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Hours after imposing steep #tariffs on #Canada, #Trump raised an issue that even the American lenders whose cause he’s championing find perplexing: the access, or lack thereof, of US #banks to the Canadian market.
On Tues, Trump wrote posted, “Canada doesn’t allow American Banks to do business in Canada, but their banks flood the American Market.” He added sarcastically, “Oh, that seems fair to me, doesn’t it?”
#disinformation #RevengePolitics #USpol #geopolitics
https://www.nytimes.com/2025/03/05/business/trump-canada-us-banks.html?smid=nytcore-ios-share&referringSource=articleShare&sgrp=p&pvid=400568FE-1FFC-4F36-B511-1D32E29C8A41
…#Trump mentioned the #Canada banking issue early last month as part of a broader criticism against what he views as the unequal economic balance between the #UnitedStates & its northern neighbor. …Trump posted Canada “doesn’t even allow U.S. Banks to open or do business.”
#Canada’s #banking sector is dominated by the “Big Six,” the 6 institutions including the Royal Bank of Canada & TD Bank. They are permitted to take deposits, extend mortgages & advise corporate clients—all the core activities for #banks. And Canadian customers disproportionately still prefer to do their banking in person, as opposed to online, meaning it would require a major physical presence for any entrant to attempt to enter the market.
Additionally, #US #banks are restricted in what they can do in #Canada.
Foreign banks, including American ones, must either work with a Canadian middleman, establish a Canadian subsidiary or receive special government permission to do business. Unless they agree to follow Canada’s stringent banking rules that include holding a hefty sum of cash-like assets in reserve at all times, they cannot operate retail branches that take deposits under around $100k.
Given how dominant #Canada’s homegrown #banks are, any international bank that tries to compete faces “an additional regulatory burden for what would begin as a small prize,” said James R. Thompson, assoc prof of #finance at the U of Waterloo.
The upshot is that #US banks have minimal operations in Canada. The largest American lender, JPMorgan Chase, says it has roughly 600 employees in Canada, out of >300k worldwide.
Many international banks limit themselves to areas that don’t involve lending, such as offering investment advice to wealthy Canadians or local companies.
So #Trump is incorrect in asserting that American #banks cannot do any business in #Canada, but it is true that they are limited in their activities.
While there are >4k banks in the #UnitedStates, Canada has just a few dozen, & >¾ of deposits are held by the Big Six.
For decades, Canadian political leaders have crowed about that restrictive #financial #regulatory model. They argue that fending off foreign entrants in the country’s #mortgage market helped the country largely avoid the 2008 collapse south of its border.
In light of #Trump’s criticism, Maggie Cheung, a spox for the Canadian Bankers Assn, was quick to point out that foreign #banks were an integral part of the banking landscape.