Image Credit: Canadian Press

By Cheryl Jahn

Canadians should watch Mid-Terms closely

Nov 9, 2022 | 4:03 PM

PRINCE GEORGE – As Americans headed to the polls for their mid-terms this week, the outcomes are not what many of the pundits anticipated. The House was sure to be a landslide for the Republicans. Not so. And that speaks volumes politically.

“It’s kind of bucking the norm,” says Chris Beach, Political Science Instructor.”Yeah, bit of a shock. I think, despite inflation, despite soaring gas prices, the cost of living, Americans, whether Republican or Democrat, voted for the rule of law, higher quality of candidates, candidates that were not backing the election Denial of 2020.”

Politics aside, what does any election in the US have to do with us? In terms of economics, the United States is the elephant in the room. And, as early as 2020, Canada is part of an economic bloc…

“So the USMCA, for example, was an effort by Canada, the U.S., and Mexico to come up with a trading bloc rather than leave our borders wide open to global trade, particularly when, as far as we’re concerned, a number of our partners, and particularly China, agreed to a set of rules they’re not playing by,” says Charles Scott with UNBC’s School of Business.

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Scott says regardless of the regime – Democrat or Republican – protectionism is high. The “America First” ideology. But inflation appears to have been the predominant theme throughout these mid-terms is inflation.

“So, for example, in a globalized world, we got very used to China being the world’s factory. And then with COVID lockdowns, with disruptions oversupply, our supply chain started to not have quite as much coming in, and then it’s an adjustment that made it far worse. But we’re also seeing a movement away from a globalized world towards a more regional one, which means that a lot of companies are talking about nearshoring or onshoring, which means you don’t necessarily buy rare earths from China to the degree that you did. You don’t buy neon from Russia the way you did. You produce it here.”

That huge industrial build-out could be good for Canada and this region, in particular, as USMCA parties focus closer to home for trade.

“Yes, frankly, Prince George’s is surrounded by deposits of rare earths. Remember that only 30 percent of the known reserves of rare earths are in China, but China kept the price. So low that at one point they had 80% of the sales. Now they now have 70 per cent of the sales, and they’ve been using that as a tool of foreign policy” says Scott. “If you want your smartphone makers to be able to get the materials they need to make smartphones, you’ll do what we say on this issue. And that has driven a lot of interest in getting your rare earths from someplace other than China. But there’s a whole array of things that are needed to make a smartphone. A lot of which come from Russia.”

So, while the US mid-term elections seem a million miles away and remote from our backyard, not so much.