Month: February 2025

Fear (part 2)

What’s going on?

Treasury yields are falling (weakening economy) but credit spreads are as low as they get (good economy, profits):

Source: Simon White, Bloomberg Markets Live Blog

Investor angst has spiked:

Professional investors? “Look Ma, No Hands!

Initial jobless claims rose 22k to 242k, above expectations. The four-week moving average of claims increased by 9k to 224k. DOGE?

Trump Plans Another 10% Tariff on Products From China The U.S. president cites the country’s role in the fentanyl trade

The U.S. plans next week to impose an additional 10% tariff on imports from China over its role in the fentanyl trade and move forward with 25% tariffs on products from Canada and Mexico, President Trump said Thursday, setting up a pivotal week for his protectionist trade agenda.

The China move, slated to take effect Tuesday along with the Canada and Mexico actions, doubles up on the previous 10% additional tariff Trump placed on Chinese products this month.

In a post Thursday on his Truth Social social-media platform, Trump reinforced his threat to impose 25% tariffs on products from Canada and Mexico. Later, in the Oval Office, he said America’s neighbors hadn’t done enough to curb drug smuggling to win another delay for those duties. The administration had postponed the Canada and Mexico tariffs for 30 days at the beginning of February to allow for negotiations. (…)

The announcement came a day after Trump appeared to hint that the Canada and Mexico tariffs could be delayed again, telling reporters that they were scheduled for April 2. The administration backed off those comments at the time, and on Thursday a White House official said that “as of now, the decision has been made” to impose the tariffs, though talks are ongoing. (…)

Canadian Prime Minister Justin Trudeau on Thursday noted that less than 1% of the fentanyl smuggled into the U.S. comes from Canada. “Canada is not the source of problems for the United States,” he said during a news conference in Montréal. “If on Tuesday there are unjustified tariffs brought in on Canada, we will have an immediate and strong response.” (…)

Beijing so far hasn’t made an offer to the Trump administration that shows a stepped-up commitment to reducing China’s exports of chemicals used to make fentanyl, according to people close to Beijing’s decision-making. The people said the lack of an offer from China on fentanyl was a reason that no direct conversation had yet taken place between Trump and Chinese leader Xi Jinping. (…)

Unlike Canadian and Mexican leaders, Xi has shown little interest in focusing solely on a deal about fentanyl, the people said. Rather, he aims to negotiate a broader agreement with Trump that could define the tone of bilateral relations.

In a bid to prepare for trade talks with the Trump administration, the Journal reported early this month, Beijing has been trying to put together an initial proposal that involves reinstating a trade agreement signed with the first Trump administration in early 2020, a renewed pledge not to devalue the yuan to help its exporters, and an offer to make more investments in the U.S. But Xi has yet to make that offer, the people said.

For now, Beijing thinks it can handle the 10% additional tariffs. The levies have raised the average duty rate on Chinese imports to 24.5% from about 14.5% as of 2023, according to Gavekal Dragonomics, an economics-consulting firm. Chinese companies already have proven adept at avoiding U.S. tariffs by rerouting their products through other countries.

Bloomberg:

Trump’s new measures came without public forewarning and took officials in both countries by surprise. Neither side on the working level was aware the additional 10% tariffs were coming, according to a person familiar with the matter. (…)

China typically hits back at tariffs only after they come into effect. Beijing responded to the last round of levies just seconds after they kicked in, with measures including additional tariffs, an antitrust investigation into Google, tightened export controls on critical minerals, and the addition of two US companies to a blacklist of unreliable entities.

Short of a last-minute deal, China could retaliate next week using those same tools and potentially reimposing some tariffs from the last trade war.

Since 2020, China’s government has been suspending various tariffs it imposed on US imports, and those waivers all expire Friday. So far, the government hasn’t said it would extend them, while it previously announced extensions in advance. (…)

“In the medium term, it’s also likely China will find new markets for its exports — although this may be met with resistance from partners in the rest of the world, already concerned about Chinese overcapacity in some sectors,” Cousin wrote in a note on Friday.

Such pushback is already becoming apparent. Over the past week, both South Korea and Vietnam followed in Washington’s footsteps and slapped tariffs on Chinese steel products to halt surging supplies from the world’s biggest producer of the metal. (…)

• US and UK in talks on trade deal that could spare Britain from tariffs
• Trump’s Tariff Onslaught Is Coming Faster Than His Team Can Carry It Out Administration officials are privately indicating that the full reciprocal action will take longer than April timeline to implement

(…) All those announcements are creating a bottleneck at the Office of the U.S. Trade Representative and the Commerce Department, which are in charge of implementing the tariffs, according to people familiar with the dynamics, prompting a race among staff to implement the president’s orders on an accelerated timeline.

So far, only the China tariffs are in place—largely because the administration viewed them as low-hanging fruit with little impact on U.S. consumers, according to people with knowledge of policy discussions. (…)

Administration officials are privately indicating that the full reciprocal action will take longer than the April timeline to implement—up to six months or even more, according to people familiar with the discussions. While there will likely be a reciprocal announcement on April 2, that time frame is simply too small to fully analyze the tariffs and nontrade barriers of all those nations, the people said. (…)

The completion date of other pending actions, such as a tariff investigation into copper launched this week, is unclear. Likewise for Trump’s planned duties on lumber imports, which he has previewed for sometime in April though he hasn’t specified an exact date. (…)

Privately, some administration officials are indicating that the reciprocal trade action likely won’t result in huge tariff increases on most nations—partially because many of those nations have relatively low tariffs, and because trading partners will try to negotiate them downward.

More trade actions are still expected, adding to the implementation bottleneck. Those are likely to be slapped on specific industries, a list likely to expand in the run-up to April 2, according to people familiar with the matter. In addition to the tariffs already announced, duties on critical minerals and products that contain them are under consideration, the people said. 

The administration’s patchwork of tariffs comes in lieu of imposing the across-the-board tariffs that Trump promised on the campaign trail. Once in office, administration members decided that combining reciprocal trade action with sectoral tariffs would be more legally defensible than a universal tariff order, said people with knowledge of the discussions, and that it would inflict less collateral damage on U.S. consumers and the stock market while still covering major swaths of the economy with tariffs.

Sectoral duties—such as the pending actions on steel, aluminum and copper—might be announced on April 2, but they are likely to be imposed under the national-security authority in Section 232 of the Trade Expansion Act. That law requires a notice and comment period, typically 30 days. The steel and aluminum tariffs are an exception because they will be imposed under an existing tariff investigation. (…)

• Canada’s Export Agency Sees Skyrocketing Interest in Trade Diversification as Tariffs Loom Inquiries have gone from around 40,000 to 1 million

(…) “We’re seeing more general thoughts around ‘How do I start to protect myself, my business going forward.’” (…) The government agency, which has been operation since 1944, offers expertise in capital, risk management, trade knowledge and has global connections. (…)

“The Canada brand writ large has a lot of value,” Winterhalt said, pointing to areas such as food security and the value of Canadian standards, energy, critical minerals and clean technologies. “Canada’s the envy of the world in many respects. And the ability to trade in those products I think is a huge asset to Canada and one that will only grow over time.”

Trump’s Tariff Threats Draw Growing Consumer Backlash

(…) The latest data point comes from a Harris Poll taken for Bloomberg News. It found that almost 60% of US adults expect Trump’s tariffs will lead to higher prices and that 44% believe the levies are likely to be bad for the US economy, compared to 31% who say they’d be a boost. (See the full story here.)

That’s not an isolated result. Multiple consumer confidence measures and retail sales numbers all point to a growing concern among shoppers, who account for some two-thirds of US gross domestic product.

There also have been warnings from companies like Walmart and Ford about the impact tariffs will have on their operations and sales. Trump’s tariffs are preoccupying the nation’s biggest companies. The topic has come up a record 700 times during quarterly earnings calls for S&P 500 companies, according to a Bloomberg News analysis of transcripts.

Trump and his aides are, of course, staying on message. His nominee to lead his Council of Economic Advisers, Stephen Miran, told senators today that there was no reason to be concerned about the economic impact of tariffs. In fact, he told a confirmation hearing: “There’s nothing in the historical record that would say that it’s impossible to have a fabulous economy with high tariffs.”

That’s true. If you look way back in US history. What Miran was referring to was the 19th century, when the US economy looked very different than it does now.

Today’s consumers don’t appear to buy the president’s message on tariffs. For now, at least, Trump’s threats are only making them nervous. Which isn’t good for the US economy.

But, that’s not true! From my Fear post on January 6:

(…) The Tariff Act of 1890, commonly called the McKinley Tariff, became law on October 1, 1890. The tariff raised the average duty on imports from 38% to 49.5%. (…)

The Tariff Act was a major topic of fierce debate in the 1890 Congressional elections. The tariff was not well received by Americans who suffered a steep increase in prices. The 1890 tariff was also poorly received abroad. Protectionists in the British Empire used it to argue for tariff retaliation and imperial trade preference.

Inflation was particularly high on what the NYT called “necessaries” such as farm products (+6-8%), textiles (+4%), metals and metal products (+6%), building materials (+5%) and “miscellaneous” (+11%) per BLS research.

In the 1890 election, Republicans lost their majority in the House with their number of seats reduced from 171 to 88.

In the 1892 presidential election, Harrison was soundly defeated by Grover Cleveland, and the Senate, House, and Presidency were all under Democratic control. Lawmakers immediately started drafting new tariff legislation, and in 1894, the Wilson-Gorman Tariff passed, which lowered US tariff averages.

Trump’s contention that the 1890s were “probably the wealthiest ever because it was a system of tariffs” also does not verify. (…)

After exploding 70% between 1885 and April 1890, the U.S. equity markets became very volatile, losing 16% in the following 7 month before roaring back 33% until the end of 1892.

The Depression of 1893 was one of the worst in American history with the unemployment rate exceeding ten percent for half a decade. Equities lost 25% in the first 7 months of 1893, back to their mid 1886 level.

The National Bureau of Economic Research estimates that the economic contraction began in January 1893 and continued until June 1894. The economy then grew until December 1895, but it was then hit by a second recession that lasted until June 1897.

Estimates of annual real gross national product (which adjust for this period’s deflation) are fairly crude, but they generally suggest that real GNP fell about 4% from 1892 to 1893 and another 6% from 1893 to 1894. By 1895 the economy had grown past its earlier peak, but GDP fell about 2.5% from 1895 to 1896. During this period population grew at about 2% per year, so real GNP per person didn’t surpass its 1892 level until 1899.

The McKinley Tariff rose the average duty on imports by 10.5pp, from 38% to 49.5%. Wells Fargo calculates that tariff announcements so far increase the U.S. trade-weighted tariff rate 6.5pp, from 3.9% to 10.4%.

Also not quite true are growing concerns among shoppers per recent consumer confidence measures.

Yes, as Wells Fargo wrote

February brought the biggest drop in consumer confidence since 2021 as anxiety about the outlook for the broader economy manifested in a more-than nine point drop in the forward-looking expectation index, which now sits at an eight-month low and is just 7.3 points from its cycle low in 2022.

The Conference Board’s measure of consumer confidence corroborated a theme evident in the separately reported sentiment survey from the University of Michigan: consumers are apprehensive.

But the index fell mainly because of dropping Expectations. Measures of Present Situation held up.

And Expectations rose for Republicans and declined for Democrats and Independents. Not very telling, is it?

It’s Xi Jinping’s World, and Trump Is Just Living in It As Donald Trump blows up the rules-based order, China is pulling ahead in the global battle for ideas.

Very interesting essay by Daniel Ten Kate, Bloomberg’s Executive Editor for Asia Economy and Government.

Some excerpts but well worth reading in its entirity:

(…) Four years on, with Donald Trump back in the White House, the back-and-forth almost looks quaint. Blinken’s talk of a “rules-based order” has been replaced with a doctrine of “America first” and “peace through strength.” Trump has threatened friends and foes alike with tariffs, pushed to somehow acquire Greenland and the Gaza Strip, and called Ukrainian President Volodymyr Zelenskiy — who has spent the past three years fighting off an invasion by Vladimir Putin’s Russia — a “dictator.”

[Yesterday: “Did I say that? I can’t believe I said that. Next question,” Trump said.]

“It’s really peace through strength,” Trump said last week. “Because without the strength it’s going to be very hard to have peace.”

Trump has also questioned the very essence of the rule of law, declaring on social media that “He who saves his Country does not violate any Law” — a quote often attributed to Napoleon Bonaparte. (…)

Trump’s understanding of power — demanding fealty and showing he is prepared to use coercion to achieve his aims — is arguably more in line with China’s vision of the world than any US president since the establishment of the UN in the wake of World War II. That shift is putting Chinese President Xi Jinping ahead in the global battle of ideas.

In China, all politicians, soldiers, judges, bureaucrats and business titans answer to the Communist Party, a form of control that will be on display next week at the annual gathering of China’s legislature, the National People’s Congress. Xi’s government has spent billions creating an Orwellian surveillance state to monitor citizens and snuff out dissent before it can threaten the Party. Laws serve as tools to maintain power, and access to China’s market of 1.4 billion consumers is wielded as a weapon to achieve geopolitical aims.

But whereas Xi flexes every bit of state muscle to ensure no one can challenge the Party’s power, Trump is using all levers of American economic and military might to keep the US ahead of China as the world’s preeminent superpower. While that strategy may prove successful in the short term, in the long run his actions are creating a world much more aligned with China’s interests. (…)

During trade talks in Trump’s first term, he attempted to force Xi into submission with demands for changes to several Chinese laws, including those related to intellectual property protections and forced technology transfers. Nationalists in China were outraged, and at one point compared Xi’s top trade negotiator to a Qing dynasty official who in 1895 signed the Treaty of Shimonoseki with Japan. That agreement remains a source of national shame because it obligated China to open more ports to foreign trade and to cede territory, including Taiwan.

Xi ended up resisting Trump’s demands, and the US president eventually settled for what was termed a “Phase One” trade deal largely tied to purchases of US agricultural goods ahead of the 2020 election. Then came Covid-19, tanking US-China ties and ultimately Trump’s chances at victory. (…)

But over the past few years, the relationship between the Party and China’s citizens has been strained. A slumping property market, a crackdown on the private sector and weak consumer spending have put the country on pace for the longest streak of deflation since the 1960s, helping to knock China off its trajectory of overtaking the US as the world’s biggest economy by 2030.

The one bright spot has been exports. Xi has cranked up China’s manufacturing machine to historic levels to buoy growth and dominate emerging industries like electric cars, batteries and solar panels. But Trump’s tariffs threaten that strategy, and other nations may follow suit to stop Chinese exports flooding the world. (…)

For Xi, a healthy industrial sector is also key to producing weapons and energy. Solar panels and batteries, for instance, could reduce reliance on imported fossil fuels if the US and its allies ever attempt to cut off supplies in any war over Taiwan — long the biggest flashpoint between the US and China. (…)

In China’s eyes, Trump is simply more honest than other administrations about America’s desire for hegemony.

The US has a long history of ignoring international rules that conflict with its strategic interests, a version of American exceptionalism that Chinese officials regularly criticize. Even so, the US has at least been able to argue that its rule-breaking was necessary for some greater good, that it was only trying to protect democracy against authoritarianism, keep the world safe from terrorists or quickly end a war that would otherwise kill many more people.

With Trump, even the pretension of moral authority is out the window. His United States is one where Ukraine provoked Russia into war, where European lawmakers are a bigger security threat than Russia and China, where alliances are protection rackets, where sovereignty is negotiable and where nearly any oppression of the weak can be justified in the name of national interest.

All of that fits with China’s strategic interests, including its opposition to formal military alliances, restrictions on civil liberties in the name of national security and territorial claims in the South China Sea, Taiwan and elsewhere on its periphery. (…)

Although Trump’s wrecking ball to global norms may deal some short-term blows to China, particularly on trade, ultimately he’s ushering in a much more comfortable world for the Communist Party. Trump’s threats of military and economic coercion to acquire Greenland, for example, provide Xi with a less bloody model to assert control over Taiwan than Putin’s invasion of Ukraine.

And in the overall contest for power, Xi has one major advantage over Trump: At 71, the Chinese leader is seven years younger, and he never needs to face an election.

That effectively means Xi can wait out Trump until the pendulum swings back again in the US. When it does, whoever takes over may find that “Chinese-style democracy” is the norm and “the rules-based order” has fundamentally changed, perhaps forever.

The Robots Are Coming!

Unitree Robots That Dance, Fight Earn Founder Beijing’s Acclaim DeepSeek of China’s robotics sector wants to monetize its tech

When Chinese President Xi Jinping gathered two dozen of the nation’s business leaders for a summit last week, one of the surprise attendees was a little-known, 34-year-old robot pioneer.

Wang Xingxing, chief executive officer of Unitree Robotics, was seated in the first row in front of Xi, more central than celebrated founders such as Alibaba Group Holding Ltd.’s Jack Ma and Tencent Holdings Ltd.’s Pony Ma. The country’s state media showered him with attention after the summit, which included a coveted handshake with the president.

Wang — whose startup makes robots agile enough to dance, work and perform kung fu — is having a moment. Beyond the Xi summit, Unitree was featured in a Carnegie Mellon University research project on robots that perform like Lebron James and other top athletes. Meta Platforms Inc. is discussing cooperating with the company, Bloomberg News reported. And Unitree machines joined humans for a dance extravaganza on one of China’s most prestigious programs, the official CCTV’s Super Bowl-like Lunar New Year special in late January.

Wang has said humanoid robots are evolving faster than even he expected, and such products may become widely deployed in service and manufacturing sectors by 2026 or 2027. (…)

Wang and his team have pulled off technological breakthroughs at relatively low cost — with parallels to DeepSeek’s bombshell earlier this year — raising the potential for China to field throngs of robots for industrial, commercial and even military use. (…)

“The U.S. military is exploring ways to incorporate humanoids into modern warfare, but China has already deployed armed robotics to the battlefield. If the U.S. falls further behind in such critical technology, our troops will face fatal disadvantages on the battlefield.”

In response to requests for comment, Unitree said, “Our products are made for civilian use and we don’t engage in any uses of our products for military purposes.” It also pointed to a joint statement from 2022 in which firms including Unitree and Boston Dynamics Inc. pledged not to weaponize their robots. (…)

Unitree now envisions making emerging gadgets and affordable, intelligent robots for homes, factories, and academic institutions. (…)

Its latest G1 humanoid features a price tag of $16,000 on its official website, versus the potential $20,000 to $30,000 Elon Musk may ask for Tesla’s Optimus robot in the future. (…)

Dinner is SERV’d

Serve Robotics (NASDAQ:SERV) is a new AI name coming out of Silicon Valley looking to re-shape the food delivery business. By implementing automation into deliveries through a fleet of self-driving, environment-friendly robots, Serve is slowly moving into more markets across the United States. The company already has a strong footprint in Los Angeles and last week announced a partnership with several fast-food chains in Miami that will begin utilizing Serve’s delivery robots.

Trump Sows Confusion Around Global Tariffs Timing, Scope

President Donald Trump on Wednesday gave a series of apparently contradictory answers about his plans to enact tariffs on Canada and Mexico, as well as the European Union.

Trump was asked during a Cabinet meeting on Wednesday whether he planned to move forward on imposing 25% tariffs on Canada and Mexico on March 4. Trump announced the levies earlier this month, but then subsequently agreed to a month-long delay after leaders from both countries agreed to stricter border control measures. But that delay is set to expire next week.

“I’m not stopping the tariffs,” Trump said (…).

But Trump later said that the Mexico and Canada tariffs would be implemented on April 2. It wasn’t clear if the president meant that he was giving the countries additional time, or had conflated the Canada and Mexico tariffs with a separate program, under development by the Commerce Department and US Trade Representative, that would impose so-called reciprocal tariffs on nations across the world.

Trump was also asked later about if he had decided on a specific tariff for the European Union. The president said those duties would be 25%, but then launched into remarks about tariffs on automobiles and other topics.

A White House official said later Wednesday the deadline for Canada and Mexico tariffs remains March 4 and Trump had not yet decided whether to grant another extension. A report on possible reciprocal tariffs is due at the beginning of April, and those duties could hit Canada and Mexico, but are still separate from the import taxes Trump has threatened related to drug trafficking and illegal immigration, the official said.

Trump’s proposal for a 25% tariff on the EU is new but all options are being considered on whether those would affect all exports from the bloc or only certain products or sectors, and no decisions have been made, the official added. (…)

Trump and other administration officials have previously given contradictory answers about whether the 25% Mexico and Canada tariffs would be on top of the so-called reciprocal tariffs, which are pegged to tariff and non-tariff barriers imposed on US goods, or incorporated into the program set to hit in April.

“The tariffs go on, not all of them, but a lot of them,” Trump said Wednesday of the April deadline. “And I think you’re going to see something that’s going to be amazing.”

Commerce Secretary Howard Lutnick interjected to say Canada and Mexico were given a 30-day reprieve to prove they were successfully stopping the flow of migrants and fentanyl into the US, and “if they have” then Trump would “give them a pause or he won’t.”

“It’s going to be hard to satisfy,” Trump added, suggesting again that the North America tariffs could hit next week.

In addition to his Canada and Mexico tariffs and worldwide reciprocal tariffs, Trump has previously promised sectoral tariffs on imports of lumber, automobiles, semiconductors, and drugs, among other goods. It again was not clear if Trump on Wednesday was referencing those tariffs — which he has previously said would be at the 25% level — when talkinmg about European duties or an additional tax on EU goods.

Trump did say he viewed the EU as “a different kind of case” from other situations because he viewed the group as having been “formed in order to screw the United States.”

“They’ve really taken advantage of us in a different way,” Trump said.

Amazing indeed, but not amusing.

Navigating Tariffs

Goldman Sachs:

(…)Tariffs affect US imports, exports, and the trade balance in three key ways. First, tariffs lower US imports from the rest of the world because they increase import costs. If other countries retaliate—as we expect they will—US exports are likely to fall too.

In Exhibit 5, we leverage estimates from two prominent studies that used detailed product-level data across countries to estimate the effects of higher tariffs on import and export demand.2 On average, these studies suggest that a 1pp tariff increase on foreign products lowers imports by about 2% and narrows the trade deficit as a share of GDP by about 0.3pp. A full retaliatory tariff lowers exports by about 1½%, or 0.2pp of GDP, offsetting much of the drag from the original tariffs and implying only a 0.1pp narrowing in the trade deficit. (…)

The second way tariffs can influence the trade balance is by changing the value of the dollar relative to foreign currencies, which can happen through a few different channels. First, lower demand for imports in the US reduces demand for foreign currency with which to buy those imports. Second, the hit to foreign exports lowers growth and reduces demand for foreign currency to invest in overseas assets. Third, higher uncertainty increases demand for the dollar as a safe-haven currency. Offsetting this, tariffs raise prices and lower real income for US consumers, which weighs on growth and the value of the dollar. (…)

Our results confirm the prediction that exchange rate changes pass through to US export prices much more quickly and to a larger extent than to US import prices, suggesting that dollar appreciation in response to tariffs weighs on exports by much more than it boosts imports.

Third, tariffs can slow domestic growth by lowering households’ purchasing power, with similar effects on foreign growth in the case of retaliation. These changes, in turn, can lead the Fed and foreign central banks to respond by changing the policy rate, which feeds back into the exchange rate and shifts capital flows and the trade balance.

(…) the model suggests that tariffs will likely have a modest effect on the trade balance; that a tariff shock eventually weighs on both US and foreign growth; and that dollar invoicing of international trade introduces some asymmetry between the US and the rest of the world, even in the case of retaliatory tariffs. (…)

Taken together, we expect the trade balance to narrow only modestly over the next year, going from 3.2% of GDP in 2024Q4 to around 3% in 2026Q1 (left side of Exhibit 10). The trade balance could narrow further if other countries do not retaliate against US tariff increases or if the dollar appreciates by less than we expect. On the flip side, US growth outperformance and further dollar appreciation would boost imports relative to exports and widen the trade balance, though we note that the ultimate effects of tariffs on US vs. global growth are ambiguous.

Even if tariffs have only a limited impact on the trade balance, we expect them to unambiguously lower the overall volume of trade, pushing down exports and imports as a share of GDP by 1pp each (right side of Exhibit 10).

But models do not account for second order effects like the “beaver slap”:

Buy Canada, Bye America’: Trump’s Taunts Spur Fury in the North Grocery stores are promoting homegrown produce to consumers as 85% of Canadians hunt for alternatives to US goods.

In Canadian grocery stores, US-grown produce is wilting on the shelves. Local executives are scouring wine lists over dinner to avoid ordering California pinot. And in Toronto, a 73-pound Great Pyrenees-Poodle mix named Izzy is no longer allowed to eat American dog food.

As US President Donald Trump has threatened tariffs, made 51st state jabs and referred to the country’s prime minister as “Governor Trudeau,” furious Canadian consumers have turned into vindictive shoppers: American-made products are out; everything else is in.

It’s a significant shift for a country that purchases almost as much in US goods each year as the entire European Union — a total of $349.4 billion in 2024, according to the US Department of Commerce. Canada has also been the largest source of foreign tourists to the US, according to the US Travel Association, with travelers spending $20.5 billion last year. Now, many are cancelling trips. (…)

A survey of 3,310 Canadians by the Vancouver-based research firm last week found that 85% of people plan to replace US products with alternatives. Nearly half of respondents said they would change their travel plans to avoid the country. (…)

Meanwhile, one of the country’s largest law firms, Fasken Martineau DuMoulin, lost C$1 million ($699,000) in deposits by ripping up plans to bring its lawyers to Las Vegas, according to a Globe and Mail report.

Canadian airlines also have begun to scale back flights to the US in anticipation of falling demand. (…)

“Donald Trump has the ability to get people in other countries upset quite easily,” said David Soberman, a strategic marketing professor at the University of Toronto, who expects a similar reaction from consumers in Europe and Asia. Companies with executives aligned with Trump, like Elon Musk’s Tesla Inc., could face a particularly sharp backlash.

Tesla sales plunged 45% last month across Europe as other EV makers saw a surge in demand. Chrystia Freeland, who’s in the race to become Canada’s next prime minister, has already floated the idea of applying a 100% tariff on the company’s electric vehicles. (…)

“We want to keep our economic sovereignty,” said Christopher Dip, a Montreal-based engineer who developed an app called Buy Beaver that scans barcodes to tell consumers whether a product is Canadian. Dip said it’s the fastest-growing app he and his business partner have developed, garnering 35,000 downloads in two weeks. (…)

To stick to their principles, Canadians will have to make some sacrifices, not least on cost. (…) Still, furious Canadians said it’s worth the extra money. (…)

Dockworkers Approve Labor Deal Six-year contract includes a 62% pay raise and protections against fully automated machinery at East Coast and Gulf Coast ports

(…) The October walkout ended after Biden-administration officials intervened and helped broker a tentative deal that raised the base hourly rate for ILA port workers to $63 from $39 over six years.

That left the union and the United States Maritime Alliance, which represents port employers and ocean carriers, to negotiate other issues such as benefits and the contentious topic of automation on the docks.

President Trump, following his election victory in November, threw his weight behind the union. Trump said he opposed automation and encouraged employers to invest in wages instead of machinery. (…)

ILA officials say the contract will cost employers a total of roughly $35 billion, almost double the sum for the last multiyear deal. They say the agreement includes important provisions that block the use of fully automated cranes at ports.

Employers say the deal allows them to more quickly roll out technologies that will help them move larger cargo volumes more efficiently across the docks. They also secured a commitment from the union to crack down on absenteeism when workers either don’t commit to working a needed shift or don’t show up to assigned jobs. (…)

Number of 401(k) Millionaires Rose 27% in 2024, Fidelity Says The surging stock market helped increase the number of retirement accounts with seven figures.

The number of 401(k) accounts with balances of $1 million or more at Fidelity Investments rose 27% to 537,000 in 2024, driven by a banner year in the stock market, the company said. (…)

About 60% of Americans have access to 401(k)-type plans, and the vast majority of accounts have far less than $1 million. In fact, the average balance at Fidelity was $131,700 at year end. However, contribution rates have remained steady. (…)

Gen Z savers, the oldest of whom are now 28, were no savings slouches, either. Members of that generation who have contributed to their 401(k) for five years saw average balances rise 66% to reach $52,900. Such a huge jump is likely due to having a high proportion of their savings in equities.

Overall, almost 40% of retirement savers bumped up their contribution rate last year, for an average increase of 2.9%. A chunk of that likely came from the use of auto-escalation plans, which automatically raise an employee’s contribution rate by 1% a year. About 90% of savers got a contribution from their employer, Fidelity said.