Real Estate Without Borders: Episode Summary

Episode Title: 3 Huge Real Estate Investments That Will Come from Tariffs
Release Date: February 16, 2025
Host: Dave Hutchinson
Guest: Daniel Fosh

1. Introduction to Tariffs and Their Renewed Impact

In this episode of Real Estate Without Borders, host Dave Hutchinson welcomes Daniel Fosh to continue their in-depth discussion on tariffs, marking the second part of their “tariff episode” series. The hosts share their dedication to becoming tariff experts through extensive research and chart analysis, aiming to educate American investors on the global implications of newly reinstated tariffs under the administration of "Daddy Trump."

Notable Quote:

• Dave Hutchinson [00:00]: "We need to make it known how much Twitter content we've consumed over the past three weeks, making sure that we are tariff experts."

2. Understanding the Current Tariff Landscape

The conversation begins with an overview of the current tariff framework. Initially, tariffs of 25% were slated for Canada and Mexico but were postponed. Now, with the new administration, tariffs have expanded globally, affecting every country from which goods are imported into the U.S., excluding energy products like oil and gas, which already face a 10% tariff.

Notable Quote:

• Daniel Fosh [02:07]: "Now it's a tariff to every country on earth. Right. Like anything that comes into the US is subject to a tariff."

3. Economic Implications for the United States

Hutchinson and Fosh delve into how these tariffs could be inflationary for the U.S., particularly impacting construction costs. The U.S. Home Builders Association has expressed concerns, warning that tariffs on essential materials like steel and drywall could increase home construction costs by 4-6%, potentially adding $29,000 to the cost of building a typical home over the next year.

Notable Quote:

• Daniel Fosh [07:36]: "If I'm a home builder... I would have to charge you more money for those houses because all of those goods that I just used, I had to pay more for them."

4. Impact on International Economies: Focus on Canada

The expanded tariffs are poised to weaken economies that heavily rely on U.S. trade, particularly Canada, Mexico, and China. Fosh highlights that the U.S. is the largest consumer market globally, meaning countries dependent on U.S. imports would face significant economic strain.

Notable Quote:

• Daniel Fosh [04:32]: "If the US economy can remain strong through this, which I think is an unlikely outcome, this could only exacerbate the opportunity for people with US dollars to buy real estate or anything, invest in, in emerging markets in other countries in the world."

5. The Canadian Real Estate Market Under Threat

The hosts explore how increased tariffs adversely affect key Canadian industries like steel, aluminum, and automotive manufacturing. Cities like Hamilton, Ontario, known as "Steel City," and Guadalajara, Mexico, vital to auto parts manufacturing, are highlighted as vulnerable sectors. The resultant job losses could lead to increased distressed real estate supply and a potential downturn in the Canadian housing market.

Notable Quote:

• Dave Hutchinson [12:53]: "Potentially in Canada, lifting the foreign buyer ban. Because if we're losing jobs, people can't afford to buy anything. Houses are going up in price. They're gonna have to do something."

6. Political Ramifications and Speculative Scenarios

The discussion takes a speculative turn as Fosh and Hutchinson ponder the political consequences of economic downturns caused by tariffs. They humorously explore the unlikely scenario of Canada becoming the 51st state of the U.S., suggesting that economic incentives like offering $220,000 USD to Canadians could sway public opinion, especially among the younger demographic.

Notable Quote:

• Daniel Fosh [20:15]: "If you actually do the math on that, 9 trillion. Every Canadian would get, like, $220,000. I feel like that would change the game a little bit."

7. Arguments For and Against Tariffs

Hutchinson outlines the primary arguments in favor of tariffs, such as protecting domestic industries, preserving jobs, reducing reliance on foreign imports, enhancing national security, and providing government revenue. However, both hosts express skepticism about the feasibility and long-term effectiveness of these measures, citing increased costs, potential recessions, and the difficulty of swiftly rebuilding domestic manufacturing capabilities.

Notable Quote:

• Dave Hutchinson [14:45]: "Tariffs can protect domestic industries from foreign competition, which can lead to job preservation or creation in manufacturing sectors like steel, aluminum, and automotive."

8. Opportunities for American Real Estate Investors

Despite the economic challenges, the hosts identify strategic opportunities for American investors. With weaker foreign currencies and struggling economies abroad, U.S. investors can capitalize on more affordable real estate markets internationally. The episode emphasizes the importance of diversifying portfolios by investing in emerging markets, particularly as the U.S. economy navigates potential recessions.

Notable Quote:

• Daniel Fosh [05:23]: "The opportunity is already forming for people with US capital to be buying outside the US and then eventually you probably would want to repatriate that capital and move it back into the US in the fullness of time."

9. The Future of the Housing Market and First-Time Buyers

Hutchinson and Fosh discuss the resilience of the housing market, especially for first-time buyers. In Canada, where 50% of the market comprises first-time homebuyers, lower interest rates and reduced housing prices present a viable entry point for new investors. In contrast, the U.S. faces a significant decline in first-time homebuyers, hitting a historic low of 24%, due to high prices and elevated interest rates.

Notable Quote:

• Daniel Fosh [41:31]: "24%. I got it wrong. It's literally the lowest number of first time homebuyers in the US Ever."

10. Conclusion: Navigating the Tariff-Driven Real Estate Landscape

The episode concludes with a call to action for listeners to educate themselves and explore international real estate opportunities despite the challenging economic climate. The hosts reiterate the importance of stepping outside comfort zones and leveraging their expertise to make informed, strategic investments globally.

Notable Quote:

• Dave Hutchinson [48:39]: "You have to step outside your comfort zone, look into it, educate yourself, and you can position yourself right now to make really good investments globally."

Final Thoughts

This episode of Real Estate Without Borders offers a comprehensive analysis of the renewed tariffs and their multifaceted impact on global real estate investments. Through engaging dialogue and expert insights, Dave Hutchinson and Daniel Fosh provide valuable guidance for American investors navigating the complexities of an evolving international market landscape.