How do you think Canada should respond to US-style protectionism?
Personally, I'd say change shift the tax base from income to resources (e.g. gas tax), but don't retaliate with tarifs.
By shifting to a gas tax, we'd create a downward pressure on the cost of services (after all, with a lower income tax, people could afford pay cuts), but a rise in the cost of gas and, as a result, the cost of products from distant parts of the o****ry, thus encouraging us to buy locally. Essentially, this would create a natural 'tarif' effect of sorts but without the potential political repercussions of an actual tarif, thus giving Canada the moral high ground in any WTO dispute against the USA.
A gas tax would also make Canada's resource exports less price-competitive, but a lower income tax could make our services more so, thus encouraging the export of finished higher-value products (i.e. products most of the value of which comes from the work put into it rather than just the value of the raw material put into it alone) and services, which could include such intangibles as tourism and education (foreign students studying in Canada), thus making our economy more tarif resistant in future (after all, how do you place a tarif on people leaving your country to exploit lower-cost services in Canada?).
With such a system, we would see the US resource industry grow while the Canadian resource industry would stagnate. However, we'd find our more service-oriented and more tarif-resistant industries grow possibly at the cost of the US services industries.
What would be yuor thoughts on an appropriate response to growing US protectionism?
Personally, I'd say change shift the tax base from income to resources (e.g. gas tax), but don't retaliate with tarifs.
By shifting to a gas tax, we'd create a downward pressure on the cost of services (after all, with a lower income tax, people could afford pay cuts), but a rise in the cost of gas and, as a result, the cost of products from distant parts of the o****ry, thus encouraging us to buy locally. Essentially, this would create a natural 'tarif' effect of sorts but without the potential political repercussions of an actual tarif, thus giving Canada the moral high ground in any WTO dispute against the USA.
A gas tax would also make Canada's resource exports less price-competitive, but a lower income tax could make our services more so, thus encouraging the export of finished higher-value products (i.e. products most of the value of which comes from the work put into it rather than just the value of the raw material put into it alone) and services, which could include such intangibles as tourism and education (foreign students studying in Canada), thus making our economy more tarif resistant in future (after all, how do you place a tarif on people leaving your country to exploit lower-cost services in Canada?).
With such a system, we would see the US resource industry grow while the Canadian resource industry would stagnate. However, we'd find our more service-oriented and more tarif-resistant industries grow possibly at the cost of the US services industries.
What would be yuor thoughts on an appropriate response to growing US protectionism?