Increasing tariffs and duties on either raw material or finished goods just forces up prices - https://www.bls.gov/news.release/cpi.nr0.htm Government used tariffs and duties as stop gap when it comes to votes USA is gaining in-shoring jobs - http://www.stltoday.com/news/national/govt-and-politics/us-factories-expand-at-strongest-rate-in-almost-years/article_f503790c-d2f2-593f-b6b3-e469da499080.html USA has made changes to tax codes and regulations, but more needs to be done in terms of policies Rising Healthcare Costs - https://www.cnbc.com/2017/08/09/employers-to-spend-about-10000-on-health-care-for-each-worker.html Rising Labour Costs - https://www.reuters.com/article/us-usa-economy-costs/u-s-labor-costs-increase-solidly-in-the-fourth-quarter-idUSKBN1FK1XR?il=0 https://www.reuters.com/article/us-bonds-investments-analysis/costly-dollar-hedges-tarnish-u-s-bonds-for-overseas-investors-idUSKCN1GC0OF Rising USD$ - https://www.reuters.com/article/us-bonds-investments-analysis/costly-dollar-hedges-tarnish-u-s-bonds-for-overseas-investors-idUSKCN1GC0OF

1. TRADE WARS ARE THE NEW
BATTLEGROUND
PAUL YOUNG
MARCH 2, 2018

2. PAUL YOUNG - BIO
• CPA, CGA
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• Former Lecturer – CGA Ontario – Public
Finance, Advance Accounting, Finance and
Advance Information Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. OVERVIEW
• This presentation looks protectionism policies when it comes to merchandise trade.

4. AGENDA
• Summary
• What is protectionism
• Issues with protectionism
• Top exporting countries
• China and USA Trade
• Canada and Trade Deficits
• Blog – Canada and Trade
• USA Steel Tariff
• Softwood Lumber

5. SUMMARY
• Increasing tariffs and duties on either raw material or finished goods just forces up prices -
https://www.bls.gov/news.release/cpi.nr0.htm
• Government used tariffs and duties as stop gap when it comes to votes
• USA is gaining in-shoring jobs - http://www.stltoday.com/news/national/govt-and-politics/us-factories-
expand-at-strongest-rate-in-almost-years/article_f503790c-d2f2-593f-b6b3-e469da499080.html
• USA has made changes to tax codes and regulations, but more needs to be done in terms of policies
• Rising Healthcare Costs - https://www.cnbc.com/2017/08/09/employers-to-spend-about-10000-on-health-care-for-
each-worker.html
• Rising Labour Costs - https://www.reuters.com/article/us-usa-economy-costs/u-s-labor-costs-increase-solidly-in-the-
fourth-quarter-idUSKBN1FK1XR?il=0 https://www.reuters.com/article/us-bonds-investments-analysis/costly-dollar-
hedges-tarnish-u-s-bonds-for-overseas-investors-idUSKCN1GC0OF
• Rising USD$ - https://www.reuters.com/article/us-bonds-investments-analysis/costly-dollar-hedges-tarnish-u-s-bonds-
for-overseas-investors-idUSKCN1GC0OF

6. WHAT IS
PROTECTIONISM
Protectionism refers to government actions and policies that restrict
or restrain international trade, often done with the intent of
protecting local businesses and jobs from foreign competition.
Typical methods of protectionism are tariffs and quotas on imports
and subsidies or tax cuts granted to local businesses. The primary
objective of protectionism is to make local businesses or industries
more competitive by increasing the price or restricting the quantity
of imports entering the country.
Source - http://www.investopedia.com/terms/p/protectionism.asp

7. ISSUES WITH
PROTECTIONISM
Many countries are receiving pressure at home to create jobs. The problem is that
government cannot create jobs directly as that is up to private sector. Government
has a role and that is to do with policies, like taxation or regulations or
trade/investment agreements with various countries around the world.
Some countries artificially keep their currency low as part of trying secure foreign
direct investment. Many countries feel these countries that are using labor and/or
currency rates to keep their costs down are not acting fairly as such will look at
counter measure through the form of tariffs/duties.
Some countries artificially control investment by putting restriction on ownership.
Foreign ownership restriction along with business subsidies can lead to companies
within those countries having an unfair advantage over companies in other
countries.
Consumers can pay higher prices due to import taxes

8. GLOBAL PROTECTIONISM
Source - http://www.cnbc.com/2017/04/18/imf-raises-global-growth-forecasts-warns-against-protectionism.html
"With persistent structural problems—such as low productivity growth and high
income inequality—pressures for inward-looking policies are increasing in advanced
economies. These threaten global economic integration and the cooperative global
economic order that has served the world economy, especially emerging market and
developing economies, well," the International Monetary Fund said in its latest World
Economic Report.
IMF – CNBC – April 18, 2017

9. PROTECTIONISM – GLOBAL CONSUMER
• Source - http://www.jsonline.com/story/opinion/contributors/2017/04/13/roth-donald-trumps-
protectionist-trade-inclinations-hurt-wisconsin/100413028/
In contrast, hiking taxes on imports — as Trump has signaled — is regressive and
serves to hurt consumers, particularly the working class, by forcing American
consumers to pay higher prices. Whether it is a tariff or the BAT tax, consumers
ought to know that the end result will be higher prices on cars, clothes and
Coronas.
Milwaukee Journal-Sentinel – April 13, 2017

10. TOP EXPORTING COUNTRIES
Source - http://www.worldatlas.com/articles/exports-by-country-20-largest-
exporting-countries.html
FORECASTED GDP GROWTH
http://www.gbm.scotiabank.com/English/bns_econ/forecast.p
df

11. USA VS CHINA
TRADE 2016
Exports $116B
Imports $463B
Deficit ($347)B
New Trade 2017
• $43B Alaska LNG
• $37B Aerospace
• $170 Other

12. CANADA TRADE DEFICIT
Source - Stats Canada
Issues:
• More taxes (Carbon Taxes)
• Tax hikes (Payroll Taxes, Income
Taxes, Small Business Taxes
• High hydro costs
• Pipelines approved, but not built
• Lack of capacity to expand exports
(Ports, pipelines, roads, bridges)
• No new trade deals (Emerging
Markets)
• Pushing social agenda (Agenda
2030)

13. BLOG - TRADE
• http://www.canadianmanufacturing.com/exporting-and-importing/canada-u-s-trade-not-broken-no-need-trump-fix-freeland-says-
181024/?custnum=11196356799&title=&utm_source=CMO&utm_medium=email&utm_campaign=161222B
•
• Key Quote “I think the reality is the trading relationship with Canada is the farthest possible thing from being broken. It is very balanced and
mutually beneficial”
•
• Fact:
• Mexico has leapfrog Canada in terms on trade with the United States - http://www.huffingtonpost.ca/2016/12/07/mexico-us-trade-
canada_n_13487730.html . “According to data from the U.S. Commerce Department, trade in goods between the U.S. and Mexico amounted to
US$245.3 billion this year through October, while U.S.-Canada trade totaled $230.4 billion”
• Canada is imposing carbon taxation and United States is not - http://www.cme-mec.ca/download.php?file=58ju7z2st.pdf – Canada needs to be
competitive in terms of taxation as well as regulations. Business investment by companies will go to various jurisdictions that maximize return on
investment (ROI)
• http://www.huffingtonpost.ca/2016/11/18/alberta-texas_n_13075844.html “Texas is right now in much better fiscal condition than Alberta.”
• Softwood Lumber - http://www.forestbusinessnetwork.com/66288/softwood-goes-deeper-than-just-lumber/ “The fact remains that Canadian
lumber companies continue to enjoy a supply of logs from government sources, while US counterparts that are in areas with a high density of
federally owned timberland continue to die off. This has far-reaching consequences for the US Forest Service and other land managers that no
longer have markets to sell their logs. That brings me to a question, why can’t mills positioned near the Canadian border compete for logs that
are in Canada? Now that the Canadian system is more market-based, shouldn’t logs be free to cross the border like lumber?”
• Canada has dropped out of the top 10 for FDI - https://www.slideshare.net/paulyoungcga/fdi-foreign-direct-investment-the-importance-of-
capital-inflow
• Ontario has fallen in terms of mining investment - http://www.mining.com/canadas-saskatchewan-manitoba-worlds-new-top-mining-
destinations/

14. USA STEEL THREATS
Source - https://economics.cibccm.com/economicsweb/cds?ID=4751&TYPE=EC_PDF or https://www.reuters.com/article/us-usa-trade-
trump/trump-to-impose-steep-tariffs-on-steel-aluminum-stokes-trade-war-fears-idUSKCN1GD4ZW
• Trump said the duties, 25
percent on steel imports and
10 percent on aluminum,
would be formally announced
next week, although White
House officials later said
some details still needed to
be ironed out.
• Trump believes the tariffs will
safeguard American jobs, but
many economists say the
impact of price increases for
users of steel and aluminum,
such as the auto and oil
industries, will destroy more
jobs than curbs on imports
create.

15. SOFTWOOD LUMBER
Source – Stats Canada
November 2017, the US Commerce Department issued a
final determination that Canada was giving unfair subsidies
to its softwood lumber producers. The Trump
administration came to the conclusion that Canadian
producers should pay on average a 20.23 percent tariff on
exports of softwood lumber to the United States, with the
largest producers paying individualized rates. The decision
set in motion a series of challenges, which are likely to play
out over the next few years.
US softwood lumber producers are at the centre of this
disagreement, arguing that their Canadian rivals have a cost
advantage because, for the most part, they manufacture
lumber from trees grown on Canadian government-owned
land, while US wood companies produce using trees grown
on privately owned land.
Source - https://www.cigionline.org/articles/lumber-fuels-
us-effort-axe-resolution-panels