US Tariff – Why Canadians should not trust the Governments!
More importantly, I’m sharing these thoughts as a warning—do not get misled by the claims and panic stirred up by politicians at all levels. They are using the tariff issue as a distraction to deflect from their own political and economic failures.
Tariff Tensions: Why Canada Must Stay Calm and Strategic
1. What is a Tariff? (Simple Explanation)
A tariff is a tax placed by a government on imported goods, usually to protect local industries or gain leverage in trade negotiations.
Example:
If Canada sells wooden tables to the U.S. for $500, and the U.S. imposes a 20% tariff, the U.S. buyer must now pay $600. This could reduce Canadian sales — but only if the U.S. has similar alternatives at a lower cost.
2. A Brief History: What Happened in 2019?
In 2018, under the Trump administration, the U.S. imposed 25% tariffs on Canadian steel and 10% on aluminum, citing “national security.”
Canada retaliated with tariffs on $16.6 billion worth of U.S. goods, targeting politically sensitive items like ketchup, whisky, and household products.
This standoff ended in 2019, when both countries agreed to lift the tariffs — but it exposed just how quickly protectionist policies can disrupt trade, jobs, and prices.
3. Why Panic in Canada is Premature — or Misplaced
Some recent government narratives around renewed U.S. tariffs are creating a sense of urgency or panic. However:
Most industries can adapt: Through price negotiations, alternate supply chains, or shifting production priorities.
Tariffs take time to bite: Their real impact is seen months or even years later, not immediately.
No immediate collapse is likely, especially when Canada exports value-added or high-quality goods that U.S. buyers still demand.
So, a full-blown panic is unwarranted, though measured strategic responses are important.
4. Who’s Fueling the Fear — and Why?
Both federal and provincial politicians are amplifying fears about U.S. tariffs, often pointing fingers or playing victim. But this may be:
A political diversion from domestic issues (inflation, housing, economic stagnation).
An attempt to rally public support under a nationalistic or protectionist narrative.
A preemptive blame strategy, should industries face challenges down the road.
In many cases, it’s posturing, not policy — and may have more to do with elections than economics.
5. What Can Canada Do Instead?
Canada doesn’t have to rely solely on retaliatory tariffs or diplomatic pressure. Smart exporters and private companies can take action:
Negotiate better prices: Canadian exporters can adjust prices to absorb tariffs and remain competitive in the U.S. market.
Form long-term contracts: Locking in buyers despite short-term costs.
Expand market diversity: Look to Europe, Asia, and Latin America where trade agreements (e.g., CETA, CPTPP) offer preferential access.
All of this can happen independently of political interference — and may be more effective than reactive government moves.
6. Why U.S. Tariffs Could Backfire
Tariffs don’t always protect domestic industries. In fact, they can:
Increase inflation: Just like Canadian goods become pricier in the U.S., Americans end up paying more — with no cheaper alternative.
Hurt U.S. businesses: Especially those that rely on Canadian imports to manufacture goods (e.g., automotive parts, construction materials).
Shift supply to other countries: If Canada’s out, countries like Mexico or Vietnam may step in and offer even cheaper prices, hurting both Canadian and U.S. manufacturers.
So while the U.S. may be using tariffs to push Canada into trade concessions, the strategy may harm its own economy, especially if inflation and supply shortages continue.
7. Final Thoughts: Calm, Not Chaos
Tariffs are tools — not weapons of economic destruction. Canada’s best path forward is not fear or retaliation, but strategy, negotiation, and resilience.
Let the politicians play their game. Business leaders, exporters, and trade experts should stay focused on practical solutions, not political soundbites.
Canada Offloading U.S. Bonds: Can It Be a Retaliation Tool?
Yes — Technically
Canada holds U.S. Treasury bonds (a form of U.S. government debt). Selling them off suddenly could:
Weaken demand for U.S. debt
Push U.S. interest rates up
Cause volatility in financial markets
This could hurt the U.S. economy, especially if other countries follow suit.
How Much Does Canada Hold?
As of late 2024, Canada holds roughly $15–20 billion USD in U.S. Treasuries.
Compare that to:
Japan: Over $1 trillion
China: Around $800 billion
UK, Ireland, Switzerland: Each hold over $200B+
So, Canada’s share is small in the global bond market.
What Would Happen if Canada Sold All U.S. Bonds?
Immediate Effects:
Little direct impact: Canada’s holdings aren’t large enough alone to shake the U.S. Treasury market.
Might cause symbolic political tension, showing Canada’s displeasure.
Could cause minor market ripples, but not major panic.
Long-Term Risks — to Canada too:
It would hurt Canada’s own reserves: U.S. Treasuries are liquid, safe, and stable — replacing them isn’t easy.
It could trigger market retaliation or chill U.S.-Canada investor relations.
If done suddenly, it might drive down bond prices, meaning Canada would lose money on the sale.
Strategic Use:
Canada could slowly reduce its exposure to U.S. debt as a longer-term signal — aligning with other policies like:
Building reserves in other currencies
Deepening trade ties with Europe and Asia
Strengthening domestic capital markets
Bottom Line:
Selling U.S. bonds is a symbolic gesture rather than a powerful economic strike. It may signal political tension, but:
Too small to hurt the U.S. alone
Too risky to Canada’s own economic stability
Better used as a diplomatic card, not a financial nuke
Tariff Tensions: Why Canada Must Stay Calm and Strategic
1. What is a Tariff? (Simple Explanation)
A tariff is a tax placed by a government on imported goods, usually to protect local industries or gain leverage in trade negotiations.
Example:
If Canada sells wooden tables to the U.S. for $500, and the U.S. imposes a 20% tariff, the U.S. buyer must now pay $600. This could reduce Canadian sales — but only if the U.S. has similar alternatives at a lower cost.
2. A Brief History: What Happened in 2019?
In 2018, under the Trump administration, the U.S. imposed 25% tariffs on Canadian steel and 10% on aluminum, citing “national security.”
Canada retaliated with tariffs on $16.6 billion worth of U.S. goods, targeting politically sensitive items like ketchup, whisky, and household products.
This standoff ended in 2019, when both countries agreed to lift the tariffs — but it exposed just how quickly protectionist policies can disrupt trade, jobs, and prices.
3. Why Panic in Canada is Premature — or Misplaced
Some recent government narratives around renewed U.S. tariffs are creating a sense of urgency or panic. However:
Most industries can adapt: Through price negotiations, alternate supply chains, or shifting production priorities.
Tariffs take time to bite: Their real impact is seen months or even years later, not immediately.
No immediate collapse is likely, especially when Canada exports value-added or high-quality goods that U.S. buyers still demand.
So, a full-blown panic is unwarranted, though measured strategic responses are important.
4. Who’s Fueling the Fear — and Why?
Both federal and provincial politicians are amplifying fears about U.S. tariffs, often pointing fingers or playing victim. But this may be:
A political diversion from domestic issues (inflation, housing, economic stagnation).
An attempt to rally public support under a nationalistic or protectionist narrative.
A preemptive blame strategy, should industries face challenges down the road.
In many cases, it’s posturing, not policy — and may have more to do with elections than economics.
5. What Can Canada Do Instead?
Canada doesn’t have to rely solely on retaliatory tariffs or diplomatic pressure. Smart exporters and private companies can take action:
Negotiate better prices: Canadian exporters can adjust prices to absorb tariffs and remain competitive in the U.S. market.
Form long-term contracts: Locking in buyers despite short-term costs.
Expand market diversity: Look to Europe, Asia, and Latin America where trade agreements (e.g., CETA, CPTPP) offer preferential access.
All of this can happen independently of political interference — and may be more effective than reactive government moves.
6. Why U.S. Tariffs Could Backfire
Tariffs don’t always protect domestic industries. In fact, they can:
Increase inflation: Just like Canadian goods become pricier in the U.S., Americans end up paying more — with no cheaper alternative.
Hurt U.S. businesses: Especially those that rely on Canadian imports to manufacture goods (e.g., automotive parts, construction materials).
Shift supply to other countries: If Canada’s out, countries like Mexico or Vietnam may step in and offer even cheaper prices, hurting both Canadian and U.S. manufacturers.
So while the U.S. may be using tariffs to push Canada into trade concessions, the strategy may harm its own economy, especially if inflation and supply shortages continue.
7. Final Thoughts: Calm, Not Chaos
Tariffs are tools — not weapons of economic destruction. Canada’s best path forward is not fear or retaliation, but strategy, negotiation, and resilience.
Let the politicians play their game. Business leaders, exporters, and trade experts should stay focused on practical solutions, not political soundbites.
Canada Offloading U.S. Bonds: Can It Be a Retaliation Tool?
Yes — Technically
Canada holds U.S. Treasury bonds (a form of U.S. government debt). Selling them off suddenly could:
Weaken demand for U.S. debt
Push U.S. interest rates up
Cause volatility in financial markets
This could hurt the U.S. economy, especially if other countries follow suit.
How Much Does Canada Hold?
As of late 2024, Canada holds roughly $15–20 billion USD in U.S. Treasuries.
Compare that to:
Japan: Over $1 trillion
China: Around $800 billion
UK, Ireland, Switzerland: Each hold over $200B+
So, Canada’s share is small in the global bond market.
What Would Happen if Canada Sold All U.S. Bonds?
Immediate Effects:
Little direct impact: Canada’s holdings aren’t large enough alone to shake the U.S. Treasury market.
Might cause symbolic political tension, showing Canada’s displeasure.
Could cause minor market ripples, but not major panic.
Long-Term Risks — to Canada too:
It would hurt Canada’s own reserves: U.S. Treasuries are liquid, safe, and stable — replacing them isn’t easy.
It could trigger market retaliation or chill U.S.-Canada investor relations.
If done suddenly, it might drive down bond prices, meaning Canada would lose money on the sale.
Strategic Use:
Canada could slowly reduce its exposure to U.S. debt as a longer-term signal — aligning with other policies like:
Building reserves in other currencies
Deepening trade ties with Europe and Asia
Strengthening domestic capital markets
Bottom Line:
Selling U.S. bonds is a symbolic gesture rather than a powerful economic strike. It may signal political tension, but:
Too small to hurt the U.S. alone
Too risky to Canada’s own economic stability
Better used as a diplomatic card, not a financial nuke