Chaos Coordinator Donald Trump - Financial Warfare

Hello, and welcome back for week/blog post number three! After this week I will be switching to biweekly posts on Wednesday mornings to not oversaturate my blog; 52 posts in my first year seems like a bit much. If you have been paying attention to the Canadian news at all recently, then you already know what I'm about to dive into based on the title. Donald Trump, or as I have liked to call him recently, the 'Chaos Coordinator', and the recent shenanigans he's been up to. When I use the term 'Chaos Coordinator', I don't mean it in the utilitarian way where one might bridge between departments, translating issues into solutions, and ensuring all stakeholders understand the problem and the path forward. I mean it in the sense that Donald Trump IS the chaos. I don't want to get too political about the Donald Trump presidency as a whole, because that is not what this is about, and I don't know enough about politics to do that if I'm being completely honest. This is purely about Trump's attempt to throw Canada in the financial sewer and the back-and-forth financial 'war' that this is now ensuing, as well as what this could mean for the future of one of the most powerful country alliances ever made.

A better name for this new financial conflict is a "trade war", since the main concern is the new 25% tariff Donald Trump has placed on goods imported to the US from Canada and Mexico. Now, this is quite the double-edged sword Trump is wielding, since while his attempt is to disrupt the Canadian economy, he is hitting his own US economy with the backswing. The way a tariff works is, for example, the 25% tariff is placed on Canada; now American businesses and consumers must pay an extra 25% tax on goods they import from Canada. This will prove very troublesome later on when I discuss how intertwined the Canadian and American economies are. The burning question we are all probably wondering is, why? Well, Trump has claimed that fentanyl flowing into the U.S. from Canada is the reason behind his decision to impose the tariffs, which, quite frankly leaves me just scratching my head, as most Trump quotes do. Figures from U.S. Customs and Border Protection show the agency seized just 19.5 kilograms of fentanyl at the northern border last year compared to 9,570 kilograms at the southwestern border (Steven, 2025). Just to be clear and shed some light on those numbers, the Canadian border is responsible for roughly 0.2% of all fentanyl seizures between both northern (Canada) and southwestern (Mexico) borders. Just in case it's still not clicking, Mexico is responsible for 99.8% of the seized fentanyl we're talking about here, yet Canada and Mexico are both facing the same 25% tariff.

As of now, Canadian Prime Minister Justin Trudeau retaliated by slapping a 25% tariff back on $155 BILLION of U.S. goods entering Canada. On February 3rd, Trump and Trudeau agreed to pause their respective tariffs for at least 30 days, as I'm assuming they (specifically Trump) are starting to feel the heat from what they are actually setting in motion here, a full-blown trade war between 'best friend' nations. The fact that these nations are such good friends is actually part of the massive problem that these tariffs impose on both parties, specifically the fact that the U.S. gets it's: oil, cars, meat, seeds/grains, natural gas, hydropower, wood, cereal, and much more, all from Canada. A major implication of this trade war is that now Canadian and American consumers will have to pay more for imported goods, leading to increased inflation. Here is a display from the Bank of Canada that perfectly illustrates the beautiful effect these tariffs will have on end consumers.

Essentially, the Canadian and U.S. economies are so intertwined that these tariffs are really just going to result in us going slap for slap, leaving both of us sore and worse off than if we just didn't do these tariffs all together. The major forces driving this trade war, of course, are politics, so to try and view these sorts of issues through a purely financial lens just leaves everyone confused about what the end goal is here.

This topic is relatively new and is among an abundance of interesting executive orders to say the least, right along side renaming the Gulf of Mexico... so you can expect an update post regarding this tariffs topic in the future as I am confident that this issue is far from over. Like I said before, posts covering a topic of this sort are not meant to be political in any way, and are only meant to hone in on the financial aspect of the story, so what does this actually mean for the future of the Canadian economy? As mentioned before, a guaranteed effect of this trade war is that prices for everyone involved will go up, resulting in increased inflation for both Canadians and Americans. This, plus the fact that the Canadian interest rates have been dropping for the past couple of years, means the future of Canada's inflation could be a rocky road. The Canadian dollar will also continue to suffer, as if it hasn't enough already. The Canadian dollar is at the lowest it has been since 2003, and while some of this can be attributed to interest rate and large Bank of Canada cuts over the years, a notable impact has most definitely come from the rising uncertainty around trade policies. The reality is that the future is unclear as of right now, since Canada and the U.S. have been trading for over 150 years and formed one of the strongest nation alliances in the world, so this is marking a point in history that we have yet to experience. Overall, there is still a lot that has yet to unravel, and the tariffs haven't even been set in motion yet, so stay tuned for follow-up posts tracking the progress and announcements regarding this trade war that Donald Trump has got under way.

Thank you for reading. Please subscribe to the newsletter at the bottom of the page to be informed on all Nolan's Investment Notion updates, including new posts! Any support is much appreciated, my next post will now be on February 26th.

• Nolan Kushnir

Citations

Steven, B. (2025, February 3). Here are all the ways Canada is striking back against Trump’s tariffs | CBC News. CBCnews. https://www.cbc.ca/news/politics/canada-strike-back-trump-tariffs-1.7448552

Evaluating the potential impacts of us tariffs. Bank of Canada. (2025, January). https://www.bankofcanada.ca/publications/mpr/mpr-2025-01-29/in-focus-1/