 Welcome to Mind Your Business ! Consider this your weekly guide to understanding what’s happening in the worlds of economics, business and finance. By Peter Armstrong | | |  | Rehearsals were under way all last week in front of the U.S. Capitol ahead of Donald Trump's inauguration. (Fabrizio Bensch/Reuters) | | | I wish I had a better sense of how this week is going to go.
I'm not alone.
For months now, Canada (and the world) has been living under the threat of tariffs that would be a catastrophe. Today, we will see what Donald Trump really means.
There is a growing sense that Trump may not impose stiff tariffs immediately. A Bloomberg piece indicates the incoming administration is looking at a more gradual approach.
“One idea involves a schedule of graduated tariffs increasing by about 2% to 5% a month, and would rely on executive authorities under the International Emergency Economic Powers Act," wrote Bloomberg's Ben Bartenstein, Nick Wadhams and Daniel Flatley.
That would be at least a temporary relief to Canadian businesses bracing for tariffs.
Scotiabank's Derek Holt doesn't buy it.
"It’s hard to see how Trump would stand down from his constant threat of imposing large tariffs without seriously losing face as some of his advisers apparently seek to rein in the craziness," he wrote in a note to clients last week.
That uncertainty is certainly part of the plan.
Trump uses chaos like a ladder and he knows keeping the other side guessing can only help.
Meanwhile, nearly a trillion dollars in trade lies in wait. | | |  | | | | | That chart comes from an excellent report by Daniel Kiselbach, a partner with the law firm Miller Thomson, which specializes in trade law.
In terms of what may actually happen during and after the inauguration, it remains unclear.
There are reports that Trump has requested a set-up on Capitol Hill where he could potentially sign executive orders before even getting to the White House.
I spent much of last week speaking with businesses and industry associations about what they are doing and how they are planning for the potential disruption of tariffs.
Most of them told me they had contingency plans, but had not yet enacted them.
But it's not like there's anything anyone can do.
The threat of tariffs has created something of a common cause (for the most part). The collective outrage over American tariffs has not yet sparked outrage over inter-provincial trade barriers.
And if you compare those inter-provincial trade barriers to those imposed by the U.S., a slightly counter-intuitive picture emerges. |  | | | That chart comes via this report by Stéfane Marion, the chief economist and strategist with National Bank of Canada.
He quoted a recent C.D. Howe Institute report that crunched the numbers on what those trade barriers mean for the Canadian economy.
"The removal of internal trade barriers could raise Canada's standard of living and increase GDP per capita by an estimated 3.8% across the country. It’s time to stop scoring own goals and start unlocking our full economic potential," wrote Marion.
I know, that's an issue for another day.
Today, all eyes will be on Capitol Hill and Donald Trump's ride back to the Oval Office.
I will be appearing on all the various specials and throughout our news coverage.
Special programming kicks off at 10 a.m. ET on CBC TV, CBC Gem and on CBCNews.ca hosted by Chief Correspondent Adrienne Arsenault, along with Chief Political Correspondent Rosemary Barton in Ottawa and senior reporter Paul Hunter in Washington. CBCNews.ca will also have a live blog of the events.
Tune in to CBC Radio One for live coverage starting at 11 a.m. ET with Your World Tonight's Susan Bonner and Piya Chattopadhyay of The Sunday Magazine.
If you're reading this for the first time, sign up by clicking the "Subscribe" button below. | | | Share this newsletter | | or subscribe if this was
forwarded to you. | | |  | | Donald Trump will be sworn in as president of the United States on Monday. The ceremony begins at 11 a.m., and the actual swearing-in takes place at noon. | | | | | | On Tuesday, we will get the latest Canadian inflation numbers. Economists believe the year-over-year rate came in around 1.8 per cent in December. | | | | | | The Bank of Canada will release two crucial surveys measuring economic confidence this week. The Business Outlook Survey and Survey of Consumer Expectations for the last three months of 2024 comes out Monday. | | | | | Three things to read, watch and listen to this week | | |  | Season 2 of Severance is now streaming. (Apple TV+) | | | 1. Work-life balance | | | Did you watch the first season of Severance?
I think it is one of the best shows of the past few years. If you missed it, go watch Season 1 now.
Without spoiling anything, the show is about workers at a company called Lumon who have chips implanted in their brains that serve to sever any link between their work life and their personal life.
It's like a partition. The work-selves (the innies) know nothing about the personal-life selves (the outies) and never the twain shall meet.
In Season 1, a group of innies stage a breakout, setting their whole world upside down.
It is at once a beautiful and slightly terrifying treatise on our quest for the ever-elusive work-life balance. It's also a wildly fun romp of a show that you can't turn off (even when you've already watched three episodes and it's late and you have to get up and go to work the next morning).
Season 1 ended with something of a cliffhanger. So, the wait for Season 2 has been.... long.
Here's how the New York Times' James Poniewozik reviewed the arrival of the new season:
"Fortunately, 'Severance' returns to Apple TV+ on Friday, and its makers seem to have used every second of the absence productively. The season takes new turns while remaining the most ambitious, batty and all-out pleasurable show on TV, an M.C. Escher maze whose plot convolutions never get in the way of its voice, heart and sense of humour," Poniewozik wrote.
Check out the trailer for Severance Season 2 here.
Read the NYT's review of the new season here. | | | 2. What Ferris Bueller taught us about tariffs | | | All you ever needed to know about tariffs you might have already learned in the classic 1980s film Ferris Bueller's Day Off.
I wrote this article in May 2018 and it's still one of my favourites.
To catch everyone up: there's a scene in the movie that depicts bored teenagers sitting distractedly as their teacher drones on.
"In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the.... anyone, anyone? Great Depression. Passed the.... anyone, anyone? The Tariff Bill. The Hawley-Smoot Tariff Act," deadpans actor Ben Stein.
The students gaze out the window and pull on their gum.
But! Embedded in that scene is one of the most important economics lessons about tariffs and the potential damage they can cause.
This week, my friends at the wonderful CBC Radio program Cost of Living explored what that scene taught us, and the lessons it holds today.
You see, during World War I, American farmers saw demand for their products skyrocket. They borrowed money to expand.
Cost of Living's Allison Dempster spoke with Douglas Irwin, an economics professor at Dartmouth College in New Hampshire.
"The problem is, of course, when we resume normal commerce after World War I, U.S. export markets sort of dry up and farmers are saddled with a lot of debt and farm prices are low because farmers in Europe are planting once again," he said.
Skip ahead to the 1928 election. Republican contender Herbert Hoover promised to help those farmers. He promised to use tariffs — so products coming into the U.S. that competed with American farmers would be taxed.
Hoover won.
Two fellows named Reid Smoot and Willis Hawley headed up the Senate and House committees handling this new tariff code.
The Tariff Act gets caught up in some pretty heavy vote-trading. Everyone wanted their particular product protected.
By the time the act was passed in 1930, they had raised tariffs on about 800 products. And, you'll never guess what happened.
Skip back to Ferris Bueller's classroom scene.
"Did it work, anyone? Anyone know its effects? It did not work. And the United States sank deeper into the Great Depression," says Stein.
Today, Donald Trump is threatening 25 per cent tariffs on all goods entering the U.S.
That would decrease demand for some goods, but it would also drive up costs for American consumers.
What Stein didn't talk about in the movie is how long it took to unwind the tariffs of the 1930s.
Irwin told Cost of Living that imposing tariffs is easy. Getting rid of them is a different story.
"So you might say that the trade wars in the 1930s only took two or three years to happen, but then it took three or four decades to sort of whittle away at the tariffs that had been raised during the 1930s. And it wasn't until the 1970s or '80s they were sort of back to where we were originally, in terms of having open commerce around the world," he told the show.
So keep a close eye on what's announced in the Oval Office this afternoon, and we can start taking bets on how long it takes to remove whatever trade barriers are put in place.
Check out Cost of Living's segment here. | | | 3. Is Florida the new centre of the American government? | | | Donald Trump has notoriously called The White House "a dump."
He prefers to spend time at his Mar-a-Lago golf club in Florida.
A Bloomberg Original video explores how Florida has quickly become the focal point of political power in America.
"I think there are few places in the world where you're seeing such a combination of money, power, wealth, politics, all mixed together, all influencing each other. This is not your grandmother's Florida anymore," said Felipe Marques, Miami bureau chief for Bloomberg News.
Things have changed quite a bit since the 1990s and even the 2000 presidential election, when Florida's hanging chads kept a nation transfixed as the result came down to just 537 votes, which put George W. Bush in office.
"Florida was the prototypical swing state," said Joshua Green, a Bloomberg reporter. "But in the years since then, it's moved steadily to the right, to the point that Florida today is just a deep-red state."
Since the pandemic, Americans have been moving to Florida in droves.
The has led to Florida adding a seat in the House of Representatives in Washington. "So, population gain means more people, looking out for Florida's interests in the capital," said Bloomberg's Amanda Gordon.
Bloomberg says Trump is surrounded in Mar-a-Lago by the very rich and the very influential. Marques says titans of industry and captains of the financial sector are converging on Florida and specifically around Mar-a-Lago.
"If you look at at who Trump is bringing in to run his next administration, the bulk of the people seem to be from Florida," said Green.
"Everybody from Susie Wiles, his chief of staff, to Marco Rubio, his nominee for secretary of state, Mike Waltz, a Florida congressman, is going to be his national security adviser, Pam Bondi, Trump's attorney general nominee."
But Bloomberg says the influx of rich and powerful have not been a benefit to everyone.
"One of the biggest draws in Florida is that it has no state income tax. But property taxes are pretty high, especially with property values coming up. There’s also all sorts of consumption-related taxes. Some would consider Florida one of the most regressive tax systems in America," said Marques.
But that's not slowing anything down. Florida is the third-most populous state in the United States. In terms of population growth, it's No 1.
"It’s not just Trump acolytes who are nesting in Florida. From 2020 to 2023, 158 companies managing $993 billion in assets moved their headquarters out of New York — 104 of them moved to Florida." said Gordon.
Check out the Bloomberg piece on Florida here. | | | How the economy looks beyond Bay Street | | | Wither the dollar? | | | The Canadian dollar hit its lowest level in 20 years last week.
It's still hovering slightly above 69 cents US.
That's terrible news for anyone buying anything from the United States or anyone travelling there.
It's great news for exporters or anyone getting paid in U.S. dollars.
And there are plenty of domestic reasons the loonie is so low.
But as this chart illustrates, much of this is a story about the U.S. dollar. | | |  | It wasn't that long ago, of course, that the loonie was above par with the U.S. dollar.
In August of 2012, it began to fall. By December of 2015, it was down to 71 cents US. That was primarily a reflection of the collapsing price of oil.
But not much has been done since to drive the Canadian dollar back up. And lots has happened to push the U.S. dollar higher (trillions in stimulus greasing economic growth in the United States has certainly played a role).
But as we enter a new administration in Washington, with the likelihood of a federal election in Canada looming large, it's important to keep a broad view of what's pushing and what's pulling the currency. | | | Share this newsletter | | or subscribe if this was
forwarded to you. | | | That's it for this week. | | | Drop me a line anytime.
Send ideas, comments, feedback and notes to peterarmstrong@cbc.ca.
I'm still lingering over at X, but migrating to Bluesky. Come join the conversation there.
Problems with the newsletter? Please let me know about any typos, errors or glitches.
And if you like this newsletter, share it with your friends by clicking on the link below.
Check cbc.ca/news/business throughout the day for the most recent business headlines. | | | | |  | | | On the lookout for more consumer news? The Marketplace Watchdog newsletter is your weekly look at exclusive investigations and consumer tips and tricks to help you and your wallet. Subscribe now. | | | | | |
