Exporters upbeat despite threats hovering over international trade

The cloud of uncertainty hanging over global trade should have Canadian exporters running scared, but they're upbeat about selling to foreign markets.

That's the conclusion Export Development Canada (EDC) is drawing from its Trade Confidence Index, which increased in a spring 2017 survey from where it sat last fall, just before Donald Trump was elected President. The index, scheduled to be released on Thursday, measures exporters' expectations of international-trade opportunities during the next six months and their level of confidence.

The No. 1 and No. 2 worries among exporters are the rise of Fortress America and increasing global protectionism, EDC chief economist Peter Hall said in an interview.

The threats to trade include Mr. Trump's cancellation of U.S. participation in the Trans-Pacific Partnership, his rhetoric about tearing up the North American free-trade agreement and the pending departure of Britain from the European Union. More specifically, the U.S. administration has targeted Canadian softwood lumber and the dairy industry while Boeing Co. has launched a trade case against Bombardier Inc. over the sale of single-aisle commercial jets.

"That's the kind of thing that you think would be the recipe for a plunge, or at least a significant correction or at the very least a downward movement of some kind," in the confidence index, Mr. Hall said.

Companies are concerned, he said, but business is so strong that they are focusing on operations and not what might or might not happen to trade policy.

He said that until companies see actual changes in policy, they will continue to react to the status quo.

"You look at current business flow and say, 'If nobody gets in the way, this is actually looking pretty good,'" he said.

Statistics Canada reported earlier this month that exports grew 1.8 per cent in April from March, which followed a 3.2-per-cent rise in March exports over February shipments.

Where the trade issue appears to be having an impact is on attitudes toward future investment, Mr. Hall noted.

The survey didn't show it, but Mr. Hall said his conversations with business leaders show that they are hedging on investment.

"They are not sure what their next move should be," he said. "'Should I delay the thing in Canada that I wanted to do? Should I actually shift that money to the U.S.? Should I diversify to some other part of the world or is my business case still strong for my Canadian investment?'"

That hesitation on future investment is a concern, Mr. Hall said.