What’s Happening in the Markets?

It has been a crazy few days. Lots of things are changing on the fly. Things could change back to normal, change to better times and relationships,  or just to all-out war. This is how volatile American politics are with Donald Trump steering the ship, and we are just here for the ride.

I read an article that the Bank of Canada might need to lower interest rates to keep Canada afloat with a prolonged trade war. This means higher inflation. It also could spark another COVID-type real estate buying frenzy.

Remember the beginning of Covid, when I was preaching that the market would not fall, but most comments on my social media told me I was wrong and real estate prices would drop in half? Is this the same scenario?

Tariffs and Trade Wars

The 25% U.S. tariffs on Canadian goods and 10% tariffs on Canadian energy are enacted. The feds responded with 25% counter-tariffs affecting $30 billion worth of goods to start and $125 billion worth of goods three weeks later.

There are no two ways about it; the trade war will cause economic chaos, with a hit of up to 4.2 percentage points to Canada’s annual GDP on the table. The pain began yesterday, with the loonie dropping below $0.69 and the TSX cratering after Trump said the tariffs were a go.

The path to ending the trade war is murky, with Trump saying there’s “no room left” to negotiate. Even after launching a $1.3 billion plan to strengthen border security and appointing a fentanyl czar, Canada still hasn’t done enough, in his eyes. 

The head of the Canada Border Services Agency told the Globe and Mail that it was unclear what else the agency could do to change Trump’s mind. 

Let’s face it. Stop the bullcrap. This has nothing to do with the border. This is a broader plan from Donald Trump that we, Canadians, have no idea what he is trying to accomplish.

Canada’s Retaliation

So, Ottawa announced 25% retaliatory tariffs on $30 billion worth of U.S. imports, including coffee, beer, apparel, and cosmetics. The tariffs will expand in three weeks to another $125 billion worth of goods, likely including categories like produce and autos. 

Donald Trump responded with a Truth Social post threatening tariff increases, but the commerce secretary later said Trump might soon announce ways Canada could earn tariff relief.

While the immediate economic shocks of the tariffs are already being felt, the trade war is also stoking national unity. Many provinces are looking at ways to reduce trade barriers, support Canadian businesses, and hit the U.S. where it hurts. 

Provinces like Manitoba, Ontario, B.C., Newfoundland and Labrador, and Nova Scotia are pulling some or all U.S. booze from provincially run liquor store shelves.

Ontario Premier Doug Ford said that cutting off electricity imports, cancelling a Starlink deal, and legislating the promotion of Canadian products by retailers were all on the table.

New Brunswick and Nova Scotia were uber-aggressive, barring U.S. companies from bidding on provincial contracts. Nova Scotia also doubled tolls for U.S. commercial vehicles.

These retaliatory measures show that Canada is not backing down without a fight. The trade war is quickly escalating, and there’s no telling where it will go. One thing is for sure – the economic and political ramifications will be felt for a long time.

Real Estate Impact

In Conclusion, as a real estate professional, I’m monitoring how these developments impact the housing market. Will the threat of higher inflation and economic instability lead to another real estate buying frenzy, similar to what we saw at the start of the pandemic? Or will the uncertainty and financial strain lead to a slowdown in the market?

Only time will tell, but one thing is certain – these are truly unprecedented and volatile times. My followers of real estate news will want to stay tuned for the latest updates and insights. Feel free to reach out to myself or a team member directly if you have any questions or would like to discuss the situation further. We are here to help navigate these uncertain waters.

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If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

Your inside source to cottage country

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