Tariffs and the Implications on Real Estate

On today’s show it we are examining what the implications of a full scale trade war will mean.

The White House executive order that was issued this past weekend has a structure that I find very familiar. It falls under the classic structure of an argument within a married couple. This is of the form when one spouse says to the other, “ if you loved me, you would take out the trash.” And then they spend the rest of the time arguing about the trash instead of the core issue which is that one member of the marriage is feeling unloved. Linking together two unrelated items is a very primitive but well known negotiating technique. I’m going to manipulate you into taking out the garbage by putting the relationship and whether you love me on the line.

This is precisely my assessment of the executive order.

The fact is, the tariff is not about trade. It’s about border security. President Trump’s election promise was to secure the national borders. The US can’t do it alone in any reasonable timeframe. Enlisting the cooperation of both Canada and Mexico is key to accomplishing his objective quickly.

I personally don’t believe that the result will be a protracted trade war, even though the outward appearance is precisely that. The media has and will latch onto the devastating economic impact that a protracted trade war would have on the Canadian economy. That level of publicity will bring immense pressure to the Canadian government to make the necessary changes at the border at a time when Canada’s government is completely in disarray. There is arguably nobody in charge at this moment.

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