 Monday, February 10, 2025 | | | 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 | | |  | American tariffs have sharpened Canada's resolve. But can policy makers convert that energy into real change? (Rokas Tenys/Shutterstock) | | | On Sunday as many were hunkering down to watch the Super Bowl, Donald Trump launched his latest salvo in the looming trade wars.
This time he threatened to impose 25 per cent tariffs on all steel and aluminum entering the U.S.
We have almost no other details and we'll see what specifically is done, when it will come into effect and whether Canada can manage to negotiate an exemption.
We've been down this road before. When Trump imposed tariffs on steel and aluminum during his first term, it hurt Canadians. But it also hurt American businesses.
Back in 2018, the CBC Radio program As it Happens spoke with James Glassman, from Mid-Continental Nail, the largest nail producer in the U.S.
He told the show that Trump's tariffs were driving up costs so much the company had already laid off 60 people and could potentially put Mid-Continental out of business.
"I doubt that anybody in the administration meant to adopt a policy that would lead potentially to the destruction of the entire nail making industry in the United States — but that's what's happening," said Glassman.
That's the thing with trade wars. They hurt everyone and have lots of unintended consequences.
Here in Canada, Trump's threats and tariffs have angered, disappointed, frightened and emboldened Canadians.
Last week, federal Transport Minister Anita Anand was asked if she believed that "interprovincial trade barriers [could] be dealt with, wiped away in 30 days?"
Her response was interesting.
"The short answer to your question is yes," Anand said.
There is no question a certain resolve has emerged amid this potential trade war. Canadians booed the national anthem at sports games. Consumer groups organized Buy Canada campaigns. Doug Ford's funny hat became a hot commodity.
But actually converting that energy into palpable change is a very different beast.
There's plenty Canada can do to offset the damage of a trade war. The three big ones are: eliminate internal trade barriers within Canada, diversify trade partners around the world and speed up the approvals process for big projects (not just energy, critical mining projects need to move ahead as well).
I wrote a piece last week about the international trade aspect of that. In summary, Trump isn't the only one threatening globalization or free trade.
That leaves us with approvals and internal trade barriers.
It's been a long time since Canada had much success on either front.
But with all the unknowns looming over the economy, maybe this time Canadian politicians will feel compelled to get something done. | | |  | | | | | That chart comes from this excellent piece in The Hub by the economist Trevor Tombe.
The main thrust of the article is that even though Canada negotiated a pause in Donald Trump's tariffs, the roller coaster of uncertainty is not going away.
So, he says Canada needs to figure out a long-term response. In the lead up to the imposition of U.S. tariffs, Canada unveiled a series of retaliatory tariffs, provinces took American booze off their store shelves and urged us to buy Canadian.
That's fine, says Tombe. But those measures have limitations.
"While these moves likely had strong public support, none would seriously impact the U.S. economy," he wrote.
He says symbolic retaliation can be important, especially when combined with a broader communications strategy targeting U.S. decision-makers.
"But Canadians shouldn’t mistake these measures for ones that will impose meaningful economic costs south of the border — despite that being the stated aim," wrote Tombe.
He walks through the various measures we have taken and shows how and whether they'll truly bite into the American economy.
His conclusion has stayed with me.
"As we prepare for the possibility — or threat — of broad U.S. tariffs returning in March, Canadians and their governments should focus on strengthening the country’s economic resilience," he wrote in The Hub.
Speaking of which, this week we will get an update on the Bank of Canada's Market Participants Survey.
I'll be interested to see the updated version of this question: |  | | | When last surveyed, most respondents believed the economy would grow between one and two per cent.
That doesn't exactly provide a lot of cushion for a trade war. And it wouldn't take much to nudge that down into negative territory.
Jobs numbers last Friday were encouraging, and we will get Canadian inflation numbers next week and GDP figures before the end of the month.
Those will really help cast a light on the state of the economy as we wait for the next tariff deadline in March.
What do you think will happen?
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forwarded to you. | | |  | | We will get the Bank of Canada's Summary of Deliberations on Wednesday. That should shed some light on how the central bank came to its decision to cut rates last month. | | | | | | The Bank of Canada's Survey of Market Participants will be released on Monday. It surveys financial market participants on their sense of where the economy is headed. | | | | | | U.S inflation numbers are out this week. Economists believe CPI data on Wednesday will show price growth decelerated to 3.1 per cent last month. | | | | | Three things to read, watch and listen to this week | | |  | The Superbowl is TVs biggest night (Piotr Piatrouski/Shutterstock) | | | 1. The crazy economics of the Super Bowl | | | I am always amazed when I look at a list of the most watched TV programs in the United States in 2024.
Fifteen of the top 20 shows were NFL football games. All of the top 10 programs were NFL games. The only non-sports-related things to push past football were the presidential debate on Sept. 10, the Oscars (which came in 13th) and the Grammys, which edged in at the 19th spot.
A whopping 121 million people watched last year's Super Bowl.
The advertisements have become an industry unto themselves.
"Fox has secured an eye-popping $8 million [US] for 30-second ad spots during the game, a new record, and brands pour millions more into producing them, and a chance to create their own pop culture moments," wrote The Hollywood Reporter's Alex Weprin.
Those ads, in turn, have become big business for stars.
"Sources tell The Hollywood Reporter that A-list actors and music stars are scoring $3 million to $5 million [US] paydays to front Super Bowl commercials, though cameo appearances (which may require only a couple hours on set) have a lower rate," wrote Weprin.
This article from The Associated Press makes the interesting point that audiences that watch the Super Bowl are just as primed to watch the ads as the game.
“This is a societal moment where we come together as a country,” Kimberly Whitler, a marketing professor at the University of Virginia’s Darden School of Business told AP. “We may be on different sides, you know, of the gridiron or the field. But we come together.”
Read this Hollywood Reporter piece on this year's advertising budgets.
Check out the ads playing this year in this AP article.
See the list of the most-watched TV broadcasts of 2024 here.
| | | 2. Build Canada | | | I've made the case in these pages before that I'm quite bullish on Canada's future. This country makes things the world wants and needs.
That said, there are some urgent needs that require action. You've probably mused about some of these at dinners or at work or out with friends.
A new project is putting together some spectacular ideas for how Canada can step into the future.
Build Canada is a project launched by former Shopify executive Daniel Debow. It offers specific actions political leaders can take to grow the economy, increase productivity and tap into the full potential that is the Canadian economy.
"Business as usual won’t cut it. Canada is in crisis — a stagnant economy and broken system — despite having the resources and talent to lead the world. Build Canada is a platform for bold ideas and action, to drive growth and prosperity. We welcome any leader to act on these proposal," says the project's web page.
It pulls together ideas from some of the biggest names in the Canadian tech world and offers some pretty straightforward ideas.
There are some simple ones, like a renewed push to tell the stories of Canada's entrepreneurs (like modern-day Heritage Minutes, for those of a certain vintage).
But there's also deeper pushes for policy changes, like this memo calling for a rethink of Canada's transportation policies.
I called up Debow last week to ask about the idea.
He said entrepreneurs in this country have been frustrated by the state of the Canadian economy.
But he says it's not just a project for business people.
"This isn't just a 'business people want to make more money' issue. It's a how do we make our country strong and free for a long time," he told me.
He says the issues they're raising have been sharpened by the threat posed by Donald Trump's tariffs.
"I think the alarm bells have been ringing for a while," said Debow.
But he says over these past few weeks of trade turmoil Canadians have realized action needs to be taken.
"Canadians have awoken to their negotiating position," he said. "So the question is what do we do as a country to resilient and strong?"
Build Canada will publish policy memos every week.
Check out Build Canada's memos on how to shape the future of Canada's economy here. | | | 3. Bonds aren't boring | | | It's easy to be drawn into the narrative that stocks or crypto is where all the action lies in financial markets. Bonds, they say, are boring.
Well, we know that's not true.
And this week there are some dandy pieces about why bonds are the real life of the party.
The reason bonds are making headlines again is that U.S. Treasury Secretary Scott Bessent told reporters that the Trump administration is going to bring down interest costs. How?
Well, he mused, we'll just drag down the yield on the 10-year treasury build.
"With the president’s policies of energy dominance, deregulation and non-inflationary growth, I think that the 10-year is going to naturally come down," Bessent told Bloomberg on Thursday.
Now, the 10-year T-Bill is just a bond the American government issues. You loan the government money, you get paid interest at a fixed rate every six months and you get the money you loaned back at maturity.
But the 10-year has become a sort of fiscal standard.
The always amazing radio show Marketplace from American Public Media tackled that story this week.
"The rate of return on 10-year bonds influences interest rates all over the economy — credit card, car loans, mortgages," reported Sabri Ben-Achour.
The piece is smart and lays out how this might work and where it may run into some issues.
But if you want to talk about bonds, you need to read Tracy Alloway's piece in Bloomberg.
She weaves in stories of ancient Chinese bonds. She even quotes famous (Canadian!) authors:
"As author Margaret Atwood once wrote, debt is really a memory — of who owes what and why."
Only in Bloomberg would you see revolutionary Marxist Leon Trotsky quoted in a story about bonds.
She was talking about the time Trotsky refused to make good on bonds issued by Russian Czar Nicholas II.
"We have therefore decided not to allow the repayment of loans which the government contracted while it was clearly and openly waging war against the entire people," wrote the Soviet.
It's all just prelude to why Alloway thinks the way governments talk about bonds, let alone uses them, really matters.
"Bonds are about monetizing stories, and so there are stories all the way down. And since stories tend to be useful tools in times of political upheaval and transition, except to see more of them flying around in the coming years," she wrote.
Check out Tracy Alloway's piece in the Odd Lots newsletter here.
Listen to the bonds segment on Marketplace here. | | | How the economy looks beyond Bay Street | | | An update on unemployment | | | Many of you have asked that I do more follow ups on some of the economic data we look ahead to in this newsletter.
Last week, I said the jobs numbers were expected to show the unemployment rate rose yet again.
In fact, Canadian employers added a whopping 76,000 jobs in January and the unemployment rate ticked down to 6.6 per cent.
It's still painting a picture of a less than ideal jobs market, but progress is progress. | | |  | Click on that link above and you can see more analysis from Brendon Bernard (chief economist at the job search site Indeed).
One of the things that has been pushing the unemployment rate higher is population growth. For much of the past few years, Canada has been adding as many as 100,000 people to the labour force.
So, even adding 15,000 or 20,000 jobs a month wasn't enough to keep up.
Last month, population rose by 50,000 but payrolls expanded by 76,000 so there were more new jobs than new people.
Let me know if these updates add value?
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