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Changing tides

Changing tides

C-Suite 47: Shifting attitudes lead to uncertainty for North America’s economy


Partner, Global Chair - Consumer & Retail, Partner-in-Charge - High Growth Markets

KPMG in Canada


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Changing tides

There is growing concern amongst Canadian executives regarding the implications of politics on trade with the United States in the latest edition of the Quarterly C-Suite Survey. Opinion about President Trump and concern about trade may explain a leveling off in expectations for the economy this quarter, following two successive quarterly improvements in the C-Suite’s outlook since the U.S. election.

Top Highlights

Trade policy, NAFTA and softwood lumber exports

  • Last quarter, 26% of the C-Suite was very worried about the implications of politics on trade. This quarter, forty-two percent of the C-Suite said they’re very worried about political developments impacting trade.
  • 87% of executives agree that Canada should protect its softwood lumber industry from duties recently imposed by the U.S. and defend the industry at the relevant trade dispute panels.
  • 58% of C-Suite agreed Canada should retaliate against US duties on lumber by imposing a tax on US thermal coal; 38 % would oppose such a move.
  • Most business leaders are open to Canada seeking a free trade agreement with China or entering talks to revive the Trans Pacific Partnership trade agreement even those talks did not involve the U.S. About half of the C-Suite believes these two approaches should be high priorities for the Canadian government.

The Trump Administration in its 2nd quarter

  • Opinion about President Trump has deteriorated since he took office. Sixty-three per cent of C-Suite executives gave poor ratings to the President on his performance in office so far. Last quarter, while few were strongly favourable, only 39% gave the President poor ratings.
  • Forecasts for the U.S. have actually softened since last quarter when roughly 4 in 10 expected the U.S. to post strong economic growth. Now, 18% expect strong economic growth.

Monetary policy, rates and the Canadian dollar

  • Most (73%) believe that if the Bank of Canada raised interest rates it would have a very or somewhat negative impact on the economy – 15% said it would be very negative, 58% somewhat negative.
  • Thirty-eight percent said raising interest rates would have a very (9%) or somewhat (29%) negative impact on their companies.
  • Few would be concerned if the value of the Canadian dollar dipped to as low as 70 cents U.S. (something that might be more likely without an increase in rates). Most said if the loonie’s value declined to that level it would have no impact or in fact a positive one on their companies.
  • Seventy-one percent of companies are planning on the loonie staying below 75 cents U.S. in the medium-term.

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