FROLITICKS

Satirical commentary on Canadian and American current political issues

Jan 11

Trump’s Foreign Policy Is Obvious Distraction From America’s Domestic Issues

by bcurry

For weeks now, the Trump administration has caught world media attention with its incursion into Venezuela and capture of Venezuela’s leader, Nicolás Maduro, and his wife.  However, attempting to avoid the appearance of seeking regime change, Trump has instead now focused on the oil reserves in that country.  What is not clear is whether the CEOs of major oil companies were consulted before hand, especially as they are apparently not ready to invest billions of dollars toward the restoration of Venezuela’s oil infrastructure.  Economically and from a business perspective, the addition of that country’s crude oil would not make much difference to gas and oil prices in the U.S., certainly in the short term.  In addition, continuing the naval blockade against oil tankers in the region has become a costly endeavour and has stretched the operational capabilities of U.S. forces.

More recently, Trump has turned his attention to directing his overall foreign policy strategy to Greenland, Cuba and even Iran.  For example, he has repeatedly said that the U.S. must take control of the strategically located and mineral-rich island, which is a semi-autonomous region of NATO ally Denmark.  From a military standpoint, the U.S. already has a defense agreement with Denmark
dating back to 1951.  Its installation at the remote Pituffik Space Base in the northwest of Greenland
currently supports missile warning, missile defense and space surveillance operations for the U.S. and NATO.  There is nothing to stop the Americans from increasing their military presence on the island under the current agreement.  Instead, it became evident, as in the case of Venezuela, that his administration is more interested in exploring business and mining deals by controlling Greenland’s governance.

Next, we have statements by Trump about the economic impact of the loss of Venezuelan crude oil to Cuba.  The control of Cuba and removal of its current regime is a big personal issue for Secretary of State Marco Rubio who has family ties to Cuba.  A day after the U.S. captured Maduro, Rubio issued a warning to Cuba, telling NBC News’ “Meet the Press” that he thinks the country is “in a lot of trouble.”  As in the case of Venezuela, Trump has suggested that the U.S. could run Cuba.

Finally, Trump’s attention has also turned to Iran and the current large-scale protests against the current regime under Supreme Leader Ayatollah Ali Khamenei, mostly as a result the deteriorating economic situation in Iran and the regime’s heavy handed approach to any opposition.  Iranian protests rage and civilian deaths mount. Trump has renewed his warning of possible U.S. intervention, without being very specific about what a U.S. intervention might involve.  Khamenei has accused the U.S. and Israel of having hands “stained with the blood of Iranians”, arguing that they are behind the protests.  Trump has simply asserted that any possible American strike wouldn’t “mean boots on the ground but that means hitting them very, very hard where it hurts.” 

As many historians and political scientists have asserted in the past, the focus on foreign policy initiatives, especially those involving military actions, are often a form of distraction from economic and political problems at home.  One only needs to remember the former unpopular U.K. Prime Minister, Margaret Thatcher, and her administration’s military actions in 1982 against Argentina over the Falkland Islands.  Even some Republicans in Congress are beginning to question the foreign policy goals of the Trump administration.  Far-right activists such as Laura Loomer, Tucker Carlson and others opposed the operation in Venezuela, maintaining that Americans will ultimately pay the price.  They have also questioned how the administration’s vague plans are squared with a commitment to refrain from military intervention and regime change, something certainly not in line with Trump’s “America First” base.

Moreover, on America’s domestic front, things are not going well politically and economically.  Unemployment is up and inflation continues to rise, especially for food, housing and other staples.  The operation of the U.S. Immigration and Customs Enforcement’s (ICE) in numerous cities has resulted in harm to American citizens and legal immigrants, including recent ICE-related deaths and injuries.  As a result, country-wide protests against ICE initiatives have emerged, leading to administration officials having to justify the use of force against protesters.

Recent polling has shown that Trump’s popularity has fallen to an all time low, including with respect to his once-popular immigration policies.  In addition, hundreds of cases involving the administration’s policies are before the courts.  Americans’ trust in the judicial system and governance has taken a massive beating.  For this reason, a strong argument can be made that the Trump administration has decided to assert U.S. foreign policy and power in order to distract from continuing domestic problems.


Donald Trump Economy Energy Foreign Policy Immigration Iran Latin America Military Prowess Oil and Gas Republican Party Trump US

Leave a comment »
Dec 29

Trump Administration’s Biggest Blunders of the Past Year

by bcurry

Remember what prevented George H.W. Bush from getting a second term was his failure to adequately address the economy at that time.  Thus the phrase: “It’s the economy stupid”.  What we now see under Trump’s second term is his downplaying of what is happening to the economy, including the continuing high inflation and increasing unemployment across the country.  One has to remember that the real impact on inflation of the tariffs will only be felt next year.  In addition, the discontinuance of subsidies for Obama care will also result in insurance premium increases for millions of Americans.  It’s becoming increasingly evident that a major split among Republicans is beginning to show as a result of the resulting anger among their constituents. 

Instead, the Trump administration seems to be concentrating on foreign policy initiatives.  Here again, there are obvious problems with a number of issues.  Trump cozied up to Putin from the outset, even meeting with the Russian dictator in Alaska which resulted in no change in the aggression against Ukraine.  Now, Trump is attempting to play the peacemaker by holding numerous meetings with Putin and Ukraine’s Zelensky.  Unfortunately, Putin is playing Trump like a fiddle and will not stop until his occupation of Ukraine is complete and is recognized by the U.S. as being legitimate, something Ukrainians may not be able to abide.

When it comes to Gaza and the Israeli administration under Benjamin Netanyahu, Trump continues to obscure the real issues in Palestine because of his close relationship with Netanyahu.  Once again, the Trump administration is attempting to broker a more permanent ceasefire agreement, while failing to provide any strategic plan for Palestinian self-rule in Gaza.  With the horrendous economic situation, lack of food and few medical services in Gaza, the U.S. appears to simply ignore what the war has done to the Palestinian people, its infrastructure and its governance.  The administration has failed to see Netanyahu’s drive to formally and militarily occupy Gaza and the West Bank, much to the opposition of America’s allies and Arab states.  Netanyahu rejects the concept of a two-state solution regarding Palestine and to date Trump has not taken a clear position on the matter.

On the other major foreign policy initiative, the Trump administration has launched an all out war on Venezuela and notably the country’s president, Nicolás Maduro.  Not only have they attacked boats in international waters off the coast of Venezuela, but Trump declared the air space around the country as being closed and has implemented a naval blockade against tankers containing Venezuelan oil.  In addition, Trump recently disclosed that a facility had apparently been destroyed within the country, without providing more details.  Moreover, his administration has not ruled out the use of the American military’s involvement in land incursions.  Given the adversarial approach by Trump towards Maduro, one cannot rule out the real objective as being regime change.

At home, Trump has backed policies that allow the Big Tech industry to grow unfettered, especially when it comes to artificial intelligence (A.I.).  The mutually beneficial alliance is even causing concern among some conservatives.  The biggest tech companies have gotten almost everything they wanted from Trump, whose administration has cleared the way for the fast-tracked building of data centers that power A.I. development.  As far as issues such as A.I. safety for children and A.I.’s effect on jobs, the Trump administration has opposed any regulation governing the industry’s actions and has actually taken federal measures to block state laws on A.I.  The implications of fast-growing technologies like A.I. have already raised new issues that are likely to play into next year’s midterm elections, much to the chagrin of many Republicans.

These are but a few of what I would consider as being major blunders under the Trump administration.  As a result, 2026 will be a tough year both domestically and abroad.  In addition, there are still a number of important cases before the Supreme Court, including the use of tariffs by his administration and whether the president has the authority to impose such trade measures.  We can only wait and see.

Artificial Intelligence Donald Trump Economy Foreign Policy Israel Latin America Republican Party Trump Ukraine US US Politics

Leave a comment »
Jul 28

U.S. Is Trying to Milk the Canadian Dairy Industry

by bcurry

As part of the Trump administration’s trade talks with Canada, Trump has once again unfairly attacked Canada’s supply management system in the dairy industry.  The problem is that this continuous American attack doesn’t really make much sense!  Here’s why.

First and foremost, Canada, with a population of about 40 million, is a small market to begin with.  Secondly, while the American dairy and poultry markets are dominated by large industrial farms, the Canadian scene is primarily one of smaller farms, often family managed.  Thirdly, U.S. dairy producers reportedly insist they’re not looking for Canada to dismantle its crucial supply management system.  Fourthly, Canada’s imports of U.S. dairy products have risen significantly since the quotas imposed under the current Canada-U.S.-Mexico Agreement (CUSMA) took effect in 2020.  Those imports totalled $897 million in 2024, according to Statistics Canada data, more than four times the value of imports in any year before 2020.  In 2024, American dairy exports to Canada had increased by 67% since 2021. This made Canada America’s second-largest dairy customer and its largest customer per capita.  Moreover, Canada presently has a $520 million dairy trade deficit with the U.S.  Fifthly, Trump’s claims of a 390 or 400 per cent tariff are false, particularly given the way the quotas on American dairy products actually work under the CUSMA.  Indeed, it is reported that to date, no U.S. dairy products imported by Canada have been subjected to those higher tariffs under the current agreement.  Under CUSMA, the U.S. can send 49 million litres of milk to Canada every year, before a single drop would have a tariff imposed.  In addition, that tariff-free amount is set to continue to grow gradually over the next 13 years.  The U.S. uses the same system of tariff-free imports of certain Canadian products up to a set quantity before imposing its tariffs. Finally, Canada’s maximum allowable dairy exports to the U.S. are lower than those for other countries, including the United Kingdom and Australia, according to the U.S. International Trade Commission’s harmonized tariff schedule.  So, let’s not talk about unfairness when it comes to dairy exports between the two countries.

Furthermore, the president of the Dairy Farmers of Canada, David Wiens, notes that countries such as the United States heavily subsidize their dairy industry for production, forcing taxpayers to pay twice for their milk (once at the store and again through their taxes). In contrast, Canadian dairy farmers do not receive similar production subsidies.

Importantly, supply management has delivered food security and sovereignty to Canada for more than six decades by producing dairy here for Canadians.  It aligns production with demand to deliver high-quality, diverse products at stable prices for Canadian consumers and a fair return for its farmers.  It also strengthens the economy, with about 340,000 Canadian jobs fuelled by the supply-managed dairy, poultry and egg sectors, and over $30 billion contributed to Canada’s gross domestic product.  Simply put, Canada’s rationale for the approach taken under CUSMA is to ensure that the domestic dairy industry thrives by effectively capping how much the U.S. can export each year, preventing cheaper American products from dominating the smaller market.

There are also benefits to having few industrial farms as demonstrated by the recent and ongoing costly toll of the bird flu outbreak on U.S. dairy farms, which in particular drove up the price of eggs in the states, affected dairy cows, decreased milk production and financially decimated many affected farms.  None of this happened to the same extent in Canada.

One chief complaint from the U.S. focuses on Canada’s cheap exports of milk proteins, also described as milk solids, such as skim milk powder.  The Americans argue that because Canada’s supply management system keeps domestic prices artificially high, Canada can sell its excess production of milk proteins internationally at artificially low prices, undercutting the competition.  Such issues can certainly be reasonably discussed as part of any renegotiation of the CUSMA scheduled to be undertaken in 2026.  Remember that Trump actually signed that agreement during his first term as president.  The key point is that one has to do away with sources of misinformation and continue to deal with this particular trade issue in a way that both countries can benefit, thereby profiting farmers on both sides of the border.

Canada Donald Trump Economy Economy NAFTA Protectionist Trade Policies Trade with U.S. Trading Relationships US US.-Canada Relations

Leave a comment »
Jul 3

Trump’s Current Energy Policies Just Don’t Make Sense

by bcurry

There is no more clean and renewable federal energy support in the U.S.as a result of Donald Trump’s most recent policy actions.  In his first term as president, he imposed tariffs on imported solar panels, whereby American companies opened or announced plans for new U.S. solar panel factories, thereby reviving a manufacturing business that had largely withered away.  Now, those same companies, particularly in solar manufacturing, are concerned that the attack on clean energy, especially solar and wind, and increasing support for fossil fuels will mean a potential disaster for the continued growth of the industry.  Indeed, it has been reported that Mike Carr, the executive director of Solar Energy Manufacturers for America, concluded that the administration’s policies would give the entire solar manufacturing industry over to China starting in 2027.  The shift has been particularly jarring in Texas and other Sun Belt states.  For example, renewable energy companies had announced plans for $64 billion in new investments in Texas, mostly for solar and battery storage projects, when Washington passed the Inflation Reduction Act in August 2022. 

On the other hand, the oil and gas industry is counting on the administration’s help to keep oil and gas prices higher in order to increase exploration and lower fracking costs, and subsequently their profits.  With a strong desire not to offend the president, one has to remember that the oil and gas industry apparently spent more than $75 million to elect Trump.  Interestingly, the U.S. also relies heavily on Canadian oil in particular, which American refineries combine with domestic crude to make gasoline and diesel fuel.  For this reason, there is much industry anxiety around the tariffs on Canadian oil currently set at 10 percent.  This and cross border pipeline discussions will certainly dominate trade talks between the two countries.

Trump’s declaration of a national energy emergency — paired with other executive orders — amounts to a promise to test the limits of presidential power to ensure demand for fossil fuels, including coal, remains robust.  It’s a sharp reversal from his predecessor’s agenda, which aimed to push the nation away from fuels that are primarily responsible for climate change.  In addition, Trump’s efforts to support coal during his first term were no match for cheap natural gas that ultimately out competed coal in the market.  U.S. coal consumption reportedly declined more than a third during Trump’s first term.  Coal extraction is clearly no longer economically viable.

Studies have also shown that any restrictions on renewable development would increase electricity prices over the next decade in both Canada and the U.S., and potentially leave thousands of homes without electricity during extreme weather events.  For this reason, Canada is continuing to promote the expansion of clean energy, including that produced by nuclear and wind and solar.  On the other hand, the demand for electricity continues to increase due to new high tech needs, including those related to transportation and artificial intelligence.  Canada, unlike the U.S. under President Trump, is still committed to tackling the adverse effects of climate change by attempting to lessen our reliance on fossil fuels and by reducing our green house emissions.

Solar energy and wind power are much more capable of having electricity provided in a more decentralized and efficient way by being located closer to the sources of need, without the requirement for costly long-distance transmission infrastructure.  This more mobile asset can reduce the initial costs of electricity production and in turn the costs of delivery to consumers.  Not surprisingly, the current shift has been particularly jarring in Texas, a Republican state and the nation’s top wind power producer, second only to California in solar energy and industrial battery storage.  Moreover, the Trump administration’s energy policies just don’t make sense, adding to the inflationary cost of electricity for consumers and to the costs associated with the evident extreme consequences of climate change.

Canada Climate Change Climate Change Donald Trump Economy Energy New Technologies Oil and Gas Oil and Gas Technological Change Trading Relationships US

Leave a comment »
Jun 6

What Is Going On With the Circus in Washington?

by bcurry

Never before in all the years that I have been following American political news have I ever seen such a circus as the current one in Washington.  We now have the current break-up of the romance between Donald Trump and Elon Musk.  With the use of social media, the barbs are flying everywhere.  Remember that on X, Musk has almost 225 million followers.  Trump on the other hand was reported in August 2022 to have only 3.9 million Truth Social followers.  The number of Trump followers has certainly increased since becoming president, but no where near Musk’s numbers.

Then there are the members of Trump’s cabinet who continue to not impress us with their mistakes and lack of applicable backgrounds and experience.  One has the Secretary of Defence, Pete Hegseth, who recently discussed top secret military missions against the Houthi rebels in Yemen on the non-secure platform “signal”, and included his wife and personal lawyer in one post.  Then you have the Secretary of Health, Robert F. Kennedy Jr., who has initiated a quick study about the causes of “autism” by a number of non-experts with dubious backgrounds.  Kennedy has endorsed a number of health claims that are not backed by scientific evidence, including many on vaccines, which have concerned many medical experts.  Next is Attorney General Pam Bondi who did not know the meaning of “habeas corpus” as defined in the constitution.  Secretary of Homeland Security, Kristi Noem, likes to dress up and have photo ops at the southern border.  Education Secretary, Linda McMahon, who was a World Wrestling Entertainment (WWE) co-founder, did not know the difference between AI (artificial intelligence) and the steak sauce A1.  We also hear very little from Secretary of State, Marco Rubio, who appears often to take a back seat to Vice-President J.D. Vance.  Vance actually visited Greenland, only to the displeasure of the Prime Minister of Denmark and the vast majority of Greenlanders.  Today, it was announced that Trump Administration has taped a 22-year-old Thomas Fugate, who is one year out of college, to head up the Terrorism Prevention Role at Homeland Security.  He just happened to work on Trump’s campaign and has no experience in this important national security field.

Trump is reportedly fuming about his new nickname “TACO”, standing for “Trump Always Chickens Out”.  The acronym was brought to Trump’s attention at the White House press conference on May 28th by CNBC correspondent Megan Cassella.  The acronym refers to the President’s ongoing tendency to suddenly introduce high tariff rates on countries, only to reduce them shortly after or to defer them to some future date.  The continuous introduction of new fluctuating rates has created a great deal of economic uncertainty and has caused chaos in the markets and affected most business sectors.  It makes no sense at all!

With the Trump-Musk feud, late-night hosts are having a field day.  The heads of foreign countries are wondering what the hell is going on in Washington, including the Prime Minister of Canada.  Hopefully, trade negotiations and foreign policy matters can continue to be carried out rationally behind closed doors in order to avoid all the senseless and needless noise.  If the Trump administration’s gaffs weren’t so serious, they unfortunately would actually be hilarious.

Donald Trump Economy Elon Musk Foreign Policy Protectionist Trade Policies Social Media Trading Relationships US

Leave a comment »
Apr 30

What The Results of The Canadian Election Mean For Canada

by bcurry

By now, anyone who keeps informed about Canadian news events, including a few Americans, have come to realize how the final federal election results are more than just significant for Canada and its federal parties.  Federally, there are six federal parties: the Liberals, the Conservatives, the New Democratic Party (NDP), the Bloc Quebecois, the Green Party and the Peoples’ Party of Canada (PPC).  Moreover, the election became a two party race to win by either the Liberals, under Mark Carney or the Conservatives, under Pierre Poilievre.  The primary issue of the campaigns became that of Canada’s relationship with the U.S., more precisely with President Trump.  The Green Party has only one seat and the PPC has none.

In the end, the election results proved to be extraordinary with the Liberals winning enough seats in Parliament to form a minority government — its fourth consecutive term!  What is remarkable is the fact that the Liberals a few months before the election were more than 20 points behind the Conservatives in the polls.  Then suddenly, all that changed when Donald Trump got elected, Justin Trudeau stepped down as Prime Minister, and Mark Carney took over leadership of the Liberal Party.  The Liberals increased their position in recent polls to take the lead over Pierre Poilievre and the Conservatives.  Then came the election itself, with the Liberals taking 169 seats to form a minority government.  Close behind is the Conservatives with 144 seats.  However, what is even more astonishing is that the Liberals gained most of their new seats at the expense of the NDP, a socialist party, with only 7 seats (a loss of 17 seats from 2021) and the Bloc Quebecois, a separatist party, with 22 seats in Quebec (a loss of 13 seats from 2021).  Even more surprising, is the fact that Pierre Poilievre and the NDP leader, Jagmeet Singh, both lost their riding seats.  Once an opposition party, the NDP no longer has official party status in parliament, which handicaps its ability to perform or contribute. 

While the popular vote was close, 43.7% for the Liberals and 41.3% for the Conservatives, Canadians favoured Mark Carney as the leader who could confront Trump over his tariffs on Canadian industries.  As a former head of the Bank of Canada and the Bank of England and a former CEO, Carney is seen as someone with fairly qualified experience in finance, business, economics and international trade.  Canadians switched their support to the Liberals to support a strong opposition to the tariffs and political attacks by Trump who has frequently referred to Canada becoming a 51st state.

Now, Carney will have to start negotiations with the Trump administration with respect to an updated or new trade agreement, such as is governed by the United States–Mexico–Canada Agreement (USMCA) previously signed by all three countries in 2018.  By introducing initial tariffs on Canadian aluminum and steel, oil and gas, softwood lumber and automotive sectors, Trump has already broken that trade agreement.  The danger for Canada is that if additional tariffs are introduced by the U.S., the economic impact on Canada would most likely lead to a major recession similar to that in 2008-09.  Canada would have to retaliate with tariffs on American goods, leading to higher prices for Canadians.  Americans would also see similar inflationary pressures due to Trump’s tariffs.

The election also resulted in a clear split between the eastern provinces which largely supported the Liberals and the western provinces, especially Alberta and Saskatchewan, which largely supported the Conservatives.  The western provinces have long argued that the federal government under the Liberals has harmed the growth of their oil and gas industry, particularly because of environmental policies.  Some westerners have already claimed that they might potentially be better off by withdrawing from the Canadian federation in some manner.  The Prime Minister will have to attempt some form of compromise to assuage the western grievances and maintain a sense of unity among all ten provinces.  Canada needs to provide a common, strong and unified front in its planned negotiations with the Trump administration.  After all, we are talking about Canada ’s state of sovereignty as a nation.

Canada Donald Trump Economy Federal Election Federal Government Protectionist Trade Policies Trade with U.S. US US.-Canada Relations

Leave a comment »
Feb 17

Trump’s Trade Policy Appears to be Directed at Securing Critical Mineral Rights

by bcurry

After three years of war that forged a new unity within NATO, the Trump administration has made clear it is planning to focus its attention elsewhere: in Asia, Latin America, the Arctic and anywhere President Trump believes the U.S. can obtain critical mineral rights.  Moreover, this is why Trump to a large extent has his eye on annexing Canada and Greenland, both of which have an abundance of critical minerals such as uranium, graphite and lithium.  Critical minerals are currently used in over 230 sectors of the U.S. economy, from energy infrastructure to advanced technology manufacturing, and from aerospace engineering, including satellites, to medical equipment.  Critical minerals are the building blocks for the green and digital economy and demand for them will only grow throughout the global energy transition. Disruption potential is related to how much of a commodity’s global production is concentrated in countries that are relatively unwilling or unable (due to political or economic instability, workforce or infrastructure inadequacies, regulations, etc…) to supply the U.S. with critical minerals.  Some critical minerals are produced primarily in countries that are economically or politically unstable, or do not have a reliable trade relationship with the U.S. —  thereby representing a higher supply risk.  This however does not apply to Canada which is a stable supplier of minerals in general, including copper, zinc, phosphorus, silicon metal, cobalt, high-purity iron ore, and rare earth elements.

The lack of stability in Ukraine is a major reason why Trump apparently ha turned down Ukraine
President Volodymyr Zelensky’s extraordinary offer that the U.S. be granted a 50 percent interest in all of Ukraine’s critical mineral resources as compensation for past and future support of the war with Russia. 

However, Canada recognizes that critical minerals are the foundation on which modern technology is built upon.  They’re used in a wide range of essential products, from mobile phones and solar panels to electric vehicle batteries and medical applications. By building critical minerals value chains, Canada can become a major global supplier of choice for critical minerals and the clean energy and technology sources they enable.  For this reason, Canada is not willing to simply give away control of these precious minerals to the U.S. or any other nation for that matter.  They are also essential to Canada’s economic or national security.

Canada has already partnered with the U.S. when it comes to discovering and mining critical minerals.  In January 2020, the Canada-U.S. Joint Action Plan on Critical Minerals was announced to advance bilateral interest in securing supply chains for the critical minerals needed in strategic manufacturing sectors.  Canada has also worked with other countries such as Japan to encourage cooperation on international standard-setting for critical minerals, as well as several multilateral organizations such as the International Energy Agency (IEA), the World Bank, the International Renewable Energy Agency (IRENA), and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).  The U.S. is also an active member of these multilateral organizations.

For these reasons, it is difficult to understand why Trump continues to be so aggressive when it comes to the U.S.-Canada trading relationship.  Canada is an exporting nation, which includes most of our natural resources which make up the bulk of exports.  Canada is very interested in exporting critical minerals to its allies through various trade agreements, and is investing more in the extraction of these minerals.  Canada already provides a stable and growing market when it comes to critical minerals.  If Trump wants to ignore the existing cooperation between the two countries, he does so at his own peril and that of those American businesses which rely on a steady and reliable supply chain.

Canada Donald Trump Economy Protectionist Trade Policies Trade with U.S. Ukraine US US.-Canada Relations

Leave a comment »
Nov 26

Trump’s Tariff Threats Against Canada and Mexico Will Hurt Americans Equally

by bcurry

Here we go again, Donald Trump’s bargaining concept is getting in the way of economic realities.  Threatening to impose a 25% tariff on all Canadian and Mexican products entering the U.S. is simply nonsense, and most likely in violation of the current U.S.-Mexico-Canada trade agreement.  This agreement, by-the-way signed during the former President’s first term, is up for re-negotiation in two years. 

The U.S. is the largest importer of goods in the world, with Mexico, China and Canada its top three suppliers.  Take for example the North American automotive sector which relies on integrative parts and components from both Canada and Mexico, whereby auto plants on both sides of the border and some production lines would most likely screech to a halt.  Not only can higher tariffs cause increased inflation, but they would also cause job losses in all three countries.  The tariffs, if implemented, could dramatically raise prices for consumers on everything from gas to automobiles to agricultural products.

For some reason, President-elect Trump believes that putting economic pressure on Mexico and Canada would force both countries to tighten up their borders against illegal migrants and the influx of drugs like the deadly synthetic opioid fentanyl.  Mexico’s efforts to fight drugs — which are manufactured by Mexican cartels using chemicals imported from China — have apparently weakened in the last year.  However, the new Mexican President Claudia Sheinbaum has argued that the flow of drugs is more of a problem of public health and drug consumption in American society, and rightly so.  On the other hand, both Mexico and Canada have an argument when it comes to the influx of weapons smuggled in from the United States, estimated to account for over 90% of arms smuggled into both countries.

Unfortunately, neither Mexico nor Canada like to be bullied into adherence to some needless policies by an American president, past or present.  President Sheinbaum has already declared that the introduction of new tariffs would result in retaliatory measures by Mexico.  The Canadian government is already examining the ramifications of increased tariffs, hoping to open up a further dialogue with the new American administration.  Hoping to avoid a trade war, both countries have indicated that they are willing to engage in talks on the issues at hand. 

What’s obviously a shot across the bow, Trump appears to think that these threats are an effective manoeuvre as part of some form of future negotiating tactics.  However, the resulting consequences will be dire for all parties concerned.  Canada in particular has clamped down on the flow of fentanyl both into and out of the country.  More aggressive attempts have also been made to deal with the influx of weapons from the U.S.  There is little doubt that these are security issues on both sides of the border.  Canada is also concerned about the potential influx of migrants from the U.S. as a result of Trump’s talks about a “massive deportation” program of illegal migrants during his second term.  Northern border security is just as important to Canadians as it is to Americans, and is nowhere close to American concerns over its southern border security.

I believe that the Canadian government will take a more cautious and respectful approach to Trump’s threat than the Mexican government which has warned the U.S. against any blatant attempts to subjugate its sovereignty through such threats.  As noted, Sheinbaum’s bristly response suggests that Trump faces a much different Mexican president than he did in his first term.  As for Canada, time will tell.  In addition, federally there will be an election next year and Trump’s administration will have to face a new Canadian government.  Unfortunately, the entire situation does not look good for the future of all three countries, both economically and politically.

Canada Donald Trump Economy NAFTA Protectionist Trade Policies U.S. Canada Border US

Leave a comment »
Jun 12

Is Inflation On The Way Down?

by bcurry

This past week, both the U.S. Bureau of Labor Statistics and Statistics Canada indicated that the general inflation rate trend is gradually going down.  As a result, the Bank of Canada reduced its central bank rate by a quarter of a point.  However, such an interest rate reduction will not immediately affect mortgage and loan rates offered by the banks and other financial institutions.  Also, for the average American and Canadian, the cost of living is still high as demonstrated by food prices and the costs of homes or rents in urban centers.  These costs do not necessarily have as much to do with inflation as they do with regards to other domestic issues and foreign markets.  For this reason, there is little likelihood that food costs, rents and housing costs will decline in the near future.  There is a general lack of affordable housing across both countries and the impact of climate change is already being felt in the agriculture sector.  We will have to wait to see what the U.S. Federal Reserve will do with respect to the current central bank rate.  With inflation sticking at a level above their 2% target, they’re apparently downgrading their outlook for interest rate cuts.

Politically, this situation does not bear well for the governing parties in both countries.  The economy, and especially inflation and high interest rates, is still the priority concern for most voters.  Remember the old adage: “It’s the economy stupid”.  In light of the coming American elections next November, the possibility of major economic improvements is increasingly unlikely every day.  The same can be said for the Canada’s federal government and its ruling Liberal Party under Justin Trudeau, which could call an election next year. 

In general, the current economy has also particularly hurt younger voters, such as Generation Z and the Millennials.  They have been especially affected by the lack of affordable housing and the continuing difficulties surrounding the cost of living and failure of wages to keep up with rising costs.  Their votes in coming elections will be very important and may very well determine which parties are successful in their bids to govern.

Both the Federal Reserve and Bank of Canada have admitted that maintaining very low interest rates over the last decade has contributed to the current economic dilemma.  For example, it created a major imbalance in how the mortgage markets operate, encouraging many people to overspend and helping to cause incredible rising costs in housing.  In addition, new housing developments could not keep up with the created demand.  As a result of the pandemic, there was also a substantial increase in construction costs due to the resulting scarcity of materials.  It has taken some time for the markets to rebound and for supply chains to catch up to the subsequent demands.

While the markets did well during the pandemic and continue to do well, this primarily benefited the large corporate sector and shareholders, but not average Americans and Canadians.  Many of them suffered wage and job losses during the pandemic, and many have not recuperated those losses after the pandemic.  The pandemic significantly altered our economies and our lives.  The consequences will be around for years to come.  Just look at subsequent changes to our labour markets.

Yes, it would appear that the inflation rate is slowly on the way down.  However, for the existing political parties it may be too little and too late.  For the average person, the damage has already been done, resulting in a great deal of anger, frustration and increasing division in political views.  There is little doubt that both the Federal Reserve and Bank of Canada will continue to be cautious in how they handle the central bank rates.  Fearing any potential new inflationary pressures on the economy, don’t expect any major changes in the near future.

Canada Economy Economy Elections Presidential Election 2024 US

Leave a comment »
Mar 25

Electorate in Both U.S. and Canada Appears to be Very Disgruntled. I Wonder Why?

by bcurry

George H. W. Bush Senior, going into his bid for a second term, was frequently told that it’s all about the economy stupid!  The U.S. economy went into a recession in 1990; the unemployment rate rose from 5.9% in 1989 to a high of 7.8% in mid-1991; and the debt percentage of total gross domestic product (GDP) rose from 39.4% in 1989 to almost 46.8% in 1992.  By the presidential election in1992, many conservative Republicans’ support of Bush had waned for a variety of reasons, including raising taxes and cutting defense spending.  Americans were less concerned with his foreign policy successes (e.g. Persian Gulf War victory over Iraq) than with the nation’s deteriorating economic situation.  Thus, despite having once been a relatively popular president, he lost to Bill Clinton.

Today, the primary issue among voters continues to be the economy, and especially the high rate of inflation and high interest rates affecting people’s mortgages and the cost of loans in general.  Yes, there is low unemployment and more people are employed today than anytime since the pandemic.  However, unfortunately for Joe Biden, the average American is struggling on a daily basis to make ends meet, especially since average wages have not kept up with increasing inflation over the last few years.  Many people and businesses are still recovering from the pandemic, which has created a real sense of insecurity and a general malaise within the population.

Taking all of this into account, and that people are not happen with another Trump vs. Biden election, there is a general mistrust with governance.  The same can be said for in Canada where you have a Prime Minister, Justin Trudeau, and a party that has been in power for over nine years.  The opposition is continuously harpooning about the high cost of inflation and high interest rates that average Canadians are facing.  There is also a good amount of discord over the government’s intention to raise the national carbon tax this coming April, despite it being only one element of several policies aimed at tackling climate change.  However, right now, climate change has taken a back seat to the economy.  A federal election will very likely be called next year in Canada, and all the government can hope for is that the economy will improve and inflation will come down.

Overall, these are tough times for governing parties.  There appear to be no win-win situations.  Government deficits have been climbing steadily, partly in earlier response to the pandemic, with no end in sight.  Wars overseas in the Ukraine and Middle East are not helping.  Funds are being allocated to support the Ukraine against Russia, Israel’s military and the plight of Palestinian refugees in Gaza.  The situation has placed both the U.S. and Canada in a difficult situation given the evolving humanitarian crisis in both conflicts.  In terms of foreign policy, domestically it is a no-win and highly emotive situation for both governments in terms of supporting one side or the other particularly in the Israeli-Palestinian conflict.

In addition, stability in the energy markets is constantly under threat as a result of the sanctions against Russian oil and natural gas exports and the general unstable situation in the Middle East.  As a result, there has been a measurable direct or indirect impact in the form of rising costs for gas and heating fuel in North America.

There is little doubt that we live uncertain times.  There is also little doubt that voters are concerned with the cost of living and continuing hard economic times.  This bleak outlook does not bode well for President Biden and Prime Minister Trudeau.  The question then becomes whether their political opponents can take advantage of the situation?  I guess time will tell.

Canada Climate Change Economy Economy Elections Federal Election Federal Government Federal Government Foreign Policy Presidential Election 2024 Ukraine Ukraine US

Leave a comment »
«Older Entries
Blog at WordPress.com.