Shots Fired on My Birthday
Am I crazy?
Just like that, US has started a trade war with Canada and Mexico.
I prefer to process the information and think step by step instead of acting emotionally to things when it happens.
I'd like to share 4 thoughts with you today:
First, it will affect both countries' economies
There's no doubt about that.
By how much, is the real question.
I like this quote from an article by CIBC:
A former Bank of Canada Governor recently told a CIBC capital markets audience that anyone who claims they can accurately measure the Canadian economic impacts of a major trade war “is lying”, and he has a point. Our statistical tools are inadequate for the task, lacking either recent precedents of high two-way tariffs to use as benchmarks, or models that have the detailed industry-level data across sectors and countries needed for accurate simulations.
You can read the entire article here: https://thoughtleadership.cibc.com/article/canadas-tariff-troubles-recession-trumps-inflation-as-the-worry/
I've seen lots of numbers been thrown out there.
The reality is explained by the quote above - we really don't know.
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Second, after years of investing, I find looking through the lens of "glass half full" tend to work out better than "glass half empty"
Even though there will be impact to both economies, one thing every business and investor hates the most is uncertainty.
We can work with 25% tariff.
Because now we have something to "work with".
The way I see it, uncertainty or psychological warfare is more damaging than the actual tariff war itself.
We've discussed in our previous newsletter on the areas we could work on domestically in Canada which will have significant long term impact than the tariff war itself.
You can read about that here: https://www.whyalbertanow.ca/p/turn-orange-into-orange-juice
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Third, the US has the upper hand right now to negotiate
One thing to always remember, is that wind never blows in the same direction forever.
If we look deeper into the US economy, we are seeing cracks starting to appear.
Countries like China, Canada, or Europe we simply hit the bump earlier than the US.
About 70% of the US GDP is from consumption.
As people's financial conditions worsen, there goes the US economy.
I believe President Trump knows that.
He's trying to get as much as he can get while he can.
He's negotiating from a position of strength.
There's a clock ticking.
I don't believe this tariff war will last for years.
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Last thought: Always remember there's 2 sides to any coin
While it may seem scary on the surface, on the other hand, volatile times create opportunities.
All it takes is for someone to look below the waves, ignore the noise and manage the emotions.
It's not easy, but good opportunities are about to present themselves.
This is called contrarian thinking / investing.
When people zig, I zag.
Thank you President Trump for your birthday gift.
I begrudgingly accept.
If you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
March 4, 2025
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