Trump & The Year Of The SNake
On Wednesday, we marked the beginning of the Lunar New Year – and the Year of the Snake. And while this is meant to represent a phase of wisdom, renewal and the metaphorical “shedding of skin,” it is fair to say that at this moment there is definitely a great deal more lurking in the grass.
To start with the positive, on that same day lucky mortgage-holders woke up to the news that the Bank of Canada had further decreased their prime rate by a quarter-percentage point, from 5.45% to 5.2%—the sixth consecutive cut in the key interest rate since June.
If you have a variable rate mortgage, rejoice for the $15 per $100k you owe extra in your pocket!
While this is great news especially for variable mortgage rate holders with a general consensus that rates are close to stabilizing for the foreseeable future, this positive development for Canada’s economic health is unfortunately overshadowed by a much larger, somewhat … oranger(??) … consideration – President Donald J. Trump.
Now before we fully devolve into a tirade of uppercase Trump-isms in reaction—WRONG! SAD!! ZERO!!—let’s look at the facts.
President Trump has committed to the imposition of tariffs on Canadian goods flowing to the United States at levels up to 25%, beginning as early as February 1. If fully realized, the economic impact of this change could be HUUUUUGE (insert emphatic, accordion-playing style gesture), with the BC government estimating potential a cumulative loss of $69 billion in economic activity and over 120,000 jobs by 2028.
Naturally, there is some reason to believe this may all be FAKE NEWS, recognizing that we may just be one tweet away from all of this going away. However, let’s admit that when it comes to creating uncertainty, NOBODY DOES IT BETTER (anybody else’s tie getting longer as we speak?). And that uncertainty is a cloud over our economy, driving Canada to consider an array of responses that may bring new challenges and impacts. TOM + ANAIS consistently get asked how this will affect interest rates, and as Anais attended the Economic Forecast for 2025 meeting hosted by the Greater Vancouver Board of Trade this week, even the economists are split on their position on this. The messaging was loud and clear, be prepared for everything and anything moving forward.
Approaches floated range from retaliatory tariffs (which may end up impacting specific industries further, to pandemic-style subsidies to cushion impacts (which will grow deficits and upset the inflationary balance we just regained through higher interest rates), to consumer-led boycotts and political campaigns. BELIEVE ME – there will be no easy path should these trade tensions escalate.
For those of us in the mortgage industry, our hope is that if Canada has to respond and GRAB THIS ISSUE BY THE … POLICY (I’m so sorry), they do so with a mind towards maintaining the economic stability and growth that we have earned after two hard years of high interest rates. In the meantime, TOM + ANAIS are always here to help you understand where you are or make your next decision.
