Trump Effects on the Canadian Economy
Now that Donald Trump is back in the Oval Office for the next 4 years, US being our biggest trading partner is causing some anxiety for Canada and its economy. In a recent Financial Post article, a few key points were highlighted including uncertainty around the trade relations between the two countries, investment climate, economic growth, currency impacts, and overall consumer costs. In Summary:
- One of the central concerns highlighted is Trump’s push for protectionist trade policies. His administration’s renegotiation of NAFTA (now USMCA) introduced new tariffs on Canadian goods, particularly in steel, aluminum, and dairy.
- The risk of ongoing trade barriers may prompt Canadian businesses to consider alternative export markets, but realigning these trade routes could take time, during which Canadian industries could face profit losses and competitive disadvantages in the U.S.
- With the U.S. tightening its own trade relationships and creating a less predictable economic environment, investors are more cautious. This hesitation can dampen Canada’s economic growth, particularly in sectors like technology, natural resources, and real estate, which are heavily reliant on cross-border investment and trade.
- A shift of U.S. capital away from Canadian markets could impact job creation and infrastructure development, especially in areas that rely on American partnerships and investment flows.
- Several sectors could be particularly impacted, including automotive and agriculture, which rely heavily on exports to the U.S. Tariffs and policy shifts have forced these sectors to adapt, either by adjusting supply chains, seeking new trade partners, or reducing costs to remain competitive in the changing landscape.
- Canada’s energy industry could also face challenges due to competition from U.S. energy producers, particularly with Trump’s support for expanding the U.S. oil and gas sectors. This competition could impact Canada’s exports and revenue in the oil industry.
Source: Financial Post
OUR TAKE
In our opinion, while Trump's policies present challenges, Canada's diversified economy and strong trade relationships may help mitigate potential negative impacts. Proactive measures, such as seeking alternative markets and strengthening domestic industries, could bolster economic resilience. For Canadian consumers, the increase in import costs may be challenging, but a weaker Canadian dollar also supports Canadian exporters by making their goods more competitively priced abroad.
Is 2025 the Year of Mortgage Battles Among Lenders?
According to CMHC (Canada Mortgage and Housing Corporation), 85% of the 1.2 million mortgages were contracted when the Bank of Canada (BoC) rate was at or below 1%. Majority of these are now up for renewal in 2025 (assuming many of those were on a 4-5 year fixed term). While on one hand, this may cause an increase in the mortgage payments for many, Canada's leading banks and mortgage lenders are getting ready for a mortgage "war" as interest rates decline. That's according to analysts at RBC, Canada's largest bank. "After a period of “significant inflation,” consumers will have a “strong incentive” to shop around for the lowest available mortgage in the coming years," -- Darko Mihelic.
"If a mortgage war does break out, banks with large mortgage books and strong deposit bases are more likely to either hold onto or improve their existing mortgage market share."
Source: Financial Post
OUR TAKE
When banks compete in a "mortgage war," consumers generally stand to benefit in several ways, especially as interest rates start to decline. A competitive mortgage environment brings significant advantages for consumers, allowing them to secure better rates, explore flexible financing options, and potentially reduce costs. For those who shop around, it’s an opportunity to find the best mortgage terms suited to their needs. However, responsible borrowing remains crucial to ensure that consumers don’t overextend financially as they capitalize on favourable market conditions.
ON A LIGHTER NOTE
Whether you want spaces to soothe or stimulate, choosing a property that matches your mood could be the solution, writes Riya Patel
With a major exhibition opening at the Guggenheim in New York this fall on orphism—the early-20th-century art movement featuring vibrant hues in dynamic compositions—bold, bright colors are at the top of the agenda again. Over a century ago, the proponents of orphism explored the emotional resonance of color; today, the interest in that visual-psychological relationship is just as strong.
THE ROUGH DRAFT is all about building a community. So please feel free to share. We're privileged to be your source of information and understanding of what's happening within our local economy and the real estate landscape. If you have any questions or would like to chat further, please don't hesitate to reach out.