Canada's tax regime makes it a hard place to invest: David Rosenberg
Though the signing of the phase one trade agreement between the United States and China has eased investors’ nerves, the deal likely won’t spur more spending from Corporate America, according to economist David Rosenberg.
“For people out there who think that the corporate sector is about to go into a capital spending spree because we had this ‘Kumbaya’ moment (with) phase one, I think they’re going to be sorely disappointed,” Rosenberg, chief economist and strategist at Rosenberg Research and Associates, said in an interview with BNN Bloomberg’s Amanda Lang on Thursday.
His comments come one day after the signing of an initial trade deal that commits China to spending US$200 billion on U.S. imports and to further cracking down on the theft of American intellectual property. At the signing ceremony Wednesday, U.S. President Donald Trump said the US$360 billion in tariffs on Chinese goods will not be lifted until “we’re about to do phase two,” which is not expected until after the 2020 U.S. presidential election.
Rosenberg says the tariffs will continue to have a “pernicious” impact on the U.S. economy and businesses.
“Some businesses [are] saying that they can’t pass on the cost increases so they’re taking it on their profit margins. That will come at the expense of employment or some other spending,” he said.
Rosenberg added that when companies do pass on the cost increases, it’s the consumer who takes the hit. He said that poses its own challenge since the consumer represents 70 per cent of the U.S. economy.