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It is not difficult to identify the reasons why business investment in the U.S. is improving faster than in Canada. The Trump administration has been unrelenting in signalling its desire to improve the business climate, from reducing regulations to sharply lowering the corporate income tax (its consistency in staying on-message in this area contrasts with its erratic communications everywhere else). Meanwhile in Canada, several jurisdictions are doing the opposite, whether by sharply raising the minimum wage in a short period or blocking the construction of pipelines that have already met all the necessary regulatory approvals.

Overhanging all this is uncertainty about the outcome of the NAFTA renegotiations, an uncertainty that gives firms an incentive to invest in the U.S. over Canada; if talks fail, they have an American beachhead from which to produce for the U.S. market. If talks succeed, they can export freely to Canada across the border. In such an environment, it is not surprising to see the Trump administration resisting and even escalating tensions with Canada, since continued uncertainty may actually favour the U.S. while harming us.

The contrast between buoyant business investment in the U.S. and weak investment in Canada is mirrored in the superior performance of the broader American economy. Compared to that three-per-cent underlying annual rate of growth of real GDP in the U.S., in Canada GDP growth has fallen to half that since mid-2017. It is now lower than before the oil slump began in 2014 despite the addition of large dollops of both fiscal and monetary stimulus.