A perspective on the trade wars

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A perspective on the trade wars

There’s a lot of anxiety out there about the economic impact of the new U.S. tariffs on steel and aluminum. Certainly, there is no upside here for Canada. But the fallout will likely be less severe than many imagine.

This was brought to my attention by a comment piece, The Trade Disaster that arrived in my Inbox this morning, courtesy of the fund manager and media figure Greg Valliere.

I believe he sums up the situation in his first sentence: “The global economy is so enormous that higher tariffs can be absorbed — they’re inflationary, of course, but probably won’t lead to an economic crisis.”

There’s no question that these tariffs will cause disruptions and will hurt the Canadian economy since we are by far the largest supplier of steel and aluminum to the U.S. These industries are sure to feel the impact of these punitive tariffs.

But in the short and perhaps intermediate term, the U.S. lacks the domestic capacity to fulfill its industrial and military needs. So those industries aren’t on the brink of being shuttered.

Long-term, the damage could be cumulative if the tariffs are allowed to endure and progress is paralyzed on a new NAFTA agreement.

If there’s any lesson to learn from the erratic political moves south of the border, it’s that we need to calmly breathe, be as patient as we can, and watch events unfold.

Common sense dictates that these tariffs are just as harmful to American interests as to our own, so we must have some faith that this situation is temporary.

Feel free to share this opinion and the link to Greg’s blog.

Hope this helps put your mind at ease (at least somewhat).

Eric Chong

1370 Don Mills Road, Suite 211, Toronto, ON  M3B 3N7


This information has been prepared by Barbara & Eric Chong who are Financial advisor for Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Financial Advisor can open accounts only in the provinces in which they are registered. For more information about Investia, please consult the official website atwww.investia.ca


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