The barrage of new technologies that are introduced to the market, each with the promise of altering (or at least affecting) the corporate world, can easily make one numb. However, our examination of a few of the more important IT trends makes a strong argument for the fact that something important is taking place. Granularity, speed, and scale—the three key elements that have characterized the digital era—are typically being accelerated by these technological advancements. However, the extent of these shifts in bandwidth, computer power, and analytical complexity is what's creating new opportunities for organizations, inventions, and business models. Greater innovation may be made possible by the exponential gains in processing power and network speeds brought about by the cloud and 5G, for instance. Advances in the metaverse of augmented and virtual reality provide opportunities for immersive learning and virtual R&D using digital twins, for example. Technological development
A new report from BMO Capital Markets says that the relationship between Canada and the US is being tested. In the past, Canada and the US had the biggest trade partnership in the world. Due to the pandemic's effects on supply lines, "reshoring," "near-shoring," and "friend-shoring" became more important than globalization. This was especially true for the United States. BMO analysts Michael Gregory and Shelly Kaushik say that this trend has been good for both Canada and Mexico, but mostly for Mexico. In the year finishing in the first quarter of 2024, trade between Canada and the US reached $920 billion. That's about $2.5 billion worth of goods crossing the border every day. The United States and Mexico traded $905 billion worth of goods back and forth. They said it was on track to pass Canada's trade total sometime this year.
The biggest trade partnership in the world is being put to the test.
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Two-way trade between the U.S. and Mexico reached a record high of $5.3 trillion in 2022, as the southern country passed Canada as America's most important trading partner. The US has a much bigger trade gap with Mexico than it does with Canada. A trade deficit is when the value of imports is greater than the value of exports. The report said that Mexico's $167 billion deficit, compared to Canada's $38 billion deficit, "is the largest it has ever been." This is partly because of a falling trade deficit with China, which is making people in Washington curious. Last year, Canada and the US traded almost $780 billion worth of things with each other and about $140 billion worth of services. We trade about $70 billion worth of things but only $32 billion worth of services.
How bad will it be for Canada if the US stops sending goods there? How bad will it be for Canada if the US stops sending goods there?
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A thought experiment that is fun. The main thing the US sends to Canada is cars and auto parts. When parts go back and forth, they often go back and forth several times. This would seriously mess up the production process in both Canada and the United States. In the short run, jobs in manufacturing in both Canada and the US would be lost. But Canada does have a lot of auto factories in its own country, so even though it would be hard at first, Canada could live without American cars. Popular SUVs and light cars that are imported from the US would have to be moved to other countries. Oil-based goods. The eastern coast of Canada gets most of its oil from the United States. The supply would change, but the oil market is very fluid, so the problems would only last for a short time. This is because of how quickly exports would be cut off. Because of what the US did, Canada might think again about building a transcanadian energy corridor that would let oil and power move back and forth across the country.
If we look at what would happen if Canada shut down its exports in response, we see:
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Canada is the main country that the US buys oil from. Before long, the US would have to rely on less safe oil from other countries, but in the middle term, supply could be increased. Gas from nature. Natural gas is also a big product to the US, just like oil. Even though there is a lot on the world market, the US wouldn't be able to get it all until pipeline capacity was raised. Power. A lot of the energy in the Northeast of the United States comes from sources in Canada. The US would be badly affected by this shortage, and the economy would not grow for many years until new power plants could be built. Parts for cars. Like the trade between Canada and the US, this would have a big effect on the production of cars. Competitors owned by foreigners would get a foothold until US manufacturers could retool and rework the supply chain. Potash. Canada has by far the most potash for fertilizer of any country in the world. If America didn't have fertilizer, its agriculture production would suffer a lot. Wood. Softwood lumber is always a problem for the US and Canada. The US can't meet its own needs for lumber. In the US, home prices would go up by a huge amount.
Canada doesn't have to do much, but they also can't. Since it is a part of the TPP, Canada is in talks with the EU about FTAs. After years of talks, FTAs take even longer to get approved by the government. This is where the EU and TPP FTAs are now. It takes years to build up the trade, even after they are in place. Canada will only get a small gain from them. Building new or bigger pipelines to get oil and gas from Alberta to the Pacific Coast of British Columbia so it can be sent to Asia takes a long time as well. Pipelines are needed to bring oil and gas to central Canada and the Maritimes from the east. These projects are still going through longer review and approval processes by the government. In the meantime, the XL pipeline is being built in the US. That will bring a lot more oil from Alberta into the US.
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