Wherever you live, you live near a border. If it is country, there is another country on the other side. In the region you live, you will vote in a particular area, those lines change with population changes and it has to do where you live. If you are near one of the borders, it is entirely possible you cross it and feel connected to another area because it is where you work, you shop, do recreation, but you do something outside where you live. The connection allows you have some sort of roots and you do not necessarily wish to change. In many ways, President Trump’s proposed tariffs are the same thing.

On of the good things about tariffs is it gives a very good understanding of how the economic flows of the country work or do not work, according to your viewpoint.

In an article by Niall McGee, Emma Graney, Nicholas Van Praet and Brent Jang of the Globe and Mail, they examined how Canada views the tariffs and what changes could they make, if they had to.

Canada is dependent of US markets – 95% of Canadian crude oil goes to the US; also 56% of minerals are shipped to the US to be refined and manufactured into value added products.

Canada’s iron and ore industry is the single biggest part of the Canada’s minerals and metals export trade accounting for $20 billion in 2023. 99% of Canada’s steel exports go to the US.

Canada’s aluminum producers send 90% of their product to the US, but the majority is sold in ingots. In theory, because the EU has a demand for ingots, more ingots could be sold to the EU.

The nickel industry sends the nickel to smelters in the US, but they could send more to the EU because they are a net importer of the metal.

Potash and uranium are some of the critical minerals Canada supplies, the alternatives are China and Russia.

The oil industry is dependent on selling to the US, mainly to refineries near Chicago and Houston area. For a variety of reasons which has never been changed, Canadian oil is discounted when sold to the US. Canada has pipelines but they do not go from coast to coast. Many years ago, a decision was made to stop the western oil pipelines in Ontario. The province of Quebec and east received the bulk of their oil from the US and the Middle East. The reason was financial, pipelines are expensive and come at a political cost and imported oil was less expensive.

In the US, President Trump was suggested building the Keystone Pipeline is back on the drawing board. The Keystone Pipeline is designed to bring Alberta tar sands oil to a Houston area refinery. The crude is similar to which comes from Venezuela’ s oil sands.

In border towns and cities, each depend on the other country’s citizens going across on a regular basis. If it is relatively easy to cross the border as a visitor, people will go across for recreation, tourism, hospitality, shopping and the list goes on. If the border crossing becomes very difficult, it is easy to find similar activities in your own backyard, just not the same.

Linking to dividend paying stocks, when there is a crisis in any industry, the media shines a light on the economic activities of the industry. You can learn a great deal, and if you want to know more on the why, there are books on the subject. There is always a risk in depending on a single user group for your services and products. Sometimes it is wonderful, and you can build great relations; sometimes it is not. Diversification is often a very good thing to really have.

There are more questions than answers, till the next time – to raising questions.