Posthaste: Never mind Trump, there's one Canadian 'export' Americans can't seem to get enough of

Donald Trump has publicly proclaimed that the United States ‘doesn’t need anything’ Canada has, but Americans can’t seem to get enough of this “export.”

According to Statistics Canada’s international securities transaction data out Monday, foreign investors increased their exposure to Canadian bonds by $33.5 billion in January, with Americans buying $20 billion of that.

“This despite swirling tariff threats and a cloudier-than-normal outlook for the economy and many of the nation’s largest bond issuers,” said National Bank of Canada economists Warren Lovely and Ethan Currie.

January’s net foreign buying was the second highest on record, exceeded only by the bond bonanza in that darkest of times, April 2020.

“Despite much geopolitical wrangling, U.S.-based investors continue to express confidence in Canada,” said the economists.

That is especially important now.

If Canada’s economy is thrown into recession by Trump’s tariffs — or even by the threat of tariffs — governments on all levels will face greater funding needs and deeper deficits as they extend aid to struggling businesses and citizens.

Provinces have begun tabling their budgets, and the trend of weaker budget balances and higher borrowing needs is already emerging. National Bank now expects provincial debt issuance for the year to climb as high, if not higher, than the record set at the beginning of the pandemic.

“The ready/steady appetite for Canadian term debt issued south of the border (or other foreign markets) allows our provinces and corporates to divert a non-trivial share of supply away from the home market (insulating domestic spreads in the process),” said the economists.

As far as our credit rating goes, we’re better off than our southern neighbour.