Chrystia Freeland resigns ahead of fall economic statement – SFU experts available

Deputy Prime Minister Chrystia Freeland’s shock resignation from the cabinet on Monday, shortly before the scheduled announcement of the fall economic statement, represents a major blow for Prime Minister Justin Trudeau’s government.

SFU experts are available to speak about what Freeland’s resignation means for the federal government and its economic direction in the face of the growing threat of U.S. tariffs.

AVAILABLE SFU EXPERTS:

ANDREY PAVLOV, professor, finance
apavlov@sfu.ca
Expertise: Real estate markets, housing affordability, B.C. and Canadian economy, interest rates, inflation

Regarding today’s news, he notes the following:

During Chrystia Freeland’s tenure as finance minister Canada has seen a jump in deficit spending, an economy-killing capital gains tax increase, and a declining GDP per capita. In my view, she should have resigned long ago on those grounds.

From what I understand, the proposed U.S. tariffs are meant to induce Canada to address the drug and human smuggling and to meet its defense spending obligations under NATO. It seems to me Canada should be doing this regardless. We should also take steps to ensure our economy is growing and competitive, which would also help deflect any potential trade disputes.

STEEVE MONGRAIN, professor, economics  
mongrain@sfu.ca
Expertise: Public economics, law and economics, taxation, economic policies.

GST Holiday and Rebate
The $250 rebate will help Canadian taxpayers. It applies to individuals earning less than $150,000, which helps target those needing it more. Personally, I would have lowered that threshold to $80,000 or $60,000 to give a higher rebate. It is problematic that it excludes the most vulnerable individuals who are not tax filers and retirees.

The GST holiday is more of a political stunt than a sound economic initiative. It is onerous for retailers to administer. Children's clothing is exempt, but not sports equipment. Coolers under 7% are exempt, but over 7% are not. It will stimulate sales, but for some of the durable goods on the list, it will shift consumption timing. I would have done two rounds of rebate instead.

Tariffs
The impact will depend on the sector. The energy sector, which represents our biggest export to the US, would be relatively sheltered, at least in the short term. The lack of comparable alternatives, in and outside the US, combined with the ability for retailers to pass on the tariffs to consumers, means higher prices in the US, but limited impact on imports from Canada.  

The tariffs could lead to significant employment loss for other sectors, like forestry and manufacturing. The auto industry would be particularly impacted due to the complex exchange of inputs across borders. We can expect the Canadian dollar to fall against the US currency.

CONTACT

WILL HENDERSON, SFU Communications & Marketing 
604.368.2532 | will_henderson@sfu.ca

Simon Fraser University

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