U.S. trade protectionism tops a list of near-term challenges that Canadian C-Suite executives see hitting the growth of the Canadian economy.

Some 23 per cent of Canadian chief executives, chief financial officers and chief operating officers cite U.S. protectionism as their top economic concern in the most recent quarterly CPA Canada Business Monitor survey.

That protectionism would top the list is especially notable, given that most of the quarterly survey was administered March 30 to April 18, and for much of that stretch of time U.S. President Donald Trump appeared to have softened his position on the North American Free Trade Agreement.

Trump was last year elected U.S. president on a promise to renegotiate or tear up NAFTA. After he took office in January, he seemed to change his tone. During a February appearance in Washington alongside Prime Minister Justin Trudeau, he even talked about merely “tweeking” the pact between the U.S., Canada and Mexico.

Things started to change on April 18 — the last day captured in the survey — when he criticized Canada’s dairy industry. Since then, his administration has increased its rhetoric, slapping tariffs on Canadian lumber shipments and at one point almost signing an executive order to pull the U.S. out of NAFTA.

At 17 per cent, oil prices came second in the Business Monitor list of 10 challenges facing the Canadian economy. Uncertainty surrounding the Canadian economy and the state of the U.S. economy were tied in third place with 14 per cent.

Yet generally speaking, Canadian executives appear less worried about the economy than they were a year ago.  

Some 38 per cent have an optimistic outlook on the Canadian economy, up from 32 per cent last quarter and up from 22 per cent a year ago. A further 47 per cent take a neutral view. Only 15 per cent of executives are pessimistic, and that’s down from 31 per cent a year ago.

When it comes to their own businesses, Canadian executives are quite bullish. Some 58 per cent have an optimistic view of the prospects of their own companies over the next 12 months. That’s up from 54 per cent in the prior quarter and up from 45 per cent a year ago.

The first quarter survey also asked executives whether Canada’s tax system is in need of a “comprehensive review.” Seven out of 10 executives agreed.

When asked what such a review might discover, almost nine out of 10 said comprehensive tax reform could keep Canada’s personal and corporate tax rates competitive with other advanced economies. More than eight out of 10 respondents agreed that tax reform could accomplish several other things, among them reducing complexity, modernizing the system, attracting investment and cutting collection costs for the government.   

The CPA Canada Business Monitor is commissioned by the Chartered Professional Accountants of Canada. The first quarter 2017 survey of 485 CFOs, CEOs, COOs and other company leaders was conducted from March 30 to April 18. The margin of error is 4.2 per cent, 19 times out of 20.

Financial Post
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