Quote:
Will said:
I say your reasoning here is invalid. Somolia has imports per capita far lower than either the US or Canada. By your reasoning, people in Somolia must really not need anything. Really! They like starving to death!
No, the reason the US imports more is because the US has a lot of very rich people, and they like to buy things, lots of things. Sometimes they never even use what they buy, or use them once but never again. They don't need these things, but they want them. Also, on the particular subject of imports from Canada (since we're talking about a trade deficit with Canada), I believe a large portion of that deficit is from timber and beef. While people in the US may enjoy their wood-finish interiors, printing out emails instead of reading on a screen, and their Big Macs and steak dinners, we in no way need them.
But yes, if all economic activity between the US and Canada stopped, it would hurt for both. Using a completely arbitrary example, and one that has absolutely no facts whatsoever to back it up, I would imagine it would be like what would happen if everyone in Texas suddenly decided they weren't going to buy or sell anything made outside of their state anymore. Both economies would take a pretty big hit. However, I would have to agree with Hunpecked here. If the same were to happen between the US and Canada, it would have a much worse impact on Canada, simply because it is the smaller economy.
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As you may expect, I'll have to disagree here as well
Seems I'm in a disagreeable state of mind right now
Your Somalia example is a poor example, since their domestic economy does not allow them to even meet the most basic needs of their people. They don't import much because they don't have the money to, not because they don't
need to to meet their people's needs. Totally different situation than either Canada or the US.
Again, the idea that $100 Billion in trade deficits comes solely from the ultra-rich in the US is rather ridiculous. After all, Canada has it's ultra-rich as well and I'm sure they like their luxuries as much as their American counterparts. Not to mention it takes a lot of useless luxuries to equal $100 Billion in trade deficit! No, I believe the reason is more along the lines that your heavy industry down there, which you have far more than us of course (larger population and all that) doen't have the domestic supply of basic materials, materials that our mines, forests, farms and ranches have in abundance. Why else would you be importing them in such huge quantities? Also following your example of beef and lumber; perhaps you are correct, but only partly. Beef, sure it's somewhat of a luxury. After all, people could get by eating tofu and bread all day and supplementing with vitamins missed out on when not eating meat. But I'm sure they wouldn't like it! Like you said though, the States could get by fairly easily without our beef. Our lumber; yup, again you're partly right. You don't need wood-finished interiors or printed emails. But what else are you going to use for the floor joists in your house? Or the frame, or other such things. Construction is the major usage of Canadian softwoods in the US, and events such as the annual series of massive hurricanes you can expect every year makes the construction of thousands of replacement homes, not to mention all the repair that needs done, necessary. You need it.
I believe that, contrary to your belief, the mining industry is the largest exporter to the US from Canada, though forestry may be ahead slightly. Without our iron, our molybdenum, our copper, our metals of many varieties, your industry would grind to a near halt. It is not economical for countries to import metals from overseas; the huge weight:volume ratio makes it extremely costly, so in a trade war, all that heavy industry, in the American North-East especially, is going to hit a massive stumbling block.
I'm also not sure why you think that a trade war would have a bigger impact on Canada due to our smaller economy. As has already been demonstrated in this thread, the economies are roughly equal in terms of GDP per capita, average income, etc. Our economy is smaller because our population is nearly 10 times smaller! We don't need as large an economy as the US to support our population. Sure, when we could no longer export our minerals, our lumber, our farm products to the US, it would be a hit, a big hit. But Canada is working on establishing markets for our lumber and farm products in Asia, and is doing a good job of it so far. Our lumber could go overseas, and our beef already does. On the other hand, American beef is still fully banned in a lot of countries Canadian beef isn't (Japan comes to mind). We'd find alternate outlets for our surplusses. The States would have, I think, a harder time finding an alternate source of the raw resources that are imported from Canada.
In other words, I think Canada's economy would do all right. But at least we can agree that it wouldn't do either economy any favors!
