During the first US presidential debate last week, Republican nominee Donald Trump predictably returned to one of the central themes of his campaign; that the US is being cheated by global trade rules. As he has done before, Trump reserved most of his criticism for China and Mexico. But some of the comments he made suggest that Canada would be caught up in a damaging trade war if he wins November’s election. It turns out that Trump’s biggest issue with Mexico is its national value added tax (VAT), which is of course almost identical to Canada’s harmonised sales tax (HST). The upshot is that it would be foolish to think Canada could remain largely above the fray in any renegotiation of NAFTA. Even just the uncertainty about whether Trump would follow through on his hard line trade rhetoric could damage investment in Canada.
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