Did Donald Trump not expect tariff retaliation?
The world of trade and politics might seem distant from our day-to-day financial lives, but when tariffs get involved, the ripple effects are real, expensive and affect us personally. I watched Prime Minister Justin Trudeau’s speech responding to the US-imposed tariffs that go into effect on Tuesday.
This wasn’t what I had in mind for the newsletter this week but here we are. What a way to start February after January was a thousand days long.
With the recent imposition of a 25 per cent tariff on most Canadian goods entering the US (and a 10 per cent tariff on Canadian energy because Americans import quite a bit of it so it can’t be too expensive), We Canadians are already feeling the heat and it will get harder over the immediate next few weeks and months.
Our country has announced counter-tariffs, so that will make things more expensive here as well. Let's break down what this means for your wallet and how you can adapt.
How tariffs hit your wallet
A tariff is essentially a tax on imported goods. Businesses importing Canadian products to the US now have to pay higher fees, which they’ll pass down the line to customers (Sorry). While this hits Canadian exporters hard as their prices have just gone up 25 per cent which means fewer sales, it also makes everyday products more expensive for you and me.
The costs will trickle down, impacting everything from your grocery bill to the price of home appliances. Even shoes and perfume. Tariffs on US products coming into Canada will make those items more expensive, if you can find them.
The provinces have already issued orders to stop buying American goods and are pulling American items like liquor off the shelves. British Colombia is focusing its actions on red states. (I support this, by the way.)
Supporting Canadian businesses
One way to fight back is by supporting Canadian-made products and local businesses. Stores are already putting up ‘Made in Canada’ signs, so look for those. By reducing dependence on US imports and shopping locally, you help sustain Canadian industries and jobs. Many unions, consumer groups, BIAs, and local community groups have already created lists of Canadian alternatives to US goods. Listen, we’re really mad about this situation.
Now let’s talk about budgeting because as said before, things will get more expensive and we’re already watching our loonies, toonies and dollars.
How to budget wisely amid economic uncertainty
Review and revise your spending: Tariffs will lead to price increases across several categories. Be prepared by reviewing your budget and looking for areas where you can cut back. Things like groceries and gas will probably change quickly and often, so keep an eye on it. Literally save your receipts and write everything down.
Support local alternatives: Check out farmers' markets, local brands, and regional suppliers. Check for the Made in Canada brand/Maple Leaf logos.
Track sales and compare prices: Now more than ever, smart shopping pays off. Use apps that compare prices or offer cash back on purchases or that list from the first point.
Bulk buy. Ok, you know I’m not the biggest fan of this as wet goods tend to spoil if you don’t have room for them but stock up on the dry goods between now and Tuesday.
The bigger picture: A long-term economic strategy
While short-term tactics can help, the tariffs highlights the broader issue of Canada's heavy reliance on trade with the US. I’m not an economist and this has been covered a lot in the last week, but now the conversation about building a stronger, self-reliant Canadian economy, which has always been around, has become more urgent than ever.
We saw it when it came to vaccines during the pandemic and it’s probably the time to support a industrial and manufacturing strategy that focuses on resilience and diversification. You can’t tell me that Canada owill trust the Americans after this. I doubt the trade relationship (and the others) will be the same.
Another conversation is around diversifying our trading partners. I won’t write about it here but you know I’ll have in This week’s readings.
For now, we wait. We can all do our part by taking a deep breath, trying not to panic, supporting local industries, and preparing for the bumps in the road. Financial resilience isn’t just about individual savings or ‘personal’ finance, as you’ve read here time and time again. It’s about community solidarity too. Reach out to friends, talk to them.