Good morning all! Shari Kulha here with your daily dispatch of the top business news. Today’s the 242nd anniversary of the publication of The Wealth of Nations, which touted free markets. Yesterday Trump stuck with protectionism, saying he would exclude Canada and Mexico from his tariffs — depending on the outcome of the NAFTA renegotiations, of course — but would impose them on the countries that dump steel and aluminum.
Alberta Premier Rachel Notley is now threatening to cut off oil exports to B.C. altogether if B.C. continues to obstruct construction of the TransMountain pipeline extension. Alberta is upset over B.C.’s refusal to allow passage of its resources — saying it is depressing government revenue, investment and job creation. As Claudia Cattaneo reports, a task group is looking at other retaliatory measures, but there aren’t a lot of gentler options available to get the attention of B.C.’s NDP/Green government, which regards oil as dispensable.
Quote: “Some people have asked how far we are willing to go,” Alberta Lieutenant Governor Lois Mitchell said yesterday. “Today, we affirm we will do whatever it takes….”
Geoffrey Morgan reports from the CERAweek conference in Houston that Shell is mulling an investment in a new wave of LNG projects. CEO Ben van Beurden indicated Shell is looking to finalize new investments, and the company has said LNG Canada is “investible.”
Bottom line: Last month Shell, the world’s largest LNG supplier, forecast a 275 million tonne supply shortage by 2020. Its LNG Canada project could cut that shortage by nearly 10 per cent. “This is not a bad time to start thinking about investing again,” van Beurden said at CERA.
Side letters with 10 countries were released shortly after Canada’s trade minister François-Philippe Champagne signed the CPTPP in Chile yesterday. Alicja Siekierska quotes Champagne as saying “the side letter will remove non-tariff trade barriers … with respect to the safety standards, allowing for Japan to recognize our Canadian standards to make it easier for the Canadian automotive sector to access that market.”
Quote: Unifor president Jerry Dias, whose union represents more than 23,000 Canadian auto workers, said “it’s lollipops and rainbows. We’ve dealt with side letters in NAFTA which have proven to be inherently useless.”
Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after failing to find a buyer or reach a debt restructuring deal. The toy chain’s U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt, but bad results over the holidays cast doubt on the chain’s viability.
Bottom line: The company started 2018 with more than 800 stores in the U.S., under the Toys “R” Us and Babies “R” Us brands. In January, it said it would close 180 locations. The chain makes up about 15 per cent of U.S. toy revenue.
IS TRUMP WINNING?
Tired of Bay Street’s grumbling that Bank of Canada Governor Stephen Poloz’s approach to communications was difficult to understand, the central bank late last year decided to explain itself more often. From now on, one of the BofC’s leaders will speak within a day or two of every policy announcement. As Kevin Carmichael writes, it should reduce the risk of market volatility, as questions about the central bank’s thinking will be answered relatively quickly. The first of the Bank of Canada’s “economic progress reports” was delivered yesterday in Vancouver.
Bottom line: The central bank might be keen to raise interest rates if not for Donald Trump’s disregard of the norms of global trade. The constant threat of trade harassment at the U.S. border is getting inside the heads of global business executives. Trump’s desire to either overhaul or quit NAFTA, along with his tariffs, is making companies hedge the risk of higher border taxes by adding factories and offices in the U.S. instead of Canada or Mexico.