South Asia calling

Recent developments and changes in the leadership in the US have unleashed a wave of patriotism among Canadians who have come together in a spirit of unity and nationalism. Trump’s actions have not only united the nation but also Canadian leadership across the political spectrum. So, thank you, Mr Trump.

In the wake of growing debt and the falling value of its currency, the US was preparing to follow a more restricted trade policy. After dealing with Trump in his first term (2016-2020), Canada should have started taking precautionary measures to avoid possible bullying by the US.

It was obvious that Trump would be uncontrollable in his second term because he has very little to lose. There is no second opinion that both Canada and Mexico will suffer the most because of Trump’s actions and the retaliatory actions that both Canada and Mexico are forced to take. However, the economic impact on American citizens, consumers and businesses alike will also be monstrous. It is hard to explain the obvious to a person like Trump, who was ready to hang his own vice president. No logic or reasoning can work with him.

But if there is one crazy driver out there on the street, other drivers should take extra precautionary measures before he hits them. They should try and take other routes, which could be longer and costlier. But it is still better than having a head-on collision.

Canada was the top source of international visitors to the US, with 20.4 million visits to the US in 2024. A 10 per cent reduction in Canadian travel could mean two million fewer visits, $2.4 billion in lost spending and 15,000 job losses. Canadians should spend their vacations in Canada, rather than going across the border. This is just one example of a non-tariff blow to the US, that we as citizens can give to the US.

Doing business with the US has become increasingly difficult and ineffective — since Trump’s first term. The US economy is still caught in the mix of inflation and unemployment. The country is losing its prosperity and leadership role in the world because of the poor management of both its economy and politics. Canada, as a major trade-and investment-dependent country, cannot afford to continue to bank on American markets alone. Both the government and businesses in Canada should work together to find more diverse and long-term trading partners worldwide. Over the years, Canada has increased its direct engagement with China, the EU, a few Latin American countries, and more recently Japan. This is the way forward, but much more needs to be done to further diversify Canada’s international trade.

The world’s economic powerhouses are rapidly shifting towards emerging markets like China, India, Brazil, and the Asean countries. Canada needs to continue exploring new markets. For example, there is considerable scope to build on Canada’s existing bilateral political and economic relations with South Asia. Canada is home to a large and growing immigrant population from India, Pakistan and Bangladesh. The current population projections show that immigration from Asia will be the driving force for population growth in Canada for many years to come.

Canada’s trade with South Asia can grow faster, driven by trade agreements, investment and the region’s economic growth. Its trade with South Asia includes exports of agricultural products, manufactured goods, and natural resources. We can expand on that. We have our feet on the ground there. What is needed is more focus and attention paid to these markets.

After East Asia and the Pacific, South Asia is the fastest-growing region in the world. GDP growth rates for South Asia are expected to be around 5.9 per cent in 2024 and 6.3 per cent in 2025. The recent economic growth in South Asia has been based on strong demand, better performance of the goods-producing sectors, and exports.

The share of South Asian countries in Canada’s total trade is less than one per cent. Compared to American trade with South Asia of more than $200 billion in 2023, Canada only did $15.6 billion in trade with South Asia in 2023.

Canada can build trade ties with South Asian economies in areas of its comparative advantages — infrastructure development; oil and gas; mining; power equipment; engineering goods; environmental technology; and financial and insurance services. South Asia’s large and growing middle class could be a target for a range of Canadian consumer goods exports, including telecommunications, transportation, agriculture/agri-food and education services. Let’s take a quick look at the prospects of trade with that region.

India’s share in Canada’s trade is only 0.4 per cent. India is the biggest and one of the most promising economies in the world. It has a large pool of educated workers and an increasingly savvy middle class striving to buy upscale consumer products. Being primarily an energy-importing country, India’s demand for energy products is growing rapidly. The areas where India needs improvements are upgrading public infrastructure, especially the quality of roads, ports, electricity, green energy and environmental projects. There could be considerable scope for Canada-India trade and investment ties in such areas.

Similarly, Bangladesh’s economy is expected to continue to grow. The country’s stable growth has helped raise millions of people to middle-class status. It is the second-largest economy in South Asia and is seen by various financial institutions as one of the Next Eleven.

To grow trade ties with South Asia, the first step is to create awareness about the potential scope of business ties between Canada and South Asia, understanding the diversity within South Asia and the potential for economic ties within each country. A good country-level analysis can be quite useful.

Chai (tea) is one of the most popular drinks throughout South Asia. Masala chai (spiced tea) is made by brewing tea with a mixture of aromatic herbs/spices that generates a refreshing aroma. It is about time Canadians explored South Asia for trade and economic linkages — wake up and smell the chai!

Dr Akbar teaches economics at KPU.

Dr Naqvi is the executive director of institutional research and planning at SFU.