As of the date I’m writing this, Mark Carney, who is the current Prime Minister of Canada, is focused on POLITICAL messaging. But the numbers are out, and Canada’s tool and die industry is likely headed to Mexico.
The reason for this is costs. Canada HAD a reputation for efficiency, quality, and lower prices than America. However, starting with Justin Trudeau, operational costs via his carbon taxes cut into margins, and then under Mark Carney, who seeks to hide the carbon tax from consumers, the numbers clearly show Canada’s tool and die industry is likely headed to Mexico.
Canada’s tool and die industry has tried to frame things as Trump’s fault, but the numbers show that Trump merely made things worse. It’s actually Mark Carney’s fault, because Trump, for example, is using Canada’s communist dairy cartel as leverage for trade negotiations. And here’s the real problem for Canada: tariffs are actually a DEMOCRAT/Labour union position. Meaning, let’s say Donald Trump is replaced with Bernie Sanders, who is a far-left socialist, he’s not going to reverse Trump’s tariff policy; in fact, he might increase it.
So Mark Carney, if you’re paying attention to the news, is trying to message to Canadians that it’s time for Canada to find other trading partners, as if he’s the one who decides that. Mark Carney has ZERO leverage, and it appears that he either doesn’t know or doesn’t care about giving Canadian businesses trade LEVERAGE. So what this means, ultimately, from our perspective, is that the Canadian dollar is headed for debasement.
In the past, some thought lowering the value of the loonie would attract investment to Canada, but you see, that worked when OPERATIONAL costs in Canada were a lot lower. Mark Carney’s carbon taxes and carbon regulations are FIXED costs, and government wages are tied to the inflation rate, meaning as the Canadian dollar loses value domestically and internationally, government bureaucrats will give themselves a pay raise.
In case you’re wondering, this is how oil-rich Venezuela and countries like Argentina in the past had hyperinflation problems. If I’m a foreign investor, I’m using the Canadian dollar for the UPSIDE. If there’s no growth and no leverage for me as an international trader to use the Canadian dollar, I start dumping it. So from our perspective, Mark Carney’s policies have rampant inflation written all over them. In general, the forex markets don’t want to dump Canadian dollars, because that means fewer baskets of currencies to trade in. But if the situation looks dire, meaning an entire industry leaves and NOTHING of equal value replaces it, well, right there, you’ve got a currency problem.
How the foreign exchange markets respond is anyone’s guess, but domestic price inflation in Canada looks like it’s headed to all-time record highs, especially if one of Canada’s major EXPORTERS leaves Canada.