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Canadian governments have an opportunity here if they can resist getting drunk on last year’s good economic fortune.

Photo by Canadian Press/Sean Kilpatrick

There’s little anyone can do to stop Trump from wreaking havoc with international trade, and his tax cuts will lure investment that might otherwise have occurred in Canada. But Trump needn’t influence the spending decisions of Finance Minister Bill Morneau, who said Tuesday thatthe next budget will be on Feb. 27, or his provincial and territorial counterparts. There’s an argument to be had about whether Canada needs lower taxes on investment to remain competitive. But we should keep in mind there will also be an advantage to having sound finances, a goal that Trump’s America has abandoned.

Some think the recent chaos in financial markets is the work of those vigilantes mentioned above. Bond yields jumped before stock prices plunged. That might have had something to do with investors deciding there are safer bets than lending the Trump administration money at 2.5 per cent, the yield on 10-year Treasury debt at the start of the year.

The yield on the U.S. benchmark now is around 2.9 per cent. A possible reason: Now that all of the world’s major economies are growing again, investors have options. That means the United States will have to pay more to finance its spending than it has had to in years.

Interest rates will be rising most everywhere as central banks lift borrowing costs to stay ahead of inflation. Still, those places with reputations for sound fiscal management will have an advantage because creditors will accept lower risk premiums to finance their debt. Canada is one of those places. The federal government is one of a small number of sovereigns that survived the financial crisis with its credit rating intact, and five of 10 provinces have balanced budgets.