Another old-economy trade fight with Trump looms, but services matter much more than aluminum
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All the momentum in trade is in services, which represented 24 per cent of total trade in 2019, compared with 19 per cent in 1995, according to a report published this week by Western Union Business Solutions and Oxford Economics. Those numbers are based on official statistics, which tend to undervalue services because things such as research and development get wrapped up in the price of goods. The Western Union study estimates that services actually represent about 55 per cent of total trade.
The trend is the same in Canada. The value of commercial services exports surged to $6.8 billion in February, roughly equivalent to oil exports and greater than auto exports, according to Statistics Canada data. That was six months ago, before COVID-19 changed everything. There is no longer any contest. The recession hammered exports of every kind, but commercial services had recovered to 85 per cent of their February value in June, while oil shipments stood at thirty per cent of their worth at the start of the year.
“Services have been under the radar,” Roy Farah, head of North America at Western Union Business Solutions, said in an interview earlier this week. “To a certain degree, that’s a good thing,” he added, given the Trump administration’s tendency to harass exporters of tangible goods such as steel, automobiles, airplanes and wine.
Instead of getting bogged down in a new trade war over aluminum, we should focus on the future.
