Pollsters have noted a surge in patriotic sentiment as U.S. President Donald Trump takes jabs at Canada and as his tariff plans evolve from threat to reality. (Photo by Lyle Stafford/SOPA Images/LightRocket via Getty Images) · SOPA Images via Getty Images
The burgeoning ‘Buy Canadian’ movement brought on by trade tensions with the U.S. could have a “meaningful” impact on the Canadian economy, a new report from Bank of Montreal says, adding around $10 billion annually and giving a boost to growth.
However, BMO senior economist Robert Kavcic cautions that “this is a very difficult economic knot to untie,” noting the complex origin stories of some goods and the challenges of replacing others with Canadian substitutes because of cost or scarcity.
“Patriotism doesn’t come without a cost — in this case, less selection and most likely higher prices,” Kavcic wrote in the report, published Tuesday.
Pollsters have noted a surge in patriotic sentiment as U.S. President Donald Trump takes jabs at Canada and as his tariff plans evolve from threat to reality. The growing trade war has inspired movements to purchase Canadian-made products at both individual and institutional levels.
Kavcic describes the trend as “behavioural economics at work” and says “the impact should be noticeable.” An addition of $10 billion in annual domestic spending could add 0.3 percentage points of economic growth in a year, he says. That growth would come from shifts in consumer spending, government procurement and more people travelling within Canada’s borders.
“The impact could be further supplemented by changes in fiscal policy and the value of the Canadian dollar, but still outweighed by the impact of the trade war itself,” Kavcic noted.
There is already evidence that fewer Canadians are making trips to the U.S., and Kavcic says “a modest domestic shift” in travel would have “a modest net economic impact.” Government spending already largely leans heavily Canadian, Kavcic says, but the sheer scale “still points to a modestly positive economic impact should governments push this policy — and we assume they will.”
A consumer movement towards buying more Canadian goods “could push a noticeable $6 billion in consumer spending towards Canadian value added,” Kavcic says — though there are clear challenges. Many products may be partly produced elsewhere, or made in Canada comprising parts sourced from abroad, Kavcic says, observing that “made in Canada” products can include “up to 49 per cent foreign content.”
Products might also be made in Canada by a foreign-owned company, Kavcic adds, employing local labour but sending the profit outside Canada. “Do those ‘Buying Canadian’ consider that ‘good’ or ‘bad’ on balance?” he asked.
Consumers … won’t be able to realistically fill a full shopping cart with home-grown products.Robert Kavcic, BMO senior economist
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