Tariff Woes, Gold and Silver Up, Markets Plunge

It's Trumps Fault

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Markets have recovered earlier losses as Mexico made a deal with U.S. to avoid tariffs, see details further down.

I have heard a lot of noise that many Canadians blame Trump for these tariffs. This only proves that many Canadians are ignorant or brain washed, maybe both. Please don't take this offensively but open your mind and hear this out. I have researched many experts, including Canada's former trade minister that negotiated the last trade deal with the Trump administration.

First - Trump won a decisive victory in the U.S. election and one of his major campaign successes and promises was to secure the U.S. border, stopping illegal immigration and drug trafficking. This is what he is trying to do and wants to show Americans he is doing it. The majority of Americans want this, that is how they voted. And tariffs was another main theme in his election campaign. Anyone that is awake would see this coming months ago.

Second – If there is any governments to blame it is the Canadian governments. The Trudeau government and many provincial governments are far left and socialist so believe they have to fight Trump and stop his policies because it does not align with their policies/agendas. Canadian governments decided to go straight to war rather than try to negotiate some kind of deal. How would it look on Ontario Premier Ford who called an election to get a mandate to fight Trump tariffs if a deal was reached and there was no tariffs?

Missed Opportunity – It takes co-operation on both sides of a border if progress is to be made on illegal immigration and drug trafficking. And Canada on illegal guns.

If you don't think we have these problems on the Canadian side, your head is in the sand or your listening to a lot of government propaganda. See above and check out this CBC news on Canada Fentanyl exports.

Other experts commented similar to Canada's former trade minister that negotiated the trade deal with Trump in his last term and said premier Danielle Smith of Alberta was the only one to read the room (Trump's room). Smith came back and initiated a number of things to beef up security at the Alberta/U.S. border. Interesting Trump only put 10% tariffs on Alberta oil. If all the premiers of Canada had done similar things there would have been no tariffs. The limited border announcements that Canada made are just window dressing.

Look at Colombia, Trump threatened 25% tariffs if they did not take back Colombians deported from the U.S. After some hesitation, Colombia complied and there was no tariffs. Canada has intentionally botched an opportunity to improve the border to instead have a trade war with the most powerful country in the world. Canadian leaders are foolish and corrupt.

As you know Canada has responded in kind with 25% tariffs. A Bank of Canada analysis says that under a mutual 25 percent tariffs scenario, Canada’s GDP would take a 2.4 percent hit. Seeing our GDP is around zero or below zero on a per capita basis, this spells a severe recession. Sure the U.S. will suffer some too but not near as much because of their size.

Canada's Advantageous Opportunity

Canada has forever taken advantage of residing next door to the strongest and largest economy in the world. In doing so there has been many high long term tariffs against the U.S. on certain items and many protection measures for Canadian industry to keep the U.S. out. American has known this all along but has chosen to go along with it, well until now. Former president Obama commented more than once that he knows Canada takes advantage of the strong U.S. economy but they are a good neighbour and ally so we understand some protectionism.

As of 1993, there is only 20% foreign ownership in telecom allowed essentially blocking the U.S. Telecoms and much the same in media. Strange though that Canada has now allowed Punjabi television broadcasts and radio stations? But American stations will hurt Canada culture?

With the last trade agreement Canada maintained tariffs on dairy goods ranging from 241% for liquid milk to 298% for butter. Canada agreed to eliminate tariffs on dairy imports up to a set volume, called a Tariff Rate Quota (TRQ), covering an amount equivalent to 3.6% of the Canadian market. I have never seen any U.S. dairy products in Canada, but when I go to the U.S. I can’t believe how cheap their cheese is.

Eggs and poultry are much the same. Under Canadian TRQs, in any given year, a predetermined quantity of imports of a good controlled under the EIPA can enter Canada at a lower rate of duty, while imports over this quantity are subject to higher rates of duty. Every egg shipment to Canada must get a special permit.

Canada also had a very protected finance industry that has caused a monopoly with a handful of Canadian Banks. There is virtually no foreign bank competition. HSBC had a small presence in Canada but it was recently bought out by Royal Bank. According to the Competition Bureau, Canada’s financial sector is concentrated, at risk of anti-competitive coordinated behaviour by incumbents, and has several barriers to entry that limit competition from new entrants.

And just today Feb 3rd Trump started escalating saying he wants U.S. Banks in Canada.

“Canada doesn’t even allow U.S. Banks to open or do business there. What’s that all about?” Mr. Trump wrote on Truth Social.

Conclusion - Blame Trump - Don’t Fix a Broken Border

Here is a prime example of the silly propaganda, narrative and ineffectiveness of Canada. Ontario. Premier Ford cancels $100m Starlink deal for 15,000 homes and business. It is announced as a big deal in the Canadian news. "U.S.-based businesses will now lose out on tens of billions of dollars in new revenues. They only have President Trump to blame," he said.

As I expected - blame Trump, as I said above this was all on his election platform. And it is just an example of the mouse biting the elephant's toe.

As of 2024, Starlink has around 400,000 subscribers in Canada, this report said. So 15k is just a small portion of 400k and Canada is only one country in the world that Starlink services. Ford's big deal will only be fractions of a percent to Starlink. At September 2024 Starlink had over 4 million subscribers so Ford's big 15,000 is under 0.4%. Elon Musk must be rolling his eyes and laughing. The only losers here are the remote Canadian people and business that won't get Ford's subsidy for Starlink.

WASHINGTON (Reuters) -The White House said on Monday it has noticed that Mexico is "serious" about President Donald Trump's executive order on tariffs, but Canada has "misunderstood" it to be a trade war between the neighboring countries.

Most every significant business leader in Canada knows what this is about. Conrad Black chirped up today and said a modest earmark for stronger and collaborative border security measures (which would both satisfy Trump and redound to our benefit – see the Toronto police’s seizure of 900kg of cocaine two weeks ago, smuggled over the U.S. border, and note the vast majority of illegal firearms on Canadian streets come over the U.S. border).

“Secondly, make good on our long-overdue commitment as a member of NATO to contribute 3% of GDP to defense. Something we should be doing for decades. “That’s it. My prediction is those two mutually beneficial ‘concessions’ with a bit of finesse would be enough to resolve the issue overnight.”

I follow Jim Rickards in the U.S. and he believed Canada would resolve easily but Mexico would be a problem. As it turns out Mexico made a deal and tariffs are delayed one month as both sides hash out the details, but basically Mexico agreed to send 10,000 troops to the border to help stop illegal immigration and Fentanyl.

I believe what Rickards, the Whitehouse, Conrad Black and others don't get is how corrupt the Trudeau government is and they want to use a tariff war to create an emergency so they can implement their own agenda in Canada, one being to hold off an election. I know and hope this tariff dispute can be resolved but I have my doubts with the crooks running this country.

I don't blame the retaliation and Canadians should avoid U.S. goods, but sadly this is all not necessary.

Not long ago, I pointed out the Trudeau government is big WEF supporters and it is probably part of their agenda they want. Just two weeks ago, a panel of globalists at the World Economic Forum meeting in Davos remarkably admitted that President Trump and his America first movement has defeated their agenda. Wow, I was surprised to hear this.

In a segment of their discussion focusing on Trump’s election victory, former Defense Department official Graham Allison, now a professor at Harvard, remarked “We shouldn’t normalize Trump. Trump has done something no person in the world has ever done before. A dead man, a dead politician, has risen.”

“This is the greatest comeback in political history for a politician, and therefore he thinks he can do anything. There’s a supreme confidence now about that,” Allison continued.

I guess Trudeau did not get the memo! Or is he trying to be a WEF hero?

New Gold Record

I thought I would be devoting a lot of time on the effects of tariffs on gold and silver, but with no tariffs on Mexico now, that is not really necessary. However gold has set a new record high on the uncertainty about a trade war. However, that break out is not convincing enough for me. At present I see this as a double top, but I do expect the break out soon.

With tariffs, gold from Mexico and Canada would simply go to London and from there some shuffled to New York as needed. The market was already anticipating tariffs.

Gold exports from Switzerland to the U.S. surged almost 20-fold in December from a year earlier as traders tried to build physical positions on New York’s Comex commodities exchange to hedge against possible U.S. tariffs. Swiss gold exports hit 64.2 tonnes in December, up from 3.3 tonnes a year earlier, official Swiss customs data show. That’s the highest monthly gold flow from Switzerland to the U.S. since March 2022, following the start of Russia’s war on Ukraine.

Inventory levels in Comex vaults have surged 75% to 926 tonnes, the most since August 2022, the Financial Times reported this week. Gold traders and financial institutions have moved 393 metric tonnes to the U.S. since the November U.S. election, but it is causing a shortage in London.

According to the Financial Times. The wait to pull bullion from the Bank of England’s vaults now stands at between four and eight weeks, up from a few days previously. Continued Central Bank buying will simply suck more gold out of Comex now that they know it is there.

Silver Another Story

Tariffs could have been more disruptive on silver, especially since Mexico produces so much. Silver has a lot of industrial use and the U.S. produces less than 20% of what they consume. This means about 80% is imported and the most from Mexico.

Industrial users would have supply agreements with different refineries and would not be easy to change sources so there could have been some supply disruptions and a lot of cases, tariffs would simply have to be paid, increasing prices. However since Mexico has an agreement to avoid this for now, the small amount from Canada will not matter much.

Mexico is the world's biggest silver producer with about 25% of world production while Canada is not much above 1% and only about 1/3 of U.S. production.

Silver is up a little bit today, but needs to break $33 for a higher high in this rally.