Officials from the US Commerce Department and Canadian Finance Ministry are scheduled to speak right now. As that meeting gets underway, JPMorgan is out with a scathing note, calling the US talking points ” economically, politically and geologically illiterate.”
They highlight a few things to make that point:
1) Canada ranks as one of the smallest components of the US trade deficit despite being the second largest trading partner of the US, with Canada responsible for around 3% of the US trade deficit.
2) When you strip out the discounted oil and gas that Canada sends the US, the US runs a large trade surplus with Canada.
3) They can’t find any way to make any kind of math work to even speculate how Trump comes up with his talking point around a $200 billion ‘subsidy’ to Canada.
“Even if you take the entire bilateral deficit including energy, and add in Canadian defense spending by 3% of GDP, you still don’t get anywhere near Trump’s $200 billion figure”
Aside from JPMorgan, I would also highlight that reciprocal tariffs against Canada are also nonsense. According to WTO data, US goods exported to Canada pay just a 1.1% tariff rate on all goods sold.
“The notion that bilateral energy deficit with Canada are ‘subsidies’ is economically, politically and geologically illiterate,” the note says JPMorgan.
I expect some better headlines coming out of today’s meetings at the White House but USD/CAD traders are on edge with the pair up 64 pips to 1.4432 today.
