Canada vs. USFour (potential) ways the U.S. shutdown could affect Canadians

Andy Radia | Canada Politics

The United States government is in a partial shutdown mode, Tuesday, after Congressional Republicans and the White House — embroiled in a battle over in Obamacare — failed to reach a deal on a temporary budget bill.

For Americans, the shutdown has significant implications: essential services — things like the military, veterans hospitals and social security payments — will continue. But, approximately 800,000 government employees who work in non-essential services — from the IRS, to NASA, the FDA and at public parks — will be told to take an unpaid holiday.

Some experts suggest the shutdown could mean a multi-billion dollar hit to the U.S. economy.

Our close ties to the U.S. mean that Canadians will feel some effects of the shutdown as well.

Here are four things that Canadians should be concerned about:

An economic hit:

According to the New York Post, Goldman Sachs estimated that a prolonged shutdown would slow the U.S. economy’s annual growth rate in the October-December quarter by up to 0.9 percentage points.

Former industry minister John Manley says such a slow down would have a significant impact on Canada’s economy.

“The big question is how long does this last and how big an impact does it have on the U.S. economy,” Manley, who is now President of the Canadian Council of Chief Executives, said on CBC‘s Power and Politics on Monday.

“It’s our biggest trading partner. We’ve been rising on the tide of [their] improving economic data for a while now. This is not good for us.”

Finance Minister Jim Flaherty also raised concerns about the shutdown’s effects on Canada.

“This is a reminder that while Canada’s economy remains strong, we are still vulnerable to uncertainties outside of our borders, especially in the US and Europe,” Flaherty said in a statement emailed to Yahoo Canada News.

“In Canada, we are focused on the priorities of Canadians — jobs, growth and long term prosperity. Global uncertainty reminds us how important it is to maintain that focus.”

Goods tied-up at the border:

In his interview with CBC News, Manley added that Canadian firms doing business in the U.S. need to be making contingency plans because there’s a good chance their goods are going to be delayed at the border.

“If you go to the border…there will be people there working because they’re essential. But they’re not being paid. That’s no way to encourage performance. You have to expect there’s going to be a lot of coffee breaks being taken,” he said.

“If you’re in a business where you’ve got to get your goods across the border — it’s just- in-time inventory — that becomes a potentially significant delay.”

NDP leader Thomas Mulcair raised similar concerns during a press conference on Monday.

“Understand that 25 per cent of our whole gross domestic product transits through that border, and look at the thickening of that border as it starts to get more and more difficult to have the administrative papers that go with it,” he said, according to 680 News.

Mulcair suggested that Canada’s manufacturing industry will take the biggest hit and could even suffer job losses.

Travel delays and shuttered tourist attractions:

Canadians travelers heading into the United States this week could face delays at borders and airports.

Once in the U.S., tourists might be disappointed.

As explained by the Globe and Mail, several high profile attractions will be shuttered.

“National parks and museums will shut down, including iconic locations such as the Statue of Liberty and Yellowstone National Park. Guests staying in park campgrounds will be given 48 hours to make alternate arrangements and leave,” notes the Globe.

“In Washington, all Smithsonian Institution locations will shut down. The Smithsonian’s National Zoo said it would even turn off its website’s livestreaming videos from the animals’ pens – including a popular “Panda Cam” of a newborn cub.”

Lower gas prices:

Oil prices on the U.S. Mercantile Exchange fell on Monday and, according to gas expert Dan McTeague, that could result in lower prices at the pumps for Canadians.

“[Prices will go] definitely to the downside but it will take another week for this to really bite,” the former Liberal MP, who who now operates told Yahoo on Tuesday.

“Sure fuel prices will be lower, but given Canada’s dependence on trade with the US, it’s not a desirable trade-off.”


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