Could the U.S. be on the brink of civil war? Canada thinks so

Canadians are known for their manners, but it doesn’t seem particularly neighborly to publicly speculate that the U.S. could self-destruct, said Politico news chief Alexander Burns

In his recent column, Burns discusses a recent report from a Canadian think tank, called Policy Horizons, which outlined a variety of external risks that Canada should be prepared for.

Chief among them: an American Civil War.

“It’s an unsettling thing to find out your immediate neighbor is getting nervous about the possibility of gruesome violence in your home. Had they realized, perhaps, that speculating about an ally’s incipient civil war could come off as impolite?” writes Burns.

The report, called “Disruptions on the Horizon,” surveyed experts and government officials about potential events that could disrupt the country and the continent.

The authors categorized those scenarios based on likelihood, timing, and potential impact. American civil unrest was ranked as a highly unlikely yet very impactful event.

Burns quotes John McArthur, a Brookings Institution scholar who sits on the Policy Horizons steering committee. McArthur says the report is more a reflection of Canadian sentiment than the reality of a full-blown civil war.

“Any sense of disruption to your closest sovereign relationship in the world, any disruption within that country, is a deep worry, I think, to any Canadian outlook,” said McArthur.

Economists are on edge ahead of the elections

Burns points out that there’s “no shortage of apocalyptic forecasting about Trump-era American politics” as of late.

Nobel-winning economist and New York Times columnist Paul Krugman cites "deeply divided politics" as a major barrier to ensuring America’s $34 trillion dollar debt remains sustainable.

Matthew Yglesias wrote in Bloomberg this month that if Trump is re-elected, the U.S. may see inflation worsen due to increased military spending and extended tax cuts.

According to an explosive report by The Wall Street Journal, Trump’s political allies are quietly drafting policy proposals that would reimagine how the Fed sets interest rates.

In essence, there seems to be much speculation about how American politics will impact us at home and abroad.

The Policy Horizons authors do make it clear, however, that the views expressed in the report do not reflect those of the Canadian government.

A monetary policy divide

Although an American civil war may be unlikely, a growing divide in monetary policy between the two countries could affect bilateral trade.

Earlier this month, Canadians saw their first interest rate cut in more than four years, while the Federal Reserve hinted that even a single rate cut in the U.S. this year is uncertain.

If the Bank of Canada’s rate dips too far below the Fed’s, the loonie’s value will likely drop against the United States Dollar.

In response, a strong dollar could reduce demand from the U.S.'s largest trading partner because American goods and services would simply become too expensive for Canadians.