We spoke with University of Saskatchewan economics professor Dr. Joel Bruneau for our regular bi-monthly review of the provincial, national, and international economy — Dr. Bruneau said all his attention is still on the trade war, which is wreaking economic havok for no clear gains on any side.
Read the last economics report with Dr. Bruneau on Discover Moose Jaw here.
Q: Well, what is top-of-mind for you at this point, Dr. Bruneau? Still the tariffs?
Well, we know now that Trump seems to be a little bit more serious about his applications of tariffs, but I still don’t see a coherent plan here. So now, we’re moving into that next phase, which is the retaliation phase, and how that’s going to work out over the next, say, month or so. Because in April, in like three weeks’ time, we’re going to see more.
Q: Given the rhetoric from the White House and from Trump, is it possible they still don’t understand themselves what they’re doing?
I mean, we’re still getting questions like, ‘Who pays for the tariffs?’ and so, I think it was the White House spokesperson, Leavitt, who said (this week), ‘No, the exporters pay for it.’ And that’s just wrong.
We can’t quite figure out if she just misunderstands what’s going on, or if she’s purposely — my comment to a friend of mine, for example, was, if you Google ‘gaslighting’, they just direct you to that video. Because we know how tariffs work, but they just keep saying this, and you know, you’re kind of questioning your own sanity, like, this is just insane.
Q: Given the back-and-forth and inconsistency from Trump and his administration, do you still believe ‘wait-and-see' is a viable strategy?
I still think it’s legitimate to just hold back and see what happens. There’s a lot more pushback from the business community in the United States.
But we’re seeing decreases in stock market prices, and there was always this belief that the Trump administration would respond to these kinds of signals. It looks like perhaps they’re not, and they’re much more sanguine about entering reduced growth, or indeed a recession in the United States.
That kind of changes, I think, the strategy that a country like Canada might have to do — we might not be able to just rely on American pressure on the administration to back off. It’s not quite clear that’s going to work, because there are a lot of people that are talking about this now (as a good thing).
Two weeks ago, people weren’t necessarily talking about the slowdown, or jobs, they were talking more about ‘tariffs will be inflationary.’ Well, it won’t be inflationary if you cause a recession.
I think the federal government response is OK. Let’s just see how this plays out, and then maybe in April, we have to do something more.
Q: Can you speak a bit to that change, then, that Trump now seems to be OK with potentially causing a recession, as opposed to his campaign promises?
I think the pre-election promises is not unlike most politicians, you know, ‘Everything I promise is good! There’s no cost to this, and nobody will be hurt by my policies!’
The rhetoric out of the administration now is, ‘No, no, no, of course tariffs will cause damages, but it’s worth it!’
In that sense, they’re being more reasonable, and in that regard, maybe we could talk about, well, perhaps you’re underestimating the cost and overestimating the benefits, and so we can have a reasoned discussion about whether or not this policy makes sense.
But I still don’t get the sense from the Trump administration that they’re listening to reasoned arguments. They’re mostly looking for excuses.
Q: What did you make of Trump’s press conference this week accusing customers of ‘illegal boycotts’ against Tesla, and his switch from anti-electric to pro-Tesla?
Customer-driven boycotts can in no way be considered illegal. A claim that, you know, the boycott of Tesla is illegal is a non-sequitur. It just makes no sense at all. Canadian consumers are buying more Canadian-made goods and being quite active in searching out Canadian-made goods and not buying American-made goods.
There’s nothing illegal about that.
Q: What are you seeing in terms of the provincial economy?
It’s hard to tell what’s going on in Saskatchewan, because data always lags. My expectation would be that there’s an awful lot of hold-up on projects going forward and contracts being finished.
What I would expect is a really big pause on a lot of activity as firms try to figure out what’s going on, and you can imagine Iowa farmers, looking for Canadian potash and saying, 'Well, let’s just hold off on this, don’t send a delivery, because I don’t want to pay even 10 per cent tariffs. It might disappear in five weeks’ time, in which case then I’ll buy it.'
It’s just a real hodgepodge, and that’s going to create an economic slowdown in Saskatchewan, and all across Canada as we try to figure out, is this still a pseudo-negotiation, or is this a permanent phase from the United States? I don’t think anybody can predict what will happen, and that uncertainty is going to kill economic activity.
This is where government needs to step and provide reassurance and support, and our provincial government is well positioned to potentially provide that. It’s in a good place in terms of growth, and it can afford to perhaps take on a larger deficit now, knowing that it can be paid off later.
So, I’m waiting for Budget Day to see if there are any considerations in there to help get the province through. They will have data nobody else has, and what they plan to do about about it, so I’m starting to look at, you know, whether the message coming out of the provincial government is to try and mitigate some of the damage.
One of the major issues right now is that Parliament is prorogued, and it’s likely we’ll have an election here, soon, so the federal government is mostly paralyzed until that happens. And even then, no matter who wins that, it will take even more time for the federal government to get settled, so right when we most need stability and established leadership to buffer that lack of private-sector confidence, it’s not there.
So, the pressure now is going to come on the premiers to provide that leadership that often has been left to the federal government.