US-Canada Trade Squabble: The hidden economic storm is brewing

BY JAY BRIJPAUL

The ongoing trade spat between the USA and Canada has captured the media. Would Ontario’s Premier, Doug Ford, cut off electricity to the U.S.? Could Donald Trump seriously consider annexing Canada? While these headlines spark entertaining debates, they may also serve as a smokescreen for more profound economic challenges brewing beneath.

This tariff war is a warning: brace yourself for financial turbulence. Rising living costs, inflation spikes, and mounting debt make it increasingly difficult for families to afford necessities. In December and January, inflation surged, prompting temporary relief measures like the HST break, but these band-aid solutions won’t prevent the storm.

A mortgage crisis is unfolding, and it’s hitting homeowners hard. Despite recent interest rate cuts, many borrowers have seen their mortgage payments soar. During the pandemic, fixed-payment variable-rate mortgages were popular. However, as borrowing costs climb, some homeowners are experiencing negative amortization, where their outstanding mortgage balance increases because their monthly payments don’t cover the interest.

“The war on protectionism is the tip of the iceberg—rising costs, mounting debt, and a changing market command a new financial manifesto.”

Those who locked in low mortgage rates during the pandemic are now forced to renew at significantly higher rates—ones they cannot afford. Selling might seem like an escape, but for those who bought during the housing boom, their mortgage often exceeds their home’s current market value. Selling at a loss means covering the shortfall out of pocket, which many homeowners can’t do. With higher monthly costs and little to no equity, some may walk away, leaving lenders to pick up the pieces.

Meanwhile, the Greater Toronto Area (GTA) has plenty of newly constructed condos—many are: tiny, overpriced, and failing to attract buyers. An oversupply coupled with weak demand drives down prices, affecting homeowners hoping to sell and ascend the property ladder.

Canada’s national debt is soaring, the dollar is weakening, and the only realistic response is higher taxes for everyone. Cybercrime is rising, insurance costs are climbing, and job prospects are dim. The cost of living isn’t just increasing—it’s racing ahead, leaving many Canadians struggling to keep up.

The tariff back-and-forth will persist, and if we get too caught up in the spectacle, we’ll lose track of the bigger picture. Hidden opportunities lie beyond the clouds of uncertainty. It’s time to pick up the financial telescope and start looking ahead.

Interest rates will likely drop further to stimulate the market, making now a prime time to plan. If you’re mortgage-free, consider leveraging your home equity to invest in an income-generating property. You can double your financial worth in ten years. It is a buyer’s market, and you can strike a hard bargain with the seller.

If your mortgage is up for renewal, a variable-rate mortgage might be wise, allowing you to lock in when rates become favourable. If your mortgage matures in a few years, explore negotiating a blended rate—partly at your current lower rate and the remainder at today’s market rate—to ease the transition.

The market suffered from tariff tensions, but savvy investors seized the opportunity to scoop up undervalued stocks. To build financial security, maximize your Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), and First-Time Home Buyers Savings Account.

Credit card debt can be a financial nightmare. Consider consolidating it into your mortgage if you own a home and struggle with high-interest debt.

Adding a secondary suite to your home can create a valuable income stream. Not only does this help pay down your mortgage faster, but it also offers an affordable housing option for adult children saving for a home.

Challenging times lie ahead. Inflation is set to rise, and tariffs will serve as the convenient scapegoat. What’s the best way to weather the storm? Spend wisely, save diligently, and invest thoughtfully. The rules of the financial landscape are evolving, but you can emerge triumphant with the right mindset and a proactive strategy. Don’t focus on the storm—navigate through it. The future belongs to those who plan.