‘What does it mean?’

The MAGA supporters in Canada would rather this blog did not talk about Trump. I get it. You’re embarrassed. Putting ideology ahead of patriotism is a wrenching choice. The orange guy is charismatic, manly, decisive, with a conservative crusader vibe steeped in conquest, wealth, virility plus confidence. He’s vengeful, too, of course. But his retribution is almost religious. This is the new king. The anti-woke. And you can’t help but kneel.

But there is a price. And we’ll keep pointing it out.

Trump is bad for Canada. Like, really awful. Supporting him means hurting your country. Hopefully you understand that. This is not about punishing Trudeau (he’s leaving next month) or the Libs (an election will come). Rather the issue is crushing the Canadian economy, throwing a lot of people out of work and wounding families.

Blog dog Darren has some good questions.

“I’ve read many blog entries where you outline the effects of tariffs,” he says, “such as from yesterday: ‘BoC boss Tiff Macklem says tariffs (which may be coming Saturday, as Trump indicated) mean an inefficient economy. Prices go up. Exports go down. Retaliation brings more expensive imports. Inflation rises. The dollar falls. Then interest rates can no longer decline, or stabilize. Bank economists say we’d see an increase ultimately of about 3%’.

“I’d like to understand this from a simpler, consumer viewpoint and how it will impact me (and others) directly, not necessarily how it will impact manufacturing or trade or imports. I am wanting to know your opinion on how it will impact me directly. Questions like:
* Will gas prices increase at the pumps?
* Will the cost/availability of a condo or sfh (not for me but one of my kids aged 30 is asking) increase or fall?
* Will food and clothes prices increase? What about electronics or lumber, in general?
* With lower interest rates does that generally increase equities, or hard to tell? (I am in balanced ETF’s and plan to stay that way so I don’t plan to change my investment strategy). (I’m retired if that matters).
* Will jobs be harder to get for people in their 30’s and 40’s because companies will not be hiring as much?
* Will our Canadian dollar be weaker against the USD and the Euro?

“What type of things do we expect in a recession regarding jobs, employment, cost of consumer prices, housing prices, taxes and how best to weather a recession (buy Canadian, don’t purchase anything extravagant, invest more in fixed income, etc)? I don’t know and would love to hear your views on how it affects consumers rather than businesses and government decisions.”

Good, direct questions. We wish the answers were simple and forthcoming. Trump is still murky. The messaging from his administration is unclear. The Commerce Secretary (designate) Howard Lutnick suggests some tariffs may arrive in a few days and more sweeping ones in April. Trump’s deadline of this Saturday has not yet been modified. The levies may be 25%. Maybe less. Perhaps on everything Canada ships south. Or not.

The uncertainty itself is apparently inflationary and impacting behaviour, says a Bloomberg report. Some companies are stocking up on inputs. Families appear to be scaling back spending and hoarding cash in anticipation of a trade war. Meanwhile the new president is driving relations with Canada into the sewer as he broadly hints economic pressure is meant to force us to become part of the United States.

It’s all unprecedented, Darren. But none of it is good.

The US economy grew at almost 2.5% last year under Biden – robust. Our economy is running at about 1% – anemic. Our interest rates have dropped six times, or a full 2%. The US Fed has reduced its policy rate only 1%. The American dollar is stronger, pushing ours lower. Canadian inflation is below 2% and falling. Consumer prices to the south are sticky and rising. Families here owe more money, per capital, than there. House prices are about 40% higher in Canada. We don’t have 30-year mortgage terms, and have 1.2 million households coming up for renewal at higher rates this year.

In short, we’re seriously vulnerable to a trade shock

Economists are universal in saying any tariffs will push us into recession. Unemployment will rise by about 2%. The dollar is forecast to drop to (maybe) 56 cents US with 25% tariffs. If Ottawa does not retaliate, mortgage rates will collapse back to the 2% range, but it’s unclear if buyer sentiment would be strong enough to rekindle house sales and drive up prices. If we do retaliate, expensive imports will boost inflation and interest rates will likely increase. Real estate, in that scenario (recession, unemployment, 6% mortgages) is toast.

It is completely, utterly, unknown.

Darren, there is no strategy. Just stay invested, shun new debt, tell your kids to keep their jobs, avoid real estate for now and have faith that, soon, principled people will step up.

This is Trump’s playbook. Get us offside. Create maximum concern and disruption. Then pursue his ambition. That might be to beggar non-Americans (like us) to finance his domestic tax cuts. It might be for manifest destiny and to expand America’s landbase. Maybe it’s vanity and legacy. It could be pay back – to augment the businesses run by Musk, Bezos and Zuk by depleting the ones based here. But none of it will be for the benefit of citizens in this nation.

The only question is what to do about it.

The only answer is, resist.

About the picture; “This is Harley,” writes Randy. “He is our bundle of joy..all 90 lbs of him.”

To be in touch or send a picture of your beast (and be more verbose than Randy), email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/01/30/what-does-it-mean/