COVID-19, Low Oil Prices, and the New NAFTA- How the Canadian Economy has Already Changed in 2020

Running a medium or even small business can be hectic during relatively calm economic times. 2020 has been anything but calm. The Canadian economy, like all economies, has been jolted in the past four months. But it's not all been bad news. If your Canadian small or medium-sized enterprise (SME) can weather these choppy waters, there's reason to be optimistic about what's on the other side.

Let us start with the one significant change that was planned ahead of time. The United States Mexico Canada Agreement (USMCA) is set to take effect on July 1, 2020, and it will replace the North American Free Trade Agreement (NAFTA). Some of the predicted impacts of the USMCA include more work for American and Canadian auto workers and, possibly, slightly more expensive cars. American dairy farmers will have greater access to the Canadian market, potentially harming Canadian dairy farmers. And copyright laws have been extended to apply up to 70 years after the author's life, as opposed to 50. If your Canadian SME does not operate in one of these specific sectors or in a community that is heavily reliant on one of these sectors, there's no reason to think that the USMCA will affect your business drastically.

Next is the COVID-19 pandemic, which has upended the Canadian – and global – economy. How this will affect your business is impossible to say as we don't know how long it will last or how gradually social distancing restrictions will be lifted. Ultimately, all you can do is shift as much of your business online as possible. Online business is still quite robust, however. If your SME manufactures or traffics in home goods, it would be a good idea to ramp up numbers of home entertainment products: everything from board games to virtual reality headsets are seeing increased sales.

Partially as a result of the coronavirus outbreak, we have seen a precipitous drop in oil prices. So much so that in late April, West Texas Intermediate, a benchmark for American oil prices, was trading in the negative as dealers were desperate to offload crude they had nowhere to store. This remarkable oddity is due to a lack of demand for oil due to reduced airline traffic, reduced commuting, and reduced industrial activity coupled with a trade war, principally between Saudi Arabia and Russia. The dispute has been seemingly resolved, but it is yet another reminder that economies such as Canada's, and especially Alberta's, should not be nearly as reliant on oil going forward. Apart from enjoying cheap gas prices right now, Canadian SMEs should look to see if and how they can expand into the renewable energy sector, which is more appealing with each passing year.

Whether you want to know what possible markets the USMCA can open up for you, want to craft a COVID-19 survival plan, or expand into green technology, Export Portal can help Canadian SMEs weather crises and take advantage of opportunities.