Canadian banks warn of fallout from US tax reforms
Source: CBC News
Two of Canada’s big banks are sounding the alarm over the negative impact that Canada’s economy will see as a result of new tax reform measures in the U.S. under the Trump administration.
Analysts from both Toronto-Dominion Bank (TD) and the Canadian Imperial Bank of Commerce (CIBC) put out reports this week highlighting how Canadian businesses have lost their competitive advantage to their U.S. peers and how this could impact economic activity.
“Canada’s formerly favourable position in corporate taxation has eroded considerably, with the U.S. now holding the edge,” said economists at TD.
“[Tax reforms] along with growing NAFTA uncertainties, increases the likelihood of a slow bleed of investment from Canada to south of the border,” they said.
Strategists at CIBC, meanwhile, pointed out that a lower tax rate in the U.S. makes Canada a less attractive destination to locate headquarters, manufacturing in the country has become less competitive, and Canadian firms will see their U.S. peers more competitive on mergers and acquisitions now.