in the face of American tariff threats, but trying to diversify away from the US remains a tall task, says BMO Financial Group chief economist Douglas Porter.
Speaking as part of a Chamber of Marine Commerce webinar earlier this month, Porter said the potential for US tariffs has created plenty of momentum toward moving trade away from the US, momentum that will hopefully continue. However, the sheer size and proximity of the American market makes it extremely difficult to reroute shipments to other parts of the world, notwithstanding the obvious logistical and political hurdles.
“I think we have to be clear-eyed and realistic about what we can accomplish over a short period of time,” Porter said.
“There is the gravity theory with trade. And that suggests trade is like gravity: it gets pulled toward the largest and closest market. It’s basically history and geography that means we’re always probably going to have a large share of our trade driven by the US. That is almost inescapable.”
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