February 8 Episode
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My name is Mike Campbell. You're listening to Money Talks. Fabulous show planned for you. Obviously, a lot of emotion surrounding the Trump tariffs, and I'll get into that in just a moment. But you also need the hard facts. Retaliation. What's it going to cost? Is it effective? What are the costs of the tariffs to Canadians? What will be the cost of the Trump tariffs to Americans? That's what we're going to deal with. Associate Professor of Economics out of Toronto, Joseph Steinberg. I think you're going to really find this informative and informative.

somewhat, I was going to say entertaining, but the whole issue isn't entertaining, but I think you're going to find it a brilliant interview. Also going to talk to Ozzy Jurek about the latest real estate numbers, implications there. Hey, big jump in supply.

And I don't think the demand is kept up with it, but we'll dig into that. I got Michael Levy with me. Of course, Victor's got tons to talk about, about the markets. I've got a good goofy award for you. I've got shocking stat and you really should listen to the shocking stat, given how much debate there is right now about fentanyl in Canada. As I say, worth your while. But first, of course, Canadians are mad at the Trump tariff threat.

We're not being treated as a neighbor, an ally. We're not being treated like a friend who immediately, for example, sent water bombers to help the California fires or stepped up immediately during 9-11 when U.S. airspace was closed and 6,600 passengers were stranded in Gander where the people welcomed them into their homes. I mean, that's what friends do.

They don't threaten with bully tactics and they don't break the essence of signed agreements like the U.S.-Mexico-Canada trade deal. I mean, there's so many aspects to talk about the Trump tariff tactics and the bombast of Canada becoming the 51st state. But I think it'd be a major mistake to focus solely on President Trump.

Although I'll bet the federal liberal government hopes we do, because as the National Post put it in quotes, blame for a good part of the pain that will follow Trump tariffs will lie within our own country and its utter contempt for economic growth. That's the key phrase, utter contempt for economic growth. Sam Cooper put it this way.

It needs to be said that Ottawa's parade of anti-energy policies, red tape on resource development, lack of investment in our armed forces and our soft on crime laws have left our country in an incredibly vulnerable and weakened state economically and politically. The fact is, under the Trudeau government, economic growth has never been a priority. As the former head of the Bank of Canada, David Dodge, stated in quotes,

The policies of the government in power and the proclivities of the current prime minister are not particularly oriented toward the hard work of generating economic growth. And we're living the consequences. But instead, the government's priorities have been climate change, LGBTQ+, expanding the government into areas like dental care and daycare and pharma care, but not economic growth.

Now that's perfectly legitimate to focus on these policies and not economic growth, but I'm just saying they come with consequences. I mean the current vulnerability of our economy to the tariff threat, including the loss of hundreds of thousands of jobs, further drop in the Canadian dollar and our standard of living, and a huge increase in the debt and deficit are just some of those consequences.

When it comes to oil and gas, you know what, I can't help but mention the profound irony that many of the same individuals who now acknowledge oil as Canada's most powerful asset in a trade war with the U.S. are the very ones who spent the last nine years actively working to undermine the industry. The point is, we're entering a trade war slash dispute, whatever you want to call it, from a position of economic weakness and financial weakness.

as a direct result of our own policy choices and refusal to take seriously the economic decline that's been reflected in so many stats. I mean, starting with what? The Bank of Canada issuing the unprecedented warning that productivity and declining GDP per capita is an emergency. Yet the government's response?

to falling productivity, declining capital investment, falling competitiveness ranking, was to raise taxes on mid and higher income individuals and small business while increasing capital gains taxes and regulations. That's the opposite of what they should be doing. Now, it's kind of smile thinking because liberal partisans are going to disagree with that statement. But guess what? The leading contenders for the liberal leadership agree with me, which is why

All of them promise to drop the capital gains tax increases and do away with the carbon tax. The government seems oblivious to the economic challenges which are now being exposed by the tariff threat. You know, just a few weeks ago, during an interview with CNN's Jake Tapper, Prime Minister Justin Trudeau stated in quotes, our economy is doing very well. What? He made the same statement with Stephen Colbert in September.

Completely oblivious to the fact that 2 million plus Canadians are visiting food banks monthly, or the 53% of Canadians in a recent RBC poll who said they feel financially paralyzed.

I mean, there are so many more examples, but the point I want to make is that, to borrow from the National Post again, our lack of concern for the economy and utter contempt for economic growth has left us profoundly vulnerable to the U.S. tariff threats. Now, the good news, and maybe I'm just having some wishful thinking, is finally the importance of the economy and our policy choices seem to be much more appreciated by the vast majority of Canadians, a

along with the cost of the anti-business, anti-economic agenda that's been featured for nine years. You know, as I regularly say, politics is for adolescents, while economics and finance are for grown-ups. Well, we're getting a good example as the consequences of the Trump tariff come to light, and the Trump tariff threat means anything. It's that it's time for grown-ups to be in charge.

Hey, this is the World Outlook Conference weekend. If you weren't able to attend, you can still watch the whole thing starting Monday. I mean, it's all been recorded. All the mainstream speakers are there. All you have to do is go to worldoutlookconference.com, you know, sign up.

And you can pay and then you get access starting Monday morning. So again, you don't have to omit all the recommendations that we had over this weekend, all the takes we've had, you know, the perspective that is so needed in today's environment. No, you can access right there, worldoutlookconference.com starting Monday.

Well, there's no secret what the big topic of conversation has been, well, for going on really since Trump's election, at least vis-a-vis Canada. And that had to do with the border, has to do with tariffs, you know, all sorts of things. Well, I think it's time to sort of get over the first emotional blush. And I share it, as I said, right off the top of the show, I share that frustration and

a sense of betrayal, however we want to put it. But you know what? When you're coming about policy, you've got to drill down. We've got to get some practicality introduced into this discussion. And no better person to do that is the Associate Professor Joseph Steinberg at the University of Toronto in Economics. Why, Joseph? You must feel like all of that work you've been doing, focusing on trade and these kind of trade issues, the modeling you've created, you're going, hey, it's my time. Yeah.

It's been a busy couple of weeks or so, especially starting over the weekend when things really started heating up. That's for sure. Forgive me if I jump around a bit, but I want to start with the context. Sure. And that is you're looking at a monster-sized economy, 10 times ours. And so when we talk about exports or they talk about Canadian imports and exports back,

It's it's not a you know, we have to get proportional on this and it just seems far more important for Canada than it is for the US. Yeah, that's absolutely right. I mean, you know, you can cut the numbers a lot of different ways. But the simplest way to think about this is, look, Canada, United States export just about the same amount back and forth to each other. Right. And as Trump makes a big deal about this trade deficit, right.

Whether it's $50 billion, $100 billion, $200 billion, it kind of fluctuates from year to year. But the reality is that deficit is pretty small relative to the total amount that each of these two countries export to one another. So those back and forth gross trade flows are about the same. Everybody knows the U.S. economy is about 10 times larger than Canada's. And unfortunately, that gap seems to be getting larger every year as the U.S. economy kind of moves ahead full steam and Canada's

continues to display some kind of anemic growth. And so what that means is that this trade, you know, back of the envelope has to be about 10 times as important for Canada as it is for the United States.

But that also then influences responses. And as I said, I think there's been a lot of emotional talk here. One thing, like we can change suppliers or buyers for our oil as if you can do that in 15 minutes. I mean, the time lag for supply chains would be so painful. And to both sides, but as you said, proportionally more to Canada. But sorry, forgive the digression, but I worry about the broad stats because we are still ultimately talking about people's jobs. You know, if we...

get rid of the middleman supply chain issues with, not issues, but supply for auto, for example. And you can say, well, it's this percentage. The problem is you're talking about real layoffs. And the numbers I've read are anywhere between 600,000 if they go ahead with what he's done, not the reprieve, but, and higher. Yeah, I mean, it's hard to say how exactly how many job losses there could be, especially in that auto sector. I think

You know, we have, you know, given the predominance of unions in the auto sector, I think there's a chance that depending on, you know, how long this trade war ended up going on, if it actually does start, you know, I think there's a good chance that if it doesn't last for very long, a lot of those jobs, I think we could see them, you know, we could hold on to a lot of those jobs. But the reality is, especially in the auto sector, but more generally across the manufacturing sector,

The supply chains are just so integrated that, you know, it's switching suppliers from domestic to foreign is just this isn't something that can be done at the drop of a hat over the span of a couple of weeks, over the span of a couple of months. And in many cases, it can even be done over the span of a couple of years. I mean, I've been reading a bunch of stories recently, you know, just in the last couple of days about how firms all across North America are postponing,

lots of other capital expenditures just to wait and see what's going to happen. I mean, I think there are many companies that are thinking about just delaying their expenditures at least for the first half of Trump's first term just to see where things go. Because they know that they can't switch. They just cannot rejigger their supply chains in any kind of short-term way.

I, in fact, know one personally. I only know one directly, though. Someone talked to me yesterday about that very thing. The other thing that worries me is firms saying, I don't need this. I will relocate to the U.S.,

Yeah, no, that's a concern as well. I mean, I think that's especially, that's a concern obviously for Canadian firms that primarily serve the United States. Absolutely. But to some degree, it's potentially a concern for firms that also have a lot of Canadian consumers, Canadian customers. But they see...

for tariffs on the intermediate inputs that they use, going back and forth across the border, they see the likelihood of Trump doing this kind of thing. It might be safer to just be located in the U.S. and be able to serve our Canadian customers however we're able, but not to have to worry about how much it's going to cost us to produce our product if we're just kind of locating the most of our production in the United States.

Yeah, of course, you know, we still have a lot of uncertainty. I mean, just the delay itself, what will be the details, you know, going forward. So there's much more to do on it. But is it safe to say the longer this goes on, the more damage? Like, obviously, I mean, this is, you know, an extreme, but if the terrace lasts one week, the damage is far less than if they last one year. And that's some of the modeling that you've done exposes that.

Yeah, that's absolutely right. So that's kind of the first takeaway from the modeling that I've done is precisely that. It's look, the longer this suppose the tariffs do get put in place, you know, by President Trump and regardless of whether we retaliate or not, the longer those tariffs are put in place on our products going going south of the border. That is it is going to get worse and worse for Canada and Mexico.

Conversely, you know, it's not going to get all that much worse for the United States. And basically the reason for this is the U.S. is putting tariffs on products coming in. And, you know, U.S. consumers are largely going to have to pay the bear the brunt of that starting right away. You know, to the extent that there's going to be some pain in the U.S. and my modeling says that there would be, that's going to feed through into prices relatively quickly. But the problem for Canada and Mexico is the fall. President Trump is putting tariffs on products.

imports coming in from Canada and Mexico. And those things, those products get, you know, transformed, upgraded, rearranged by factors in the United States. And then they go back north or south of the border. That's especially true in the auto sector, right? Where parts cross the border many times. In some cases, you see part get imported from, you know, Southeast Asia, enter the United States, go down into Mexico to get worked on a little bit.

up into the US, across the border into Canada, back down south, back up north, right? And so the more times this happens, the more times tariffs are being levied on that kind of part that has been embedded into an automotive.

And so the longer this goes on, the more that's going to happen and the more costly the intermediate inputs that Canadian producers need to buy from the United States are going to get because those products are going to get more and more expensive the longer this goes on.

Let's come back to retaliation and again, to put some perspective on it, I must say right out of the gate, I said, are we sure we want to retaliate? My example is oil and gas. Why don't you throw 25%, you know, Mr. Trump or President Trump on 25 and have all your people pay more for gas, more for diesel, jet fuel, you know, your heavy crude refineries are in trouble, etc.

And see how you like it. Exactly. I wasn't convinced that the response, and we got a lot of it saying, oh, let's just not sell them oil and gas because it's so important. I'm going, well, that hurts an awful lot. Can we at least do the cost benefit analysis of that? Yeah, that's right. Yeah. So that is kind of the second part of what I've done. So the kind of

First pass at my modeling was, look, let's just think about what happens if President Trump puts these tariffs on our products and we don't do anything. And that's bad, as you've seen in the article. The second scenario that I looked at was, well, let's see what happens if we do go ahead and actually retaliate in the way that the prime minister announced over the weekend. Now, one thing that is...

You know, somewhat positive about that retaliation package, I will say, is that it is primarily focused on consumer products. You know, the biggest category is food and beverages. And so what that means is that these tariffs are, you know, if we do retaliate and put tariffs on those things, it is going to make some of the products that our consumers buy, you know, at the grocery store more expensive.

But the fact that we're not going to focus so much on those intermediate inputs that are used in the auto sector and the rest of the manufacturing sector means that it's not going to hurt us quite so much in terms of an increase in producer prices broadly across the board. That is a positive. Now, the downside of that, of course, is in terms of the kind of leverage that that retaliation package creates, it's fairly minimal. It doesn't really inflict too much pain on the United States itself.

The vast majority of the pain from that retaliation package is, in fact, going to be felt by us. And so the way that I'd like to see it is the following. My calculations say the Trump tariffs themselves, the effects are going to be about five times larger for the Canadian economy than for the U.S. economy. And again, that difference is going to get more pronounced the longer it goes on.

You flip things around and talk about the retaliation package, the numbers are actually about the same. The effects of that retaliation package are going to be about five times larger for the Canadian economy than for the U.S. economy. And, you know, you can expand the retaliation package,

you know, apply more broadly across the board to all products, both consumer products as well as those intermediate inputs. That would have more effect on the U.S. economy. But of course, the downside is the effects are going to be much larger for us as well.

I mean, I think what has been widely appreciated is there's no winner in a trade war. Absolutely. But there's the most effective way to go forward. And, you know, with understanding, you know, the kind of research that you've done, I hope I'll recommend to all our MPs to consult with you. Look, I'd love to hear from them. I haven't heard yet. Well, they're back. Yeah.

They're busy, I understand. Well, forgive this comment, but research-based policy isn't their strength. That was me saying... No comment. Not Professor Steinberg. But, okay, so you just alluded to this, and I think that's the key, because now we're going forward, we've got this...

Period. We're in suspension right now, but we should be preparing for more of this. And I want to come back to something you said. It's probably good policy that we are targeting American consumer goods, but it's also not the most effective. And that seems to be the dilemma. I'm just going by some of the polls. Angus Reid did a poll showing that absolutely even Trump supporters do not support tariffs that will increase the cost of gas. So it seems that...

You know, all of us understand that, you know, gas is a huge issue. And it seems to me that would be the most effective in terms of immediate pain, especially if we did a marketing campaign around it saying, you know, your trailers on Canada are costing you 25 to 75 cents at the pump. Yes, exactly. But as you said, I mean, the pain of that, I just said, well, we've got to do the calculations. Are we willing to endure that kind of pain?

Yeah, and you know, the problem for gas, and this is not so much true for you guys out on the West Coast, but for us over here on the East Coast, the problem with the gas is that, you know, the gas that we buy at the pump is refined in the U.S., by and large. It's our crude oil.

Chipped down south and then refined and then sent back up. And so we have to, you know, the pain that the U.S. consumers are paying at the pump from this, it gets reflected right back around to us as well. So those increases in gasoline prices in the U.S., you know, from tariffs, they actually show up for us as well, which is, you know, there's that's also something that I think is really important to consider.

Yeah, and it's a reminder of how complicated it is, as you alluded to earlier with the auto parts. You know, you cry. I mean, are they going to put, and I think they are. The plan is to put the tariff on, like if a part came from Mexico, he'll throw the tariff on that.

We bring it into Canada and let's say we have a regulatory tariff, send it back to the States. He'll put another tariff on that. But the escalation of the cost could be very dramatic on these that crisscross, as you just alluded to with oil, for example, refined products. Yeah, I mean, the estimates I've seen are, you know, going from an absolute lower bound of, you know, an increase in the cost of a vehicle, passenger cars, about $3,000 at an absolute lower bound. I would anticipate it probably would be larger than that.

I think the reality is that, you know, in the auto sector especially, a lot of the effects are not going to be coming just from, you know, the increased cost of production, which, as you said, it's going to get kind of amplified every time those products cross back and forth across the border. You can't just think about an increase in 25% and leave it there. It really is going to be quite a bit larger than that because those things do cross the border many times. But there's also just...

You know, the auto sector, again, it is so hard to rearrange the structure of production in that industry, especially internationally, that I think you have to anticipate production just being shut down entirely for weeks in order to try to figure things out. And that is obviously going to be a huge supply shock to the auto industry. I'd anticipate prices going up a ton as a result of that as well.

Let's finish off with a couple of things here. And again, I'm looking at the impact on Canadians. I've already seen the debate over the Canadian dollar, which has been in a period of weakness anyways, well before this, how it could be impacted. But I want to ask you, and again, just put your crystal ball, shine it up. And it's very difficult with President Trump because he is all over the map a lot of times.

You know, I don't know what he's going to do next. And yet, I think to a degree, I haven't personally observed elsewhere. I may have policies I disagree with, but you sort of go, which one is which? You know, what's this really what's this trade war about? But do you think we're looking at the potential for a real change in the international trade economy?

when it's being used as a political weapon, as Trump did down in Colombia, for example. Take back your illegals or we're going to slap this on. And sorry, I'm all over, but one more thing. If we retaliate, he says he's going to double the tariffs.

Yeah, so there's two things I want to emphasize there related to what you just said. So I'll start with the second one, which is a little bit simpler. So, yeah, so he did say, in effect, you know, the executive order that the president signed on Saturday that has been delayed for in the case of Canada and Mexico. It does have a clause that says if Canada or Mexico retaliate, he's going to escalate. And so one of the things that I did do in my in my modeling was to think about what could happen.

And so in addition to having a, you know, Trump tariffs plus Canadian retaliation scenario, I've also got the initial tariffs, Canadian retaliation plus Trump escalation scenario. And so there the numbers obviously do look, you know, quite a bit worse as well. You know, it's the effects on Canada obviously get quite a bit larger. The one thing that is kind of interesting about that and maybe a little bit of a silver lining if there's anything for Canada is that

that escalation by the United States would actually dramatically increase the pain felt in the United States. And so if the initial Trump tariffs are already kind of unpopular in the U.S., I have to imagine that seeing the pain associated with those escalatory tariffs that are even higher, I have to imagine that

that would cause a lot of upset down south. So that's the first thing I wanted to say. The second thing I wanted to say that's related to what you just said is a broader, bigger picture point that I think is really important and I think is well appreciated by a lot of economists, but I think more broadly people haven't quite started to appreciate yet, which is exactly what you said, that the way that President Trump is kind of rethinking politics

What trade policy should be used for treating it as a negotiating tactic rather than something to try to foster, you know, deeper integration and more productive economies and just higher living standards.

As a byproduct of that, he is just creating a big increase in the amount of uncertainty about what the future of U.S. trade policy looks like. The future of U.S. trade policy towards Canada and Mexico and China, but also towards he's talking about tariffs on the European Union, talking about tariffs on chips from Taiwan.

By creating this uncertainty, what he is doing is destroying the credibility of the United States commitments to its past international trade agreements, but also the potential credibility about any agreements that might be made in the future. And a lot of research, including some of my own research, suggests that just this uncertainty about what that future trade policy could look like can have really big negative effects today.

I think you're seeing that, you know, some mutterings about that already in terms of firms just saying, look, we're going to delay capital investments for a couple of months or even a couple of years just to see what happens with, you know, the Trump's for the first half of Trump's term. Maybe the midterm elections will change the balance of power. But until then, it's just not even worth getting, you know, getting into the market.

And I think over the longer term, I see, you know, I see exporters all around the world being more hesitant about getting into bed with serving the United States, you know, and perhaps as a byproduct, Canada and Mexico as well, because of how deeply integrated that North American economy is. I see that as a persistent drag on the global economy for years to come, to be perfectly honest. And I think it's going to be very difficult to

You know, Trump administration ends, the balance of power shifts toward the Democrats, or perhaps the tenor of the discussion in the Republican Party changes. I think it's going to be very difficult, quite frankly, for the U.S. government to rebuild that credibility. It's very easy to destroy it. It's hard to rebuild it.

Well, and it's against one of our themes here is you can't have the major debt buildup that they've had in the States and globally and a weak economy. The two don't go hand in hand. So there's so many implications. But you give me a wonderful lead in to put you on the spot and say, sure, there's much more to talk about. I hope you can make time for us because this has been terrific. Yeah, no, I've got plenty of time today. No, it's as you said at the beginning, you know, this is...

It's a really daunting time for Canadians, but it certainly is a fascinating, riveting time for economists, especially those of us who study international trade. Well, let's visit again in the near future and in the meantime, Professor. Thank you so much for finding time for us today. Yeah, it was great talking to you, Mike.

As I said earlier, of course, the Trump tariffs are the big news. That's what people are talking about. And it's difficult to put the finger on exactly why he's putting these tariffs on. So I'm going to go to a quote he made this week.

In quotes, we're not going to be the stupid country any longer. Make your product in the USA and there are no tariffs. Why should the U.S. lose trillions of dollars in subsidizing other countries? Why should these other countries pay a small fraction of the cost of what the U.S. citizens pay for drugs and pharmaceuticals, as an example? This will be the golden age of America.

Will there be some pain? Yes, maybe, maybe not. But we will make America great again, and it will all be worth the price that must be paid. We are a country that is now being run with common sense, and the results will be spectacular.

Well, again, I'm not any clearer on why he's doing that. I said earlier that that would be the danger if people may relocate to the U.S., that manufacturing. But, of course, he's talked about many other aspects to it. But I still think that was somewhat illuminating what he's got to say. Hard not to avoid the tariff talks, and I'm going to continue that on here with Michael Levy. Mike, interesting conversation with Joseph Steinberg. You know, I mean, well, fascinating and factual and research and all of that stuff.

It's interesting, though, you know, of course, we're worried about the impact on Canadians. But what about you? You've been looking also more focused on the impact on Americans, hoping that they'll scream bloody murder that they've put the tariffs on Canada.

They already have. They already cried uncle. And they did it within about 24 hours, maybe 48 hours. I just love Claudia Scheinbaum from Mexico, the president of Mexico. What a pro, Mike. It was the conversation with Trump. Okay, we don't want these tariffs to go ahead.

What do we have to do in order to continue to talk, continue to negotiate? What do you want Mexico to do? Trump comes back after talking to his advisers. We want 10,000 more troops on the border. Okay, you got it. I know I'm paraphrasing. Talk to you again in 30 days. See if we can work this out. Prime Minister Trudeau, a morning talk. Didn't go well at all. He's telling the U.S. what's going to happen to them.

We hear about Claudia Scheinbaum in Mexico, afternoon talk, made the same deal with Trudeau, 30 days. And the pressure that Trump was getting internally from Americans and the costs that were going to go up to them because of the trade sanctions that he was going to bring in, they pushed back dramatically.

They pushed back big time. So Trump was getting it both from Canada and Mexico, particularly Mexico, but also internally from Americans. Gasoline prices may be going up 20 cents a gallon because of the import of oil from Canada. Your car is going back and forth manufacturing eight times across the border, back and forth.

what, we're going to stop it each time and slap on a tariff? Mike, I could go on. It doesn't make any sense. And I'm glad we've got breathing space.

You know, here's one that Global News reported. I guess it was on Wednesday, and I guess there's much more after that. But our public safety minister, David McGinty, said there's actually no plan to send Canadian soldiers to the U.S. border. Now, they were careful in the wording saying they'd include administrators in that and other occupations. But it's because we don't have 10,000 frontline personnel there.

available to protect the border. So there's more to come on that file, that's for sure. Well, there sure is, Mike. But Trump was just covering his, pardon the expression, covering his butt. Whatever Trudeau said then was going to work because he was looking myopically, he was looking at

the impact in his country. And boy, it was just a pushback. And everywhere you read, Mike, I read Pete McMartin, who is right in the Vancouver Sun, but his column, you can get it throughout Canada about goodbye to the US. I'm done. And he lists the whole things of what he's not going to do.

That was an elegant call-in, but start talking to people. I think we're going to go to Mexico instead of going to California. I think we're going to go to the Caribbean instead of going to Florida. I mean, wherever you look, this was so truly badly researched by Trump and his associates, and it took the professionals to come in, straighten him out, and they did it within a day.

Well, again, we always said that practicality, when the reality started to hit, would show up. So we're still in that stage. I still think there's tons of uncertainty. We'll see where this goes. You know, Canada, Mexico and the U.S. have, you know, whatever it is till March 1st to figure it out, how it's going to go forward practically. And as Joseph Steinberg did a great job explaining how complicated it is.

Oh, you know, car parts going several times back and forth across the border and could hit Mexico, U.S. and Canada, then back again. And that's not the only industry, but it's one that Canadians appreciate is very prominent in it. He estimated that U.S. car buyers are going to spend three thousand more to purchase a new car if the tariff goes ahead, as you know, announced last week.

And you can bring it into a much smaller perspective that impacts families. Avocados are going to cost more. Strawberries are going to cost more. Any of the fruits that come in from Mexico won't cost Canadians more. Mexican fruit will pay from the U.S. if it goes ahead. But it's impacting everyday Americans and their grocery bills. And back to you, Mike.

And you've said it so many times and causes inflation because prices are going to go up. Well, it's like those old serials from the 30s and 40s when it says to be continued. Well, this one certainly has a lot of details to be worked out and implications, etc. Mike, in the meantime, go out and have a fabulous week. Thanks. You too, Mike.

Time now for the shocking stat of the week. You know, it'd be interesting to quantify whether the fentanyl crisis has gotten more attention since President Trump, I think it was late November, started to threaten tariffs to stop organized crime and the fentanyl trade crossing the border versus the 12 years before that when it was maybe reported, but I think there wasn't anywhere near the same level of reaction.

And there's been no shortage of things to report, by the way. I mean, you could start with a shocking number of deaths attributed to fentanyl. You could do what Sam Cooper's done brilliant work on this. You could expose the infiltration of organized crime from China. But there's the next to no response from the federal government.

So far, the government's downplayed the problem of fentanyl crossing the border with statements like, and they're still doing it, only 9,600 pounds of fentanyl were confiscated at the border. Well, they might want to consider that's because we have the longest unguarded border in the world with the U.S., and it's largely unpatrolled. We should also note the 9,600-pound claim, well, it flies in the face of like the drug bust they had earlier this year on Falkland, B.C.,

where enough chemicals and other material to produce roughly, are you ready? Shocking stat, 96 million doses of fentanyl. One bus, 96 million doses. New York Times also reported that officials believe that there are about 100 organized crime groups involved in fentanyl production in Canada last year. And that's about a four times increase from 2022.

I mean, there's a lot more that apologists for governments inaction on both sides of the border want us to overlook. But I don't want to move on without making sure you understand the human costs. In 2012, BC reported that 4% of illicit drug deaths involve fentanyl. By 2016, 68%. And in the first half of 2017, 83%. That's in BC. But nationally, well, just look at the first quarter of 2024.

Right through June, 79% of accidental apparent opioid toxicity deaths involved fentanyl. Well, that was up like nearly 40% since 2016. You've got major publications like the Wall Street Journal stating in quotes, reports indicate that transnational organized crime groups are utilizing Canada as a base for manufacturing and distributing fentanyl to the US, Europe, and Australia. So now President Trump says,

has put the issue on the front page with his tariff threat. Well, I think tariffs are not. I think that's a good thing, as it's been the catalyst for, you know, if it pushes government to take action, which they did, announced, I think it was December 27th, $1.3 billion to enhance border security, or at least they're promising to do that. Well, I say it's well past time, whether it displeases the government's friends in Canada, China, or anywhere else.

Busy day for Ozzy Jurek presenting at the World Outlook Conference. And I'm telling you, Ozzy may be the most popular speaker in the country right now. Well, he's got the hot topic and he does a fabulous job of delivering background information, etc. And that's what we keep picking his brain for. And I'm going to do that again today. Ozzy, let me just come to the numbers that have just come out. I mean, it's building a picture. We get a better sense of what's happening. And I guess for me, in a nutshell, it was...

Yeah, we're edging better than last year, but man, I looked at some of the comparisons with the 10-year numbers. Yeah, it's kind of, you know, it's in the end, it's all in how many listings are there compared to the past and how many sales are there. It's very simple. Well, sales in Toronto are down 8%. Sales in our wonderful neighborhood of Surrey are down 21% on the single-family home and 15% on the condos.

Vancouver is better with having a slight increase in the sales, but the big kicker is the listings. In Toronto, 70% increase in active listings. Active means everything that's for sale at the end of the month. It could be two months, three months, but it's all that 70% higher. Well, that is really outlandish

Vancouver, well, it's not that far behind. We are 48% higher in new listings and we are 28% higher in active listings on the condo sector and the same in single-family homes. We're up some 40% and in Surrey, 47% active listings and new listings up 56%. I would say buyers rejoice.

Yeah. And I mean, again, we're not trying to do too much forecasting in this, but I mean, that's the kind of pressure that brings prices down fine because the prices don't seem to have meshed dramatically. But clearly there were a lot of people waiting to

you know, sell their homes. And that's why the listings go way up. But as we said, the buy side, you know, can be a little bit deceiving if you just look short term. But when you look at what the overall trends have been over history, as I say, back to 10, it's still a very weak market. So that should produce, you know, over time, lower prices if someone wants to sell.

No question about it. As we pointed out on the show that in 2021, the year preceding 2021, we had 14,700 single-family homes sold. And the year preceding December 2024, we sold 7,500. So 50% decline over that. Now, December over December 2023, it was better. And the whole year of 2023 was better than 2022. But, you know, those were anemic years.

Let me, let's come to something, you know, just part of this though, is what about the impact on the presale market? Because again, the presale market has such a huge influence on what's going to get built and we know we need supply over time. So what's your take on the presale market with these numbers?

Well, unfortunately, it's not good. I mean, Toronto is really difficult. And I guess what the pre-sale market faces, the developer faces, is a huge rising in costs. No question about it. And rising in taxes and municipal fees. But a huge rising in costs, number one. At the same time,

is facing the existing buyer market because those increases in listings I just mentioned, that's all used inventory. And that's now what, okay, say take a three-year-old condo in Toronto or in Surrey and it's cheaper.

It's on a square footage basis cheaper. It's larger, usually by 100 square feet because we keep building shorter and shorter units. And there's no GSD. So now the developer is not just competing with other developers that are coming on. He's competing with what's on the market now. And as that builds, more and more pre-sale construction guys will back off. And three years from now, there'll be no inventory.

Let's and let me finish with this because we've been talking about that, the competitiveness for mortgages. So you are finally saying this is going back a few weeks. You would think, especially now with the perception that Bank of Canada is going to continue to lower rates, as we talked about earlier in the show, you know, with pressure. I mean, look at the RBC saying eight one quarter point rate drops by October. So the consensus is that at least rates are going down.

But we finally see a little bit of a budge in the fixed market. Variable have been moving with the Bank of Canada, but not the fixed particularly. So it looks like there will finally be some action on the fixed side of the thing, like a five-year fixed.

Yeah, I was talking to Jared Dreyer, who has a very cool mortgage, and he says the best rates available right now in a five-year fixed are 4.09 for a high ratio and 4.44 on a conventional. Mike, that's below 5%. Even the variable rates are also in that same range, 4.19, almost the same. So take a look at the last 50 years or so. We only had five years where the fixed rate was 5%.

under 5%. And we are there now. So it's certainly from a new buyer's perspective, mortgages are not going to be the problem. In particular, as you point out, rates may even come off some more. And we even hear the whisper that the Bank of Canada will do an emergency cut next week. So all of the mortgage rates are not the problem. I think we have a large supply. And if you love

to buy a house, maybe in the next little while is a good time to take the realtor that has the time for you, the mortgage broker that sits down and actually listens to you and helps you get the best deal. All that is in the buyer's favor.

Well, we'll be chronicling here on Money Talks, and the audience at the World Outlook will be enjoying Ozzy today. But, Ozzy, in the meantime, thanks so much. Much to talk about. People can go to ozbuzz.ca. All you have to do is put in your email address, get the latest from Ozzy every week, ozbuzz.ca. Also, check him out on YouTube. See his gorgeous face. Just type in Ozzy Jurek, and it'll set you through 1,222 videos.

But all the latest topic specific. Ozzy, thanks for taking the time. Thanks, Mike. You know, I've been always accused of talking a lot. Well, that's because I love the sound of my own voice. But when I was born, I was so surprised I didn't talk for a year and a half. Yeah, I was very similar. I was six months before I spoke after birth. Ozzy Jurek, OzBuzz.ca. ♪

Let's go live to the trading desk and this unique weekend, live to the World Outlook Conference. Victor Adair there with us. Vic, great to see you, by the way. And, you know, as you can tell, listening to the speakers, there's just no shortage of things to talk about. But I wanted to focus on one aspect of it, and that is the uncertainty President Trump creates, the volatility that comes out of that, you know, and what we should do as investors slash traders in this. So I'll leave it to you.

Well, I think everybody was anticipating that the markets would be different once Trump became president. Yeah. And actually, you know, to say, well, we think they're going to be more volatile. Yeah, they will be.

But but how do you handicap Trump? You know, how do you trade Trump? I mean, we've watched him before. And I think he's like Trump on steroids this time around compared to the last time he was president. I mean, Steve Bannon, I thought, you know, who used to work very closely with Trump, said it perfectly. He said he's going to flood the zone. He's going to create uncertainty and noise. He's going to create chaos and people won't be able to keep up.

with what he's doing. Everybody's left behind. So yeah, if that's in fact the environment, how do you trade the market because of Trump? Okay, I'll start with this. I do not trade whether or not I think Trump is right or wrong, whether I agree with what he says or does.

That's not it. That's not trading. I'm going to look at what he does and say, so what's that doing to the market? He may say something that possibly I think is a great idea or a horrible idea from a political perspective, but that's not what I'm trading. I'm trading the market and how it reacts.

I just think that's a key point. I mean, really, just such a key point and a very difficult one. People are enamored with their own opinions and can't make that distinction. It's a long one. We talked to Kevin Muir about that last week. But your point about he's a disruptor,

and you've already seen volatility all the way along. Forget the flip-flop on tariffs, delay, no tariffs, whatever it is. But the market is certainly reacting accordingly in terms of volatility. Okay, so Mike, specifically, here's what I've done since he became president. I've done practically nothing in terms of trading compared to what I might have done before.

Now, part of that time, I was away on a road trip with my son. We went down to Palm Springs, played golf. But I purposely kind of turned my back on the market so I could get used to, as much as possible, this new environment. There is a new force in the markets. And so...

You know, I've said on the show so many times, I make money by managing risk, not by having a great crystal ball. And I think if you're going to try to trade the markets on your predictions of what Trump's going to do, you're going to be disappointed. That'd be a start.

Let me come to something here, just a broad perspective on the Canadian dollar, because we've been monitoring it correctly about the decline in the Canadian dollar. But I'm wondering if, at least for a month, if the news is out, I mean, we did get the tariffs, but now they have been suspended. So again, that's another level of uncertainty. But your take on the Canadian dollar? Okay, so on the show here for the last...

three, four months thereabouts, I've been saying to our folks, listen, the speculators in the currency futures markets are building a massive short position against the Canadian dollar. But hold on a sec.

It's not just the Canadian dollar. The U.S. dollar is going up against everything. And aside from a couple of weeks we had back at the end of 2022, the U.S. dollar index is at a 23-year high. The U.S. dollar is really strong compared to where it's been historically. So we go into, you know, the lead up to the...

25% tariffs on Mexico and Canada. The market is short up the yin-yang. And lo and behold, Trump announces 25% tariffs. The Canadian dollar drops a bit more.

And then like, that's it. And then I'm watching my screens and I see the markets, whether it's a stock market or whatever, are starting to trade up. I'm thinking, what's going on? I'm trying to quickly find out on Twitter. What is there been a news release? What the news release was, is that Mexico announced they'd done a deal.

And I thought, oh, my God, this has got to rally. Certainly a couple of hours later, Canada came out. Trudeau said we'd done a deal. And the Canadian dollar soared the biggest one day gain we've seen in at least a few years on heavy volume. What was happening there, Mike? Those big shorts that we're talking about realized there was nothing left on the short side. So they were buying the dollar.

to cover their position, to realize their profit. So what we're seeing here is

When I look at the market, I'm trying to see how it is positioned. And then if Trump does something, what that positioning will likely lead to. So it's exactly what we had here. Massive short position. Canada goes down. And then it's like there's nothing left to do for it but to rally. And much more to come, Vic. And anyway, so you know you got your hands full on the weekend here. But nice to chat with you. We'll talk to you next week. Hope you have a good one. Thanks, Mike.

I'm now for this week's Goofy Award, and it's a straightforward one because I started to see several comments coming out of the U.S. along the line of a guy named Harrison Crank, who stated in quotes, name one good product that Canada has created. I bet you can't. That kind of comment, and as I said, there's been several, reflects such a profound ignorance that supports what the Wall Street Journal calls the dumbest trade war in history. And for that, it wins my Goofy Award.

Now, I'll leave the discussion for a moment and discuss the profound, deep pool of ignorance that produces statements like, bet you can't name a single good product created in Canada. So I want you to forgive this lengthy list, but that's the point. It's a lengthy list. Let's start with the telephone. How about the electric light? Henry Woodward invented it before Edison. How about diabetics? So a debt of gratitude to Canada, where Banting and Best invented insulin.

And hard patients the world over are thankful that Canadians invented the pacemaker along with the electron microscope. I hope Michael Jordan and LeBron James offer big thanks to James Naismith for inventing basketball. And we got the Super Bowl. Roots of American and Canadian football traced back to McGill.

and the birth of that style of football, including McGill's use of a forward pass and the use of an oval ball, not a round one. You know, the first documented game of North American-style football was played November 9, 1861, between students at the University of Toronto. Canada was the first to play organized ice hockey, and all sports viewers can thank Canada for instant replay.

Canada's also the birthplace of green garbage bags. Used one myself recently. The first patent for peanut butter paste, 1884. The Canada arm used by NASA and the system of worldwide time zones, standard time, created by Canadians.

Americans can thank Canada for the paint roller, the snowblower, canola oil, instant mashed potatoes and poutine and the zipper and the wonder bra. You know what? Even Superman was co-created by a Canadian, Joe Schuster. I mean, there's more, but you get the picture. Some Americans might not be able to think of a single good Canadian product, but I want to make sure the rest of us can.

That's all the time we have this week, but I want to give you a reminder. If you weren't able to join us in person at the World Outlook Conference, we're going to have the full archive of the two-day event available. You can get it as early as Monday morning.

All you have to do is go to www.worldoutlookconference.com and click on. And as I say, it doesn't matter where you are or what device you're using. You can access it immediately starting Monday morning. So don't wait on that. Purchase is right there. Get access. Get all the information and the specific recommendations of a huge array of award-winning speakers. In the meantime, I hope you go out and have a fantastic week.