From the Fraser Institute

By Kenneth P. Green

With all eyes focused on WWT (World War Tariff), another Trump initiative was quietly put in place last week in one of the now-signature Trump “flood the zone” initiative waves.

On Jan. 31, the Trump administration published an executive order (EO) titled “Unleashing Prosperity Through Deregulation,” and as regulatory reform initiatives go, well, it’s every anti-regulatory analyst’s dream as “each new regulation issued, at least 10 prior regulations be identified for elimination.”

For reference, one of Canada’s strongest regulatory-reform efforts (in British Columbia back in 2001) only called for a 2-for-1 ratio. Although B.C.’s effort did somewhat foreshadow Trump’s, in that it created something of a DOGE (Department of Government Efficiency) when the B.C. government appointed an actual minister of deregulation to oversee the effort rather than leaving it to the bureaucracy to reform itself. And it worked. By 2004, 37 per cent of regulatory requirements in B.C. had been eliminated (exceeding the initial one-third target).

Trump’s new plan is less explicit in defining regulations, but it makes sure that new regulations cost less than the 10 regulations they replace. “For fiscal year 2025,” reads the EO, “the heads of all agencies are directed to ensure that the total incremental cost of all new regulations, including repealed regulations, being finalized this year, shall be significantly less than zero, and any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.”

And Trump’s plan will put regulators in government agencies on a permanent diet, as a “total amount of incremental costs… will be allowed for each agency in issuing new regulations and repealing regulations for each fiscal year after fiscal year 2025.”

Why does this matter to Canadians?

Because, unlike those few years of B.C. regulatory reform, Canada has been wrapping itself in regulatory red-tape for decades, making our economy less competitive globally and with the United States. Between 2006 to 2018, the number of restrictive regulations in Canada grew from about 66,000 to 72,000. And according to the Canadian Federation of Independent Business, the cost of regulation from all three levels of government to Canadian businesses totalled $38.8 billion in 2020, for a total of 731 million hours—the equivalent of nearly 375,000 fulltime jobs.

Clearly, Canada has a regulatory problem—our governments generate seemingly endless spools of regulatory red tape, which keep Canadian businesses tangled in inefficiency, wasted labour and non-competitiveness. President Trump’s new regulatory reform initiative will further increase the “red-tape gap” between Canada and the U.S.

Policymakers in Ottawa and the provinces would do well to learn about Canada’s experiences with deregulatory programs and strive to match—or beat—the new U.S. regulatory reform efforts before a massive lack of regulatory competitiveness becomes a serious problem, adding insult to injury on top of World War Tariff.

Kenneth P. Green

Senior Fellow, Fraser Institute

MxM News

Quick Hit:

Nissan is reportedly abandoning merger talks with Honda, scrapping a $60 billion deal that would have created the world’s third-largest automaker. The collapse raises questions about Nissan’s turnaround strategy as it faces challenges from electric vehicle competitors and potential U.S. tariffs.

Key Details:

• Nissan shares dropped over 4% following the news, while Honda’s stock surged more than 8%, signaling investor relief.
• Honda reportedly proposed making Nissan a subsidiary, a move Nissan rejected as it was initially framed as a merger of equals.
• Nissan is struggling with financial challenges and the transition to EVs, still reeling from the 2018 scandal involving former chairman Carlos Ghosn.

Diving Deeper:

Merger talks between Nissan and Honda have collapsed, according to sources, after months of negotiations to form an auto giant capable of competing with Chinese EV makers like BYD. The proposed deal, valued at over $60 billion, would have created the world’s third-largest automaker. However, differences in strategy and control ultimately derailed the discussions.

Reports indicate that Honda, Japan’s second-largest automaker, wanted Nissan to become a subsidiary rather than an equal merger partner. Nissan balked at the idea, leading to the collapse of negotiations. Honda’s market valuation of approximately $51.9 billion dwarfs Nissan’s, which may have fueled concerns about control. The failure of talks sent Nissan’s stock tumbling more than 4% in Tokyo, while Honda’s shares rose over 8%, reflecting investor confidence in Honda’s independent strategy.

Nissan, already in the midst of a turnaround plan involving 9,000 job cuts and a 20% reduction in global capacity, now faces mounting pressure to restructure on its own. Analysts warn that the failed merger raises uncertainty about Nissan’s ability to compete in an industry rapidly shifting toward EVs. “Investors may get concerned about Nissan’s future [and] turnaround,” Morningstar analyst Vincent Sun said.

Complicating matters further, Nissan faces heightened risks from U.S. tariffs under President Donald Trump’s trade policies. Potential tariffs on vehicles manufactured in Mexico could hit Nissan harder than competitors like Honda and Toyota. The stalled deal also impacts Nissan’s existing alliance with Renault, which had expressed openness to the merger. Renault holds a 36% stake in Nissan, including 18.7% through a French trust.

While both Nissan and Honda have stated they will finalize a direction by mid-February, the collapse of this deal signals deep divisions in Japan’s auto industry. With Nissan’s financial struggles and the growing dominance of Chinese EV makers, the company must now navigate an increasingly challenging market without external support.