The American economy thrives despite the definitions. Will you continue?

By almost every indicator, the American economy holds well. When Donald Trump launched his global trade war, economists and markets said that his customs tariff policy would slow down the economy, increase prices and significantly reduce global trade.

However, stocks all over the world at all, the country’s work is strong, its economy is expanding and the expected rise in inflation has not been fulfilled.

Canada’s economy also showed sudden flexibility, as spending on consumers began to seize last month and low unemployment.

Economists told CBC News that it is unclear whether the effect of definitions has been exaggerated, or if there is more pain. But they say that flexibility in both countries is fragile, and it can be raised quickly if the trade war is worsening or expanding.

Lack of revenge

BMO Douglas Porter Porter says that there are two main factors who lead the recent American flexibility.

“The other countries were not really discussing against the United States, so their exports did not face this pressure on this pressure. On the other hand, the American consumer was very great from this,” Porter said.

Meanwhile, American companies did not pass the costs of definitions. General Motors, for example, issued profits last week, which said Trump’s tariff policies had a 35 percent decrease in profits in the second quarter. The auto industry company said that the definitions of cars and spare parts led to an American loss of $ 1.1 billion in its quarterly profits.

But still, the prices did not exceed.

This has become a trend between affected American companies, “says Royce Mendes, the administrative director of Diggardins Capital Markets.

“Some companies may choose merely eating a customs tariff in costs instead of drawing President Trump’s anger,” Mendes said.

General Motors’s arrow fell on the news, but has been recovered since then, and he undermined the losses and climbing throughout the way to where it was before its profits were published.

Financial markets had some volatile sessions, including sharp sales when announcing the customs tariffs, and large gatherings when exemptions. But stock markets in both Canada and the United States in or near standard levels or near – which investors believe are a sign that the flexibility we see will continue.

Stock from the products

The question, though, is whether the effect of definitions was simply late.

When the fees were announced for the first time last spring, companies all over the world have defended the product from the door to the United States. This has led to a large group of products – this means that American importers have not yet had to bear the worst definitions.

“There was a lot of front and this may be one of the great reasons that make us see a big impact yet,” Porter of BMO said. “There is likely to have some pain, but I don’t think it will be bad as many economists were concerned earlier this year, at least for the United States.”

Canada’s economy also showed flexibility

But both economists refer to the fact that the Canadian economy was better than almost than anyone.

Economic growth decreased in April, but only by 0.1 percent. Canada statistics say another 0.1 percent decrease is likely to be in May. (These numbers will be confirmed on Thursday.) The unemployment rate began to decrease since the peak in May by seven percent.

The retail numbers showed last week that the consumer spending began to pick up again in June.

“We have referred to this broader flexibility in the consumer,” said Claire Van, an Economist at RBC.

She says that the feelings of consumers fell in the spring, at the height of uncertainty. But since then, RBC has provided American customs data and found Exemptions for CUSMA compatible products They withdrew the average effective tariff rate along the way to 2.3 percent.

“It is a reflection of President Trump’s comprehensive strategy represented in the aggressive exit very early, but then walking back. I mean that the customs tariff was not punitive with Canada as he initially believed – anywhere close to it.”

Sector pain

However, real damage was made in sectors such as cars, steel, aluminum and wood. Anxiety now is that Canves Canade has got products compatible with CUSMA will not last.

“Unless a commercial deal is reached to reduce the customs tariff in the United States and Nadda by August 1, when a new American tariff is appointed into effect, we expect job losses and higher prices of customs tariffs to pressure the available income and cause families to tighten their conservative chains.”

On the one hand, some in the Trump administration will consider the relative flexibility of the American economy as a reason to double the bottom and push more strongly for more customs tariffs.

But the escalation will not be bad for the Canadian economy.

Currently, most companies and consumers have been protected on both sides of the border from the worst effects of definitions.

This shelter depends on a good and difficult balance of importers who eat some costs, and exporters decrease some prices and countries that limit reprisals.

The increase in this balance comes with risks on both sides of the conflict.