Canadian High Dollar Woes

. High Dollar Woes in Canada

The Canadian manufacturing industry is extremely vulnerable to exchange rates and today is facing it's most critical challenge. Since 2003, the Canadian dollar has appreciated by over 40% against the U.S. dollar. this has created a profit decrease in the manufacturing industry and dramatically reduced its cost-competitiveness in the marketplace. Our high Canadian dollar has been the single largest cause of job losses in the manufacturing sector over the past few years and has cost the Canadian manufacturing industry billions of dollars in lost revenues.

The rapid and sustained appreciation of the Canadian dollar is one of the most critical challenges facing the Canadian manufacturing industry. All manufacturers feel the impact of a higher dollar and are extremely vulnerable to exchange rates.

“It is estimated that each one cent rise in the value of the Canadian dollar has slashed manufacturing revenues by about $500 million.” (Source: PricewaterhouseCoopers).

Although the powers of the Canadian government or the Bank of Canada to directly influence the value of the Canadian dollar is limited, we urge them to employ whatever means they have to manage the upward trend of the Canadian dollar. There is renewed urgency to the need for policy reforms that will improve the business climate for the manufacturing industry. While earnings are falling, the cost of Canadian inputs remain the same.

www.canadianeconomy.gc.ca.

• “In 1999 shortly less than 40% of consumer goods sold in Canada were made in Canada”
• “By 2006 made in Canada consumer goods decreased to less than 25%.”

Factors to Consider

As the Canadian dollar value increases, why is this not reflected in lower consumer prices of imported products?

As the Canadian dollar is on par with the US dollar, why aren't the same imported products the same price in both countries? Especially in common stores such as Walmart and Home Depot.

As the Canadian dollar value increases, interest rates have a pressure to increase. The consumer loses value due to higher rates on mortgages and credit cards.

As the Canadian dollar value increases, exports on manufactured items will decrease creating loss of jobs and a lower tax base.

As the Canadian dollar value increases, taxes will likely rise to compensate for the decrease in export revenue.

Can the Canadian Consumer really afford a higher valued Dollar

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