The world of Canadian economics is approaching a new era, one, which will be heavily influenced upon the decisions of the United States. With the United States being our biggest trading partner, our whole economy will be affected on how they react with our standings on the war.
Three basic questions must be asked for any economic system: What to produce, how to produce it and for whom to produce it for. With trade being an essential part of the Canadian economy, punishments from the United States will create economical problems in many industries, for example, the softwood lumber industry. We produce higher quality softwood lumber that is less expensive than the US counter part. With a greater abundance of wood available we are able to produce enough for the construction industry in both Canada and the United States. The US lumber industry now has a problem with Canada because we are able to supply higher quality wood at a cheaper price. Therefore American businesses are put into bankruptcy and Canadian businesses take the market. With businesses going bankrupt, people lose jobs and the unemployment rate rises.
Meanwhile, on the other side of the border, the industry begins to boom creating a greater number of jobs for Canadians. The US has had enough of this and they decide Canadian wood should have quotas on how much may enter the country. Not only do they limit the quantity of wood that may enter the country, but they also increase the price by placing tariffs on top of the original price. Canadian wood is now too limited and expensive for American businesses to purchase, so they buy from within the country. With companies’ losing a huge sector of business from the United States, cutbacks occur and Canadians lose their jobs. The national unemployment rate rises and the Government must now spend money on social programs instead of military or otherwise.
Free enterprise emphasizes the importance of the individual first and government second. Free enterprise encourages private property, the making of profit as well as creates competition. Now with a government involvement competition is both protected and put at risk. Continuing with the softwood lumber issue, with the US making it nearly impossible for Canadians to sell lumber south of the border, cutbacks cause companies to sell assets such as machinery, trucks or if the problem is serious buildings. Other factors such as natural disasters, ‘boom bust cycle’ and etc may cause a company to go bankrupt.