Saturday, March 2, 2013

By Graeme MacKay, The Hamilton Spectator – Saturday, March 2, 2013

How U.S. spending cuts can hurt Canada

The billions in automatic spending cuts in the U.S., which come into effect today, could have an impact on cross-border trade with Canada as well as contribute to a general economic slowdown.

“It’s very hard to say,” Ambarish Chandra, assistant professor of economics at the University of Toronto, said of the potential effects here.

“I think even within the U.S. it’s not clear where the axe will fall. There is so much uncertainty about exactly what programs are going to be cut and which ones aren’t.”

President Barack Obama and a bipartisan group of congressional leaders failed to reach an agreement during a meeting on Friday.
Given the sheer size of the cuts — the plan involves slashing $1.2 trillion in federal spending by 2021, including $85 billion this fiscal year — the sequester will undoubtedly have some impact, particularly with respect to cross-border travel and trade.

U.S. Homeland Security Secretary Janet Napolitano said earlier this week that her department would be slashing 5,000 border-patrol agents if the cuts go through, and that would ultimately slow some of the busiest crossings between Canada and the U.S.

U.S. Customs and Border Protection is also preparing to reduce its work hours by the equivalent of 2,750 inspectors as well, meaning cargo inspections at the border could drag on.

That will undoubtedly have an impact on the approximately $1.6 billion worth of goods and 300,000 or so people crossing the U.S.-Canada border each day. (Source: CBC News0