Trade war takes a break - impacts on Canada, Mexico & the US

Summary

Real Estate Without Borders: Episode Summary

Episode Title: Trade War Takes a Break - Impacts on Canada, Mexico & the US
Host: Real Estate Without Borders
Release Date: February 4, 2025

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In this pivotal episode of Real Estate Without Borders, hosts Dave Hutch and Daniel Fosh delve deep into the ongoing trade tensions between the United States, Canada, and Mexico. With tariffs playing a central role, the discussion unpacks the immediate and long-term ramifications of these economic maneuvers on each country's real estate landscape and broader economic health.

1. Introduction to the Trade Tensions

The episode kicks off with Dave and Daniel addressing the buzz surrounding tariffs and their effects on North American economies. Their casual banter sets the stage for a detailed exploration of the subject.

Notable Quote:
Dave Hutch [00:00]: "I am Twitter, okay? I know everything about tariffs to an extent."

2. Overview of the Current Tariff Situation

Daniel provides a concise background on the recent developments, highlighting Canada's retaliatory measures in response to U.S. tariffs imposed under President Donald Trump’s administration. As of February 3rd, Canada has maintained these tariffs, which have stirred significant economic debates and public reactions.

Notable Quote:
Daniel Fosh [02:08]: "Canada and Mexico both announced retaliatory measures in response to the U.S. Tariffs imposed by President Donald Trump."

3. Canada’s Response to U.S. Tariffs

Canada’s strategy involves imposing a 25% tariff on a wide array of U.S. goods, notably targeting alcohol and fruits—industries where Canadian production is limited. The government’s actions extend to canceling initiatives like the Starlink plan, signaling a strong stance against U.S. economic policies.

Notable Quote:
Daniel Fosh [03:03]: "Canada's basically announced that they're going to match with 25% tariffs. They put out a big list of stuff, everything but most notably alcohol and fruits."

4. Impact on the Canadian Economy

The imposition of tariffs has led to tangible repercussions within Canada. Consumers face higher prices on imported goods, and businesses encounter challenges in exporting Canadian products to the U.S. sectors such as alcohol, automotive, and construction are particularly vulnerable. The government’s push for consumers to favor Canadian-made products has met with public disapproval, reflecting widespread dissatisfaction.

Notable Quote:
Dave Hutch [04:08]: "They pulled the American alcohol out of the LCBOs."

5. Mexico’s Response and Current Status

Mexico has taken a slightly different approach by pausing tariffs to allow continued negotiations, a strategic move to potentially ease tensions. Additionally, Mexico has deployed 10,000 personnel to the border to address U.S. border protection requests, signaling a readiness to enforce trade agreements strictly.

Notable Quote:
Daniel Fosh [02:52]: "Mexico has bought themselves a month to continue negotiating because it appears that they are now sending 10,000 people to the border to appease Donald Trump’s border protection request."

6. Impact on the Mexican Economy

Mexico's temporary hold on tariffs provides a window for economic adjustment. By reinforcing border security, Mexico aims to stabilize trade relations while negotiating terms that might benefit its economy. The deployment of additional personnel is both a defensive and a diplomatic maneuver to maintain leverage in negotiations.

Notable Quote:
Daniel Fosh [10:54]: "So they committed to putting 10,000 soldiers on the border, which they did that in 2021 at Biden's request, like, with no tariffs."

7. Implications for the U.S. Economy

The U.S. faces its own set of challenges as the tariffs and retaliatory measures ripple through its economy. Manufacturing sectors, particularly automotive and construction, are experiencing increased costs and operational hurdles. Additionally, President Trump's strategies indicate a broader agenda to overhaul the tax system, potentially eliminating federal income tax to incentivize repatriation of businesses.

Notable Quote:
Daniel Fosh [24:16]: "His goal is to make people pay tax without noticing through tariffs and think that Canada’s paying and then, and then get rid of income tax to try and make it more competitive because he wants to repatriate bunch of businesses."

8. Currency Effects and Investment Opportunities

A significant discussion point revolves around the strength of the U.S. dollar amidst these trade tensions. The robust dollar, juxtaposed with a weaker Canadian peso, creates a tempered impact of the tariffs. This currency dynamic offers unique real estate investment opportunities, particularly in depressed markets like Canada and Mexico, where American investors can capitalize on favorable exchange rates.

Notable Quote:
Dave Hutch [21:45]: "So the tariffs create the perfect storm for buying real estate in one of these economies that's going to be depressed."

9. Real Estate Investment Opportunities

Despite the economic downturns, the episode emphasizes that depressed markets present lucrative real estate opportunities. For instance, in Mexico, regions like Tulum are seeing the peso weaken against the dollar, making property purchases more affordable for American investors. Similarly, Canada's potential economic struggles could lead to attractive investment scenarios as real estate prices adjust.

Notable Quote:
Dave Hutch [14:05]: "As the peso being so weak and your dollar getting stronger… it just opens the floodgates for Americans to come and dominate real estate globally."

10. Regional Vulnerabilities in Canada and Mexico

The hosts break down the most vulnerable regions within both countries:

• Canada:

  • Ontario: The heart of the automotive sector, particularly cities like Windsor and Oshawa, faces significant impacts.
  • Quebec: Home to the aerospace industry, areas like Montreal could see strategic shifts.
  • Atlantic Canada: Dependent on food production and seafood processing, coastal communities might experience economic strain.

• Mexico:

  • Northern States (e.g., Nuevo Leon, Chihuahua): Critical for manufacturing and automotive industries.
  • Central Industrial Hub (e.g., Mexico City, Puebla): Focused on aerospace and technology sectors.
  • Agricultural Regions (e.g., Sinaloa, Guanajuato): Impacted by tariffs on fruits and vegetables.
  • Gulf Coast (e.g., Veracruz): Significant for ports and energy infrastructure.
  • Tech Hubs (e.g., Guadalajara): Emerging as centers for electronic vehicle manufacturing.

Notable Quote:
Dave Hutch [26:08]: "Ontario's a ton of auto sector, right? So you got Windsor, Oshawa, parts of the GTA…"

11. Outlook and Predictions

Daniel predicts that Canada might have to lift foreign buyer bans and adapt to stimulate its economy amidst the tariff-induced downturn. Conversely, Mexico appears more resilient, leveraging its established industries to weather the economic storm. The U.S. economy might also face inflationary pressures, but the strong dollar could continue to present investment opportunities abroad.

Notable Quote:
Daniel Fosh [17:27]: "I think that Americans will be the number one buyers of Canada. The 51st state of them."

12. Conclusions and Future Perspectives

The hosts conclude by reiterating the dynamic nature of trade relations and their profound implications on real estate investment. They highlight the necessity for American investors to stay informed and agile, leveraging the evolving economic landscape to expand their portfolios internationally.

Notable Quote:
Dave Hutch [35:05]: "It's an emerging thing. And you know what the cool part is? This trade war could be over very quickly and then we can move on to being experts in something else next week."

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Key Takeaways:

• Tariffs as Economic Tools: The use of tariffs by the U.S., Canada, and Mexico serves as both a protective and retaliatory economic strategy, impacting various sectors differently.

• Investment Opportunities: Depressed real estate markets in Canada and Mexico present unique investment prospects for American investors, especially when considering currency fluctuations.

• Regional Impacts: Specific regions within each country are more vulnerable based on their economic dependencies, necessitating targeted investment strategies.

• Future Dynamics: The trade war’s resolution remains uncertain, with potential swift changes that could alter investment landscapes rapidly.

Upcoming Episode Teaser:
Next week, the hosts will explore the most and least expensive countries to live in, providing valuable insights for investors considering global real estate diversification.

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Credits:
Real Estate Without Borders (Podcast Episode Transcript)

Transcript

[A]

Welcome back to Real Estate Without Borders. I'm Dave Hutch and I'm joined here with the Daniel Fosh. And today we have the most talked about episode. I think right now we're going to be talking about tariffs. And I want to let you know that I am Twitter, okay? I know everything about tariffs to an extent. As long as the AI chatbots within Twitter aren't lying to me. I actually wanted to ask you, do they fact check on Twitter? Like, is it like, everything I'm reading.

[B]

There'S like, Community Notes, right? So it's not like Facebook where they had, like, independent fact checkers that were, like, hired by the app. Did you hear Zuck's thing with Joe Rogan about the fact checking?

[A]

I didn't watch this.

[B]

Crazy. Oh, yeah, I don't watch that. That podcast. It's crazy. But anyway, yeah, so there's this thing called Community Notes, but I don't think they show up in. In Grok. And Community Notes is like, I don't know. I mean, sometimes they're good, but sometimes they're just, like, kind of dumb.

[A]

So I spent. I debated deleting my. My Twitter account within six hours of getting it, because now I understand fully why you like charts and graphs so much. It's like, dude, my fiance, are you gonna ever. I'm like, I know. Asking anything. Honestly, ask me anything.

[B]

Fully turned you into a nerd now? Fully.

[A]

It's crazy, man. And then for those that don't know, I learned this from you. Thank you. On Twitter, they have a thing called Grok, which might be the best AI for what we.

[B]

For real time. For real time. For sure. Like, it's not. Not really good for anything other than, like, news. But ChatGPT and like any other ones, they don't know the news, right? Like, they only get updated so often, whereas Grok is like pulling from Twitter. So it's like, it gives you the news and it also gives you. It also has, like, some critical thinking. Like, it'll pull arguments from the left and the right and, like, kind of it'll examine the discourses that are taking place. Like, it definitely is a. It's a really cool AI for sure.

[A]

It is revolutionary. But let's get into it because I. I'm looking at our notes and we have. We could make this a seven part. Yeah, we can make this a seven part episode about the tariffs and what's going on. But I think. I think I'll let you take this on first and take off with what's going on with Canada, sure.

[B]

So we're self proclaimed Twitter or tariff experts now. We were, we were AI experts last week and I think we're Nvidia chip experts before that and fire Wildfire. So we, we, you know, we just, we talk about everything. We're smart, we're Twitter guys, big Twitter guys. Canada and Mexico both announced retaliatory measures in response to the U S Tariffs imposed by President Donald Trump. Canada's as of Monday, February 3rd at 3:53pm still seem to exist. Mexico has bought themselves a month to continue negotiating because it appears that they are now sending 10,000 people to the border to appease Donald Trump's border protection request.

[A]

I'll be actively scrolling just so you know. So don't worry. If there's an update I'll be.

[B]

I thought you were going to say I'll be actively going to the border to check if they're there.

[A]

I'm close enough.

[B]

Yeah. So the, in Canada they originally put retaliatory tariffs on U.S. goods. So Canada's basically announced that they're going to match with 25% tariffs. They put out a big list of stuff is basically everything but most notably things that are going to cost Canadians is alcohol and fruits because we don't produce a ton of alcohol in Canada and also fruits, we, we have winter here so we don't grow those outside of the winter and, or inside of the winter. There's additional economic measures potential. I mean Doug Ford like canceled the Starlink plan which was kind of funny, you see. And they're just poking. Yeah. What do you say? Cool, Whatever.

[A]

Yeah, he's like, I think you said cool. Let me pull up this morning. Legend.

[B]

Yeah, it's funny and you know, I mean the government's obviously pushing Canadians to choose Canadian made products and to reconsider vacation plans to stay within Canada which like it's kind of weird, man. Like Canadians are actually like pretty, pretty angry about this. They're booing that, they're booing the national answer. Like just two minutes for unsportsman like right there for sure. That's like not you. Come on, come on.

[A]

They pulled the American alcohol out of the LCBOs.

[B]

Yeah, they're doing a bunch of like really dramatic stuff. Honestly, it feels like a high school fight at this point but I guess it would feel that way like with Donald Trump and Justin Trudeau being the leaders in the situation.

[A]

I think this is going exactly how it would go any. This is exactly how we expected it to go, I think.

[B]

Yeah, for sure. You put a couple of Notes in here. So. So how can Donald Trump just do this?

[A]

Yeah, that's what I want to. You know, I calculating on my TikTok or Twitter rants last night. I was covering because it's not something easy that he can just enforce. Right. There's a lot of things he had to go through and loopholes you have to do to actually enforce these tariffs.

[B]

The guy does seem to find the most simple way to do stuff. Like I think he just like tweets and then makes his policy team figure it out. Honestly at this point for sure. But yeah, I mean, I guess they violated the, the new. Because he tore down NAFTA in his first term, which is a North American free trade agreement which had survived. It was like the biggest free trade agreement ever. I think it started in like the 70s or 80s, I think I want to say it was Reagan. And then they. He replaced it with the usmca. So he basically violated this act that he himself negotiated, which was meant to promote free trade among the three countries with most goods moving tariff free. And now he has basically walked that back and put a tariff on all of them. He used emergency International Emergency Economic Powers act to justify it, basically saying that they have an national security issues as a result of the fentanyl border. And you know what, like I will say as a Canadian who's really paid a lot of attention to this stuff, I'm not sure if you read Sam Cooper's book. Sam Cooper's a journalist in Canada, wrote a book called Willful Blindness, which is about like how much illegal, like Chinese narco capital is moving through Canadian banks and stuff like that. And I've said, you know, jokingly that like Canada is the money laundering capital of the world. But like there's a lot of evidence that Canada does turn a blind eye to money laundering in its banking system. TD bank in the US being an exceptionally good example. So TD is like the 9th largest bank in the US and they just got a record. So TD is a Canadian bank, but they operate in the US and they're the 9th largest bank and they got a record fine for money laundering for drug car, global drug cartels. And. Yeah, and so, and, and the Last one was HSBC. Remember HSBC's drug. Yeah. Like everybody remembers that. TD basically got a worse fine than that. So I, I do get where Trump is coming from with this stuff, to be honest with you.

[A]

Then he just put out his thing about putting American banks in Canada. Right. I think.

[B]

Yeah.

[A]

I don't know if he has a real Plan. To be honest, I think he.

[B]

I think I agree. I don't think he's. He's like, just. Yeah, no, he's full typical, like, bully. He's just like, kind of pushing and being like, what are you gonna give me? Yeah, I don't know what's in your lunchbox? Honestly. Honestly, man, I. I really do get that vibe from him. Like, because it seems like he got on a call with Trudeau this morning, and then they were discussing banking, and now all of a sudden Donnie's out tweeting, like, how come our banks aren't allowed in Canada? Yeah, I think he's like, oh, cool. I. I think that they called his bluff probably. Like, I don't think he expected them to throw the tariff back. And now he's like, okay, I gotta, I gotta find an off ramp here real quick.

[A]

I gotta make it make sense. Yeah, it's crazy. I. I don't know. I. I've been watching. I've been watching your stuff. I've been watching everybody's tweets and, and posts about this stuff, and yeah, to me, it seems like he doesn't have a clear plan, maybe. I mean, obviously he's a lot smarter than, Than me, that's for sure.

[B]

But for now, buddy, you spend a couple more days on Twitter, you'll be there.

[A]

If this grok AI can help me get my stuff together here. It's. I had. I told you, man, I had two screens. I had two screens open. My eyes were bloodshot.

[B]

It's just. Man, no wonder you have your gamer video set up there. You're just burning it till 4am like, crushing monster energies. I took a free power scrolling Twitter.

[A]

No, had a pre workout and I was like, I'm gonna know everything about tariffs by the end of the day today. And I think I'm pretty good. I got it all sorted out here. Even I just note.

[B]

Tell me, what'd you learn? Yeah, tell me what you learned. I mean, I don't know much about tariffs, dude. I'm new here. I was an AI expert last week. I just. Just switched careers.

[A]

I'm just a realtor. All right, let's just put it that. Okay, I'm not an economist by any means, but I. I learned that maybe we should. Maybe we should back it up here because.

[B]

Yeah, what.

[A]

What is a tariff? Because I've seen a lot of tick tocks that are hilarious and thank God they didn't come up to me with the microphone, you know, on the street, because I'd look like one of those people. But I don't think most people know who's the one actually paying tax, you know?

[B]

No.

[A]

And it. And I, I. Yeah, it's crazy.

[B]

They, like, literally think it's like Justin Trudeau, like, paying in his pocket.

[A]

Yeah, yeah.

[B]

Canada's band.

[A]

I saw one on the street with a guy. He was. He was like, yeah, I'm all about. I'm a. I ship out or I import goods. I'm an importer. This is great. And they're like, oh, dude, you gotta go. You gotta go to TikTok or Twitter for a bad day. Honestly thought that. And then they. They made them feel really silly, obviously. But I learned what a tariff is. I learned, you know, I did a lot of studying on the Mexico side of things. I think it was crazy. This is all just a. This is all. It's not about. I made one post on Tik Tok and I regret it. I'm never doing it again. Honest to God. I'm not. Unless I'm with you beside me. You're like, my. You know, you can defend me. I made one, one Tik Tok about it. Got roasted and took it immediately down. I was like. People were like, did you read anything? And I was like, yeah, I'm on page 48 of Twitter. Right.

[B]

I wouldn't trust Tick tock as you're like, no, your. Your.

[A]

No.

[B]

Like, I think usually I would do inverse tick tock. You know, like inverse Kramer. We talked about this already. Inverse Kramer. Inverse Canadians is a good one. Those are usually 2. Inverse tick tock is also a really good strategy, to be honest.

[A]

Yeah.

[B]

Like, usually if I'm pissing people off on TikTok, I feel like I'm doing well in life.

[A]

Well, I get a lot of that. I get a lot of it from all different angles because. Mainly because I'm a realtor. And that's just that.

[B]

Well, you're also like, you're like finance Chad. Like, you're like, you know, handsome, tall, jacked, like, you know.

[A]

Yes, I'm very unlikely.

[B]

Lives in, like, lives in paradise. Like, you know, good relationships.

[A]

I'm such a nice guy. But I get it a lot that I know people mis. Mislabel me. It's kind of rude, actually.

[B]

I. Yeah, I think that's an ism. There's an ism in there. So. Chad.

[A]

Ism. I feel offended. I'm honestly pretty offended by it. I did more of my stuff on Mexico and Mexico, when I made my original TikTok, which was a mistake, I said, you Know, it's cool to see Mexico handling this. I think how a country, country should handle it. Not that I'm a problem. Not that I'm the president of Mexico. Not that I'm the president of anything. Okay. But I thought Mexico, as of yesterday, early afternoon was handling this better than Canada was. And then Mexico went and said the same thing as Canada. However, I reiterate because I, I said it, I backtracked. And now I'm back again with my original statement because Mexico, I negotiated some sort of terms with, with Trump, which maybe you know more about than I would. But they've paused the tariffs for now for Mexico, correct?

[B]

Yeah, yeah. Because they've committed to a border security, which is interesting because they. So they committed to putting 10,000 soldiers on the border, which they did that in 2021 at Biden's request, like, with no tariffs. So. But Donnie just wants a win, man. Like, you know the guy, right? Like, you know that, like this, that kind of guy.

[A]

That's why I don't think that the, the tariffing back, I don't think is the, the play. I mean, people got mad at me, especially, like, the left, left Canadians were like, well, what else? The true, not even left Canadians, the true, like, proud Canadians, which were Canadian, you know. But I just don't know if, if, if tariffing, Donnie the bully, it was the play. I don't know what the play is, but I don't think that was it.

[B]

But I'm like a purely libertarian kind of guy, so I think that the government should ideally do nothing. Like, I actually think that we have the perfect. And, like, I'm not saying, like, nothing in this regard, but I'm saying, like, nothing. Like, period. Like, I actually think we already have the perfect democratic system. I'm not going to get too esoteric on the show, but. Because it's just always so much time. But the economy is like, the perfect, like, system that balances people's needs. Like, people vote with their money, right? So it's like, if I don't like this, you know, business because they're left, I won't give them my money. If I don't like this business because they're right, I won't give them my money. Like, we have that system. We don't really need politicians to, to distribute what's valuable to us anymore, right? Like, a lot of these things that are social problems have been brought into politics, but they have nothing to do with it. Anyway, that's my thought. So I would say let the economy do it get rid of politicians within 10 years, or by the time we die, we won't have politicians. I will be governing US.

[A]

I had a really good tweet that I could have brought up here, but I didn't save it to my notes. It's okay, but I'll get it next time.

[B]

I can go hunt it down. I'll hunt it down. So what's going to happen to the economies here? Like, I would say Mexico, to me feels like. I think they're more like, they're more prepared because they've been through, like, enough, like, hardship economically. Like, it's never, you know what I mean? It's never really felt like it's an emerging market. It's never really felt like, super first world there.

[A]

Right.

[B]

You know, it's going to suck for them, but I don't think it's going to suck as much as it's going to suck for Canada, dude, like, who basically just was like, hey, you're like top 10 first world now. You're basically going into depression.

[A]

Right.

[B]

I think Canada is going to have a really rough go.

[A]

Well, what was that? There was that one tweet that came out that said. I think you sent it to me. How many businesses are now up and leaving and looking at.

[B]

Yeah.

[A]

Exploring the operations in the U.S. yeah, yeah.

[B]

A thousand jobs lost in Ontario alone. I think Ontario is going to end up being ground zero for this.

[A]

Yeah.

[B]

But, you know, I mean, so you think about this like, this, to me, is the tariffs create the perfect storm for buying real estate in one of these economies that's going to be depressed. The US is going to get smoked too, by the way. So, like, I'm not trying to say that, that, that, you know, the US will probably be presented with buying opportunities as well. The US economy is really, as a result of this and the Doge thing that they're doing where they're scaling back all of these government employees, like, you're firing a bunch. You're basically going to fire half the government. It sounds like they want to do. You know, that's a bunch of unemployed people. If as much. If as many people are employed by the government as they're claiming, then that's a. Even more unemployed people. And so the US is definitely going to go through it. Right. The question is, is the US dollar going to stay strong through all of this? Because as it stands, it has, like, it's. It's stayed ridiculously strong, which I still haven't figured out, that could present opportunities to invest in a depressed Canada or a recessed Mexico. That's just my two cents.

[A]

Well, and their, and their, their dollar is getting stronger. I mean what's the. I saw the peso. The peso went very weak today. At one point came right back down up to 21.1 US$1 was 21 point something pesos down 20.4, 20.5. But if your dollar is so strong, I'm only speaking for Tulum Mexico here, but there's a ton of opportunities here in Tulum as an American buyer with the peso being so weak and your dollar getting stronger. And like you said, what's going to happen to the economy here? It's just opening the floodgates for Americans to come and dominate real estate globally. Like literally, you know, for sure.

[B]

Totally agree, man. And, and I think they will, to be honest with you. I actually think Americans will like it's funny because everybody's talking deglobalization. Deglobalization. But what they actually mean is we don't want the world to come and like globalize us. We want to go and globalize the world. That's what they mean, man. I think honestly, you know, when people say that stuff, that's my thought. But I would agree. I think tons of people are going to capitalize on. On the huge US massive and they're going to invest in equities in other countries, but also in real estate in other countries.

[A]

Yeah, I think so. The one thing I wanted to ask, I actually wanted to ask you about bringing up was the, on the topic of tariffs is the multiple tariffs on a single product. So I was looking at that map where it was. I think it was the North America. The North American automotive supply chain is so like it's interwoven between the countries. It would pass by each country like I think six times. I don't know how that's going to work in terms of. Well, is even, you know, come to fruition. I don't know any updates yet on terms of this, but that's crazy. That's super in depth and I don't even know how they'd monitor that one. 2. It'd be devastating for. I think that's the biggest, the biggest warrior now is the automotive industry, correct?

[B]

Well, one of them, yeah. For sure. Well, yeah, because automotive is our second. Like after I could. I'll pull up the list of like oil and gas is like by and large ma, the most massive. And I think they put a 10 tariff on oil and gas.

[A]

Yeah.

[B]

And then you have transportation, which is basically car parts, automotive, etc. And yeah, so, so I think the way that it would, it would work because we have a tax treaty is basically if the tariffs already been paid, then it just gets like put in as an input tax credit against the next layer of the supply chain. For example, like if I sell you a car part, like a mirror for a car, right? And you, and I give it to you for a hundred bucks and now you, you pay 125 because you put, you pay the 25 to the government and then you put it on the car and you sell the car back to me. Then that 25 just gets deducted. Like it's not an extra tax that I have to pay on top. You know what I mean? Kind of like HST and like, you know, like how you do input tax credits with, with like your personal, your income taxes.

[A]

Sounds sounds advanced. Sounds like it's going to be okay.

[B]

You know, it's, it's annoying for their accountants for sure. I don't know. I don't think any of this stuff would be, I would put any of this stuff in the B okay category of life, to be honest with you, man. I think actually is not. None of this is going to be okay. It's going to suck.

[A]

It's going to be bad. I think it's going to be worse for Canada like we talked about. But I think again, look, the main reason we made this show in the the first place was to help Americans invest globally. That's the main purpose and the main reason why we, we made this, this, this show. And I think this is like I said before, it's going to be open the floodgates. It's going to turn like Canada's in some serious hot water. Serious hot water.

[B]

Yeah. My biggest prediction of what happens as a result of this in Canada is that the Canadian government, either Trudeau or Carney, who's probably going to replace him. So, so there's a couple of things. So. So number one is I think that they're going to get rid of the foreign buyers ban. I think that that's probably with will happen within. Okay.

[A]

Massive.

[B]

Yeah. And I think that they'll do that because it's really the only way to resurrect or to stimulate your economy with a weak Canadian dollar is to stimulate forward direct investment. And quite frankly, we don't have any other stuff to invest in other than the housing market. And any, any benefits that we would have had to a diversified economy just got blown away by the tariffs. So if the tariffs Stick around. Then it doesn't matter if we diversify into oil and gas or whatever, anything. Because now all of a sudden we're at a huge competitive disadvantage on that stuff. So that's number one. Number two is I think construction costs are going to drop substantially in Canada because we can make all construction inputs. Right. Like pretty much everything except for like maybe like your bathtubs and blah, blah, blah. We could still make that. Like, we just don't really. Because other places do it cheaper. But.

[A]

Right.

[B]

We don't get most of that stuff from the U.S. but you know, timber, lumber, plywood, blah, blah, blah, paper products, drywall, insulation, we do all that here.

[A]

Right.

[B]

And so now all of a sudden we can't sell any of that stuff to the U.S. okay. Or if we do, it's going to cost more and so they're going to buy less of it, which means construction prices are going to go up in the US because they buy a ton of construction inputs from US. Construction prices are going to go down in Canada because we're going to have a surplus.

[A]

And then what about interest rates?

[B]

Interest rates are coming. Interest rates are coming down more than we originally expected. Oh, yeah, for sure. I think BMO changed their forecast to like 6 cuts this year. 625 basis point cuts this year with.

[A]

The expectation of it ending.

[B]

I think I said national banks calling for an emergency rate cut.

[A]

I saw that. I saw that.

[B]

Yeah. So I would say, you know, I think this is the funny part too, from my perspective. Donnie's talking about how now all of a sudden he wants banks to come to, to Canada. Right. Yeah, I would. So for those people listening, and you're going to hear this a lot about, there's a couple of examples, actually. Most countries outside of the U.S. the biggest thing that you will notice as an investor buying in any country, buying real estate in any country outside the US is they have very few banks. The US has tons of banks. Like their banking sector is so competitive you can price compete with so many different lenders. And in, in other markets, especially Canada, they have what's called a ligopolistic banking system, which is basically. Yeah, it's like a monopoly, but monopoly is one mono. You know, like when kids are getting mono in high school, mononucleosis, monogamy, that's like. Yeah, exactly. One partner. Yeah. So mono then. Oligopolistic is multiple. Right. So I don't know if they don't call it. There's no, there's no monogamy version of that. I don't think they just call that something else.

[A]

You're on a roll, man. Keep going. Something about monogamy.

[B]

Yeah. Market dominated by a couple of players. Right, Right.

[A]

So we could use that. We could use some new banks. It'd be good.

[B]

Yeah.

[A]

I've heard the.

[B]

They would crush Canada. But the thing is, this is why TD isn't competitive in Canada is because they're raising capital, a lot of capital in the U.S. right. Like, they don't have super competitive mortgage rates here.

[A]

Right.

[B]

So if U. S Banks came, it would give them a chance because Canadians expectations plus Canadian bond investors expectations are lower. Like Canadian bond yields are way lower than U.S. bond yields.

[A]

Yeah. The bond tanked yesterday. Where are they at right now? Where'd they end up?

[B]

2.5, I think.

[A]

What was that? A dropout?

[B]

A drop like 50? Yeah. I don't know. What is it? You pull it up. GOC 5 here. What's it at now? 16. Yeah. Dropped. It literally gapped down like this morning. Opened like, dropped down 25 bips. 30 bips this morning.

[A]

Wow. But okay. I mean, okay, so let's. I like those predictions where we're going. I like the predictions. So we think interest rates are probably going to drop lower than what we were originally expecting. Because originally we're talking in Canada of interest rates dropping to like, what. Hovering around the 3% mark. But now they're calling for significantly lower, which is great for Americans. It's gonna devalue our dollar. Correct. Continue to drop. What do you think it's gonna. I've seen reports of like right now it's. What's the. What's one us to CAD?

[B]

We're at 68.

[A]

Right.

[B]

So dollar CAD is like a buck 40. I think it's crazy. US buck 40 Canadian.

[A]

Okay. Which just opens the door more. So if you're saying, if you think that they're going to open the door to draw or to open and get rid of the foreign buyer ban. I think Americans are going to be the number one buyers of Canada. The 51st state of them.

[B]

Yeah. That's what they're just. They're just buy. Yeah. They're just buying for future state.

[A]

Okay. So. So the cost to Americans. I'm looking here at the thing. So let's break down how Trump's 25 tariffs actually impact trade when accounting for currency changes. Do you want to cover that part?

[B]

Sure. Is that.

[A]

I can put a little note for you here. But it's basically.

[B]

Let's see the actual cost. I got it. Basically, if you started With a hundred dollars worth of goods at US$0.79 USD. So that's USD to CAD. The old rate, you'd be paying US$79 if it dropped from 79 to US$0.70 USD, which is probably, I mean, what are we at now? We're at 69. 60. Yeah, I guess. Yeah. So when it drops to 79 to 70, you get a 25% and you put a 25% tariff on that at $17.50 USD additional cost. So you went from $79 to 87.50 USD. This means that even with the 25% tariff, the weaker Canadian dollar makes the final cost to American buyers only about 11% higher than before, not the full 25%. Now you take something like real estate, which you don't pay a tariff on, buying a house in Canada and your investment is basically purely discounted.

[A]

Right.

[B]

So in other words, the currency depreciation has absorbed more than half of the tariff impact. This kind of demonstrates how the weaker Canadian dollar acts as a bit of a cushion against the tariffs, making them less effective as a trade barrier than they appear on paper.

[A]

Crazy. The one thing that I also wanted to touch on because you mentioned this and I had, I was again deep into Twitter talking about the inflation deflation and how this is going to affect Americans versus And like, let's talk about the effects, like the, maybe the immediate effects and then the long term effects like, or not that we know, but our predictions of what that's going to look like. Because I think obviously a lot of the Americans right now are super worried because at the very beginning they'll likely see prices increase a little bit on what they're buying. Right. But also Trump's in the middle of trying to abolish federal tax. No?

[B]

Yeah. Well, basically his goal is to make people pay tax without noticing through tariffs and think that Canada's paying and then, and then get rid of income tax to try and make it more competitive because he wants to repatriate bunch of businesses. Right.

[A]

So. Right.

[B]

I think that this is kind of road map for thinking that he's going to be able to accomplish that to.

[A]

Bring businesses back to the U.S. i.

[B]

Mean, that's kind of what his motive appears to be. But it's not like, you know, I mean, it's kind of funny too. This is one of the things that I actually thought was really interesting. You know, there's no tariffs on services. So like they could very easily also just accidentally play themselves where they take all of the blue collar work out of all of these other countries and move it to the US and then all of the white collar work just goes to all of these places like Canada and Mexico where they're currencies are smashed and they can play white collar workers way cheaper. And, and us, US ends up being a blue collar economy and all the knowledge work is in Canada and, and Mexico. So that, that could be kind of funny. But anyway, I mean that to answer your question, yes, it appears to be his goal to get rid of income tax through this whole thing.

[A]

So the immediate effect's going to be inflationary to the U.S. deflationary to Canada and, and Mexico. Correct.

[B]

It'll be inflationary to Canada on the goods now that they've put tariffs on. Originally it would have just been deflationary or not deflationary, but disinflationary, which means slowing inflation. Deflation means price is actually going down. Disinflation means price is just going up but less quickly. And so I would say in the fullness of time it'll become inflationary. In the short term it'll be probably, it'll be inflationary and then for the kind of like medium term it'll be disinflationary, deflationary because everybody's going to, there's going to be a shock. People are going to be trying to reconfigure and buy like goods in Canada.

[A]

Right.

[B]

They're going to be adjusting to the, the changes in demand. So as an example, like if you're Canadian parts manufacturer, all of a sudden you're going from selling a bunch of stuff to the US to now selling only in Canada or whatever. Right. Under selling way less of it.

[A]

Should we, should we have like a regional breakdown of the most vulnerable areas of how this is going to affect Canada? I think that's important.

[B]

Yeah. You want to go sectors or geography?

[A]

Ooh, let's go. Well, let's go geography.

[B]

Okay. Yeah. Why don't you take me from the top or do you want to go and then you can do Mexico after?

[A]

Yeah, you go, take, take Ontario away. Ontario is going to feel this the most and I think you're going to nail this.

[B]

Yeah, I would agree. Yeah. So Ontario's a ton of auto sector, right? So you got Windsor, Oshawa, parts of the gta. All very dependent on manufacturing parts production. That whole corridor would obviously feel significant impacts. Alberta, you know, I was listening to the, there's a podcast out of Canada called the Looney Hour. Steve Sierraski, I'm not sure if you know him. He. Yeah, they had Daniel Smith on there. And I, I was originally felt that Alberta would feel it pretty hard, but it seems like they probably won't feel it as bad.

[A]

Why is that?

[B]

Because, well, oil and gas is only. Or like g. Oil is only tariffed, I think 10% and I don't think there hasn't. Has been really any changes to that, so. Because like the US isn't obviously going to take away their. The, the one thing that they buy more. More from us than anything.

[A]

Right.

[B]

That's why I thought like if the government was really wanted to screw them, they could have. They could put an export tariff on, on oil. Right, right. But that would be. That would be like total trade war.

[A]

I think we're pretty much there, man. I think we're pretty close.

[B]

Yeah, we're pretty close.

[A]

But the energy sector, like Calgary, Fort McMurray, Edmonton, you think it's not going to be as bad as originally anticipated. I did notice. I saw that one post on Twitter. Twitter. The main oil line that was not complete in Canada from the west coast to the east coast actually cuts through the U.S. you see that?

[B]

Yeah, yeah. The one that goes like into Quebec or whatever. They all do. Every single one goes into the U.S. it's not like we could even do anything about it really.

[A]

Right. So we're kind of pigeonholed. We kind of pigeonholed ourselves in Canada quite a bit, for sure, to be honest.

[B]

Yeah, yeah.

[A]

Quebec, the aerospace industry. Concentration. Quebec has an aerospace industry.

[B]

Bombardier.

[A]

Okay. Right. I was thinking astronauts, man. I'm not gonna lie.

[B]

No, no, not that stuff.

[A]

Big, the French are in Texas.

[B]

Big space people.

[A]

French are big. Big. All my French listeners. I didn't know you guys were big in the space. Me too. And then Atlantic Canada. The region's significant food production, seafood processing industry can be impacted, obviously affecting coastal communities and major processing centers. Okay, now vulnerable areas in Mexico.

[B]

Yeah, tell me about it. I don't know. I can't even say any of these things. You've been practicing your Spanish.

[A]

So I go to school twice a week and I still can't get it, man. The Spanish is a language. I can understand it now, which is actually kind of cool. I can understand when people are speaking Spanish to me, but speaking back and forming a sentence, not my strong point. I sound like a baby when I speak. Anyways, so the northern borders. Yeah, I get by. The worst part is sometimes I sound really convincing about it. And then they think I speak mucho espanol and I only speak poquito espanol. And then I Just they look at me like I'm an idiot. And I just. I know keywords. Okay.

[B]

Keyword. That's all. That's it.

[A]

Yeah, I can get by. So the northern deal. Yeah, sold. Yeah. It doesn't work like the, the real estate world here, but it's a bit different. The northern border states, Nuevo Leon, Chihuahua, that's actually close to here. But Baja California is like the West.

[B]

I just know Chihuahua from the dogs, obviously. Yeah, yeah, no, that's, that's the death of my Mexican culture.

[A]

I'll clean up this floor here on this one. But Baja California is on the other side. When I actually first moved to Mexico, I thought it was very small, very big country. If you would know this better than I would. I mean it's a massive country.

[B]

Yeah, yeah. I like, I'm big map guy. So yeah, I've definitely. New Mexico is pretty large.

[A]

It's a high concentration, I'm not even going to say that word of manufacturing plants. But I think the northern border states are huge in the automotive industry. So that's obviously going to be macchiatoras. You gotta add that. That's right. I can't do it. You know what? Actually on that note, I noticed it was the Cadillac converter is the one that, that's the specific part that goes back and forth in the US like six times.

[B]

Catalytic converter. Cadillac converter is what converts your, your GM into a Cadillac catalytic converter. Dude, people steal those like crazy, right?

[A]

In Canada.

[B]

Yeah. They're worth a lot of dough. Yeah.

[A]

I don't know.

[B]

Yeah. So for those of you who are listening, thinking about investing in Canada, one thing that is worth noting about Canada is we have a lot of auto theft. Like the most.

[A]

I had one stolen. I had my Range Rover stolen. I had my Range Rover stolen. And they basically told me, you know what? Canada is a great place though to, to invest. If you're looking to invest. It's great. It's just. Don't get a Range Rover.

[B]

Well, just. No, we just need a. Some. We need a regime change at the federal level and we'll start arresting people again like right now. You just don't go to. You don't get in trouble for anything.

[A]

You know what? I actually have people. Okay. When people come to Mexico, there's like six different police forces here. No joke. Okay. There's like national, the, the National Guard, the army, the marine guys, the provincial police, and then the traffic people. There's one more, but you'll see them in Tulum driving around in the Truck with like, with AK47 of them masked up with their eyes out, just staring at you. It's the most intimidating thing in the world. But no one messes around because you don't want an AK47, you know, to the back of your head. Not that that happens here.

[B]

Quick, quick gun. Yeah.

[A]

People are very friendly and people don't really do anything crazy because that you see them rolling around all the time. And I know that, that it may look intimidating, but honestly, I think I prefer a heavier police presence than zero police presence. Am I wrong? Yeah, maybe not with machine guns even all machine guns in the eyes covered.

[B]

Canada seems to be doing the defund the police experiment and it's not working. I'll say that.

[A]

Yeah, exactly. Okay. The regional areas of Mexico, okay, we've got the northern border states. They're the manufacturing, the automotive, the central industrial hub, which is like Mexico City, Puebla. You don't know that one. Which is also. Also big into aerospace industries like our alien friends over in Mexico in Montreal. The agricultural regions like Sinaloa, those places you don't go to. Guana. Guanajuato. Fruits and vegetables.

[B]

This sounds like a place that fruit would be from for sure.

[A]

This if they tax avocado toast, Americans are going to lose their mind. What are the. What's. What are you going to eat for breakfast? You know what though, on that note, when you come to the grocery stores in Mexico, you walk into the grocery store and it's like the most colorful, beautiful. Oh, dude. It's crazy. And super, super cheap. Then you have the Gulf coast region, like I'm not gonna say that one. Veracruz. With their ports and energy infrastructure. And then the tech hubs. Did you know there's a tech hub?

[B]

I did not. Did you?

[A]

Yep. I did not. Areas like Guadalajara, which is hands down one of my favorite words. Places to say Guadalajara. Guadalajara is like the Silicon Valley.

[B]

That's a good. That makes it like. That's a very important metric enjoyment of saying it.

[A]

It ranks top, top. One of my favorite Mexican words.

[B]

Do you have fun saying it when your friends ask you where you bought real estate in Mexico?

[A]

Guadalupe. Yeah, it's the silly, but it is it. I've been to Guadalajara, funny enough. They have a beautiful airport and I've been outside of it very briefly and it's like very. Have you been to Mexico City?

[B]

No, I haven't been to Mexico. I know. Never. Never been in Mexico. No, never been to Mexico. Sounds good. Yeah. See, I'm almost like, you know, my thought though is like if these economies actually get like super depressed, you could actually see the US companies start offshoring labor over there. Like you can already buy super cheap Canadian engineers for like a tech company as an example. Like Toronto has like the, the one thing that Toronto has done really well is like they figured out how to make everything super expensive and also pay people nothing. I think, honestly I don't know how they've done it. Like I think everyone's just depressed there and feels like they're on a hamster wheel, to be honest. Like that's kind of. But, but you know that could be an outcome here. Right? I know it sounds crazy but like it's not unheard of for all these tech companies to start. Like Canadian offices. Like services are not subject to tariffs. So you could actually see Canadian companies just start producing more in the service space and a lot of US businesses start moving there as if, if 500000 people are looking for jobs in. Right. If I'm Meta or Amazon, I'm like, yo, let's go over there and hire all those people.

[A]

Right. Texting.

[B]

Especially if they're about Guadalajara. Yeah, exactly. Dave's gonna try and sell them some, some airports in Guadalajara.

[A]

I gotcha. Whatever you guys need. So Mexico has emerged actually as a significant hug for electronic vehicle manufacturing, which is leveraging its established automotive industry. Here are some key points. Investing, not that's not important, but it is. I was right. That's all that matters, to be honest with you.

[B]

Yeah. As long as you fact check yourself and you're right. That's like, that's. That' this show is about, man. That's what I want our listeners to get out of here, out of this.

[A]

Twitter said it was right, you know.

[B]

Here we. Anything else, Anything else you want to add here before we wrap this one up?

[A]

We are here 37 minutes. I thought this was going to be a four hour episode since all the study. I honestly at this very moment realized I actually don't know that much about tariffs. I still got a lot to go, so.

[B]

That's all right. Whatever. It's an emerging thing. And you know what the cool part is? This trade war could be over very quickly and then we can move on to being experts in something else next week, you know, like what's next? Maybe wildfires again? Who knows? Yeah, like something else is going to happen.

[A]

Honestly, we can't get a, we can't get a break. I feel like it's been non stop one thing after the next.

[B]

Yeah, it's a lot to become an expert in all of those things, but we're working on it so that you can yell it, type it in all caps at people online. Anyway, if you enjoyed this show, please share it with one of your friends. Text it to your mom. We do have a video version. Dave's really good looking, so you can send him that one. Yeah, he's like kind of. He's got a gamer setup. He looks like a, like a Disney character. This is because like Lilo and Ditch.

[A]

It's because I'm in Mexico. Okay. Amazon, Mexico has two different lights. One is this one the white one. This one's the blue one. Okay. I don't have other options.

[B]

James doing red light therapy over here. He's like, you look like you're at like a, like a glow in the dark laser tag. You know what I mean? Kinda. Anyway, for those of you who are luckier listeners and only doing this on audio, thank you for tuning in. Please leave us a five star review on either Apple podcasts or Spotify. Leave us an angry comment on YouTube. If you're the three people who watched our YouTube video, we'll see you again soon. Next week we're going to be talking about next episode. We're going to be talking about what is it the most highest and lowest cost of living countries on Earth.

[A]

That's right. Earth. Yeah.

[B]

Well, who knows, man? Maybe next time it's without borders. So that could be intergalactic. We were talking about that. I mean, Elon's like saying Mars very soon. So maybe we'll be selling some let's go properties on Mars.

[A]

We got to change our logo up real quick.

[B]

Yeah. Okay.

[A]

Success.