Even before U.S. trade dispute escalated, NAFTA talks were hurting Canadian exports,

EDC economist warns impeded investments in sector could strain Canada in the future

OTTAWA— A growing number of Canadian exporters were saying NAFTA talks were having a negative impact on their operations even before the trade dispute with the United States escalated in recent weeks.

A survey done for Export Development Canada found 28 per cent of the 1,000 exporters polled said the NAFTA talks had a negative impact on their Canadian operations.

That was up from 23 per cent in an earlier survey.

“Current sales may be riding high, but trade uncertainty is having an impact,” EDC chief economist Peter Hall said in a statement Friday.

“Nearly one in five exporters say that NAFTA talks have negatively affected their investment plans. This reluctance to invest could severely restrain Canada’s export capacity in the years ahead.” The survey was done from April 18 to May 11, before the U.S. ended an exemption for Canada on the global steel and aluminum tariffs it had put in place in March.

Since the tariffs went into place on Canadian metal exports at the end of May, Canada has imposed retaliatory tariffs on steel and aluminum coming from the U.S. as well as a wide range of consumer goods, while the U.S. has threatened addi- tional tariffs on the auto sector.

The biannual survey found overall trade confidence increased to 76.5 per cent from 73.5 per cent in the previous questionnaire, which was done at the end of last year.

The increase came as 73 per cent of Canadian companies indicated their export sales will increase over the next six months compared with 56 per cent in the previous survey.

More businesses said their sales to the U.S. increased over the past six months with 46 per cent reporting an increase compared with 36 per cent.

The EDC survey also noted that rising interest rates were having a negative impact on the sales of a larger share of exporters at 30 per cent compared with 21 per cent in the previous survey.

The Bank of Canada raised its key interest rate target to1.5 per cent this week.