Good morning. I’m Sierra Bein, The Globe’s newsletter editor. Canadian manufacturers are strategizing for Donald Trump’s promised tariffs, or at least for a few tumultuous trade years. More that further down, but first:
In the news
Canada Post has presented the union representing about 55,000 striking postal workers with a framework to reach negotiated agreements, the corporation said.
Investors are fleeing the preconstruction condo market, as units no longer soar in value every year and rent no longer covering the cost of loan payments and other expenses.
Paladin Energy’s proposed acquisition of Canadian uranium development company Fission Uranium is hanging in the balance amid a deepening national security probe and a punishing Paladin stock selloff that has spooked investors.
Canadian media companies, including the CBC and The Globe and Mail, have filed a lawsuit against OpenAI that alleges the company is infringing on copyright by unlawfully scraping news articles to build its models.
Happening today
- S&P Global Manufacturing PMI for November in both Canada and the U.S. Also, November auto sales.
- It’s Cyber Monday, but you already knew that.
Kaycee Vasudeva, owner of auto parts plant Ultra-Form Manufacturing Co Ltd.Christopher Katsarov/The Globe and Mail
In focus
Trade troubles
Some companies are having deja vu, while others are still figuring out what to do. With his return to the White House just around the corner, U.S. president-elect Donald Trump is already sending shockwaves through the Canadian business community.
Even though many experts are skeptical that the 25-per-cent tariff promise will become reality, companies are starting to prepare. Small- and mid-sized manufacturers are especially vulnerable to steep tariffs because many of them have become tightly integrated with the U.S. market over three decades of free trade.
The Globe and Mail spoke with five executives about how they’re strategizing for Trump 2.0. Here’s some of what they had to say.
Two employees load gloves at the start of the dip production line at Superior Glove's headquarters.Carlos Osorio/The Globe and Mail
Superior Glove Works
When Trump made his tariff intentions known, Tony Geng, the owner of Superior Glove Works Ltd., had flashbacks to 2017 and the early days (and sleepless nights) of the first Trump administration.
Acton, Ont.-based Superior Glove has three production facilities in Canada that collectively employ about 450 people. The U.S. is by far the company’s biggest market, with 70 per cent of the work and safety gloves it makes destined for south of the border. The company has spent the past year building its first American manufacturing facility in North Carolina. That means those gloves can bypass any potential tariffs.
“In hindsight, I am extra glad we started this plan over a year ago so we aren’t totally behind the eight-ball, though it really does seem like the end result of this, if it were to happen, is to drive business to China rather than more business and manufacturing jobs to the States,” he said.
Ultra-Form Manufacturing
Kacee Vasudeva’s company turns chunks of steel and aluminum into fittings and components used in a car’s fluid systems. Three-quarters of the products are shipped eight times a week to parts makers in the U.S. and Mexico, where they are added to other components and sold to automakers for final assembly.
The integrated nature of auto-making underpins the trade agreement upon which North America has relied for mostly tariff-free commerce.
“We are like two brothers here,” said Vasudeva. “We are not different. We pay the same wages. We have the same rules and laws. We have to be fair. Why we are being punished? If they have to punish [a trade partner], they should punish Mexico and China.”
Arctic Snowplows
Others such as Jim Estill feel Canadian policymakers should retaliate if the U.S. enacts steep tariffs. His company, Arctic Snowplows, would refocus its sales efforts on Canada and not spend any marketing dollars in the U.S. It’s possible the company could offset the loss of U.S. revenue with more business in Canada, he said.
Estill worries the uncertain policy landscape makes it difficult for business owners to invest in their operations, which can ripple through the economy.
“If everybody has the same tax, then it’s kind of a level playing field and nothing much changes except prices to consumers,” he said.
AceTronic Industrial Controls
Kim Thiara’s company makes machinery and parts for manufacturers of plastic goods. Her customers make food packaging, car interiors and components, medical equipment and other products, most of which are exported to the U.S.
She expected another round of protectionism if Trump was elected, but is optimistic the levy will not be as high as 25 per cent.
“This isn’t our first storm. And this, too, shall pass,” Thiara said. “I think he’s just kind of saying that now and just preparing us for what may be coming down the road.”
Brink Group of Companies
After 50 years in the softwood lumber business, John Brink is not worried about his own company’s survival. He has learned to keep a tight budget and an eye on the markets. But the inflation that would follow such a steep tariff, he said, is the most troubling part.
The northern B.C.-based group employs around 400 people and exports more than 90 per cent of its product, mainly lumber, to the U.S. Brink predicts the cost of two-by-fours would soar, driving up U.S. home prices.
“I’ve dealt with everything from recessions through inflation to duties and all that combined at times, but we survived it all. Now we’ve got a whole combination of all the above,” he said.
Charted
Stock markets outlook for 2025
At ROB Magazine, our economics team looks at the best- and worst-case scenarios for 2025. When it comes to the stock market, there’s a few things to consider.
Upside: If Trump moves to slash America’s corporate tax rate as quickly as he’s promised, equities are likely to rally as corporations eye fatter bottom lines. Even if Canadian companies don’t directly benefit, the TSX may get pulled along for the ride.
Downside: Longstanding predictions about an imminent U.S. recession may finally prove right as cracks in the American economy mount. In October, Goldman Sachs warned the era of double-digit stock market growth is over.
Quoted
What does the AIMCo shakeup mean for pensions?
The Globe and Mail
AIMCo is responsible for managing hundreds of thousands of public-sector pensions, totalling more than $169-billion. On today’s episode of The Decibel podcast, institutional investing reporter James Bradshaw explains the shakeup at AIMCo, why Stephen Harper is taking over, and the reason the separation of government from public pension funds is at stake. Listen to the full episode.
The outlook
On our radar and reading list
Suing for bread: Grupo Bimbo is suing Maple Leaf Foods, as well as some of the company’s senior executives and directors, seeking more than $2-billion in damages related to an alleged bread price-fixing probe.
Fighting for bread: As the Canada Post strike enters its third week, there is little sign that the postal service and the union representing these workers are close to reaching a deal.
Beware the bezzle: That is the playful term that the great Canadian-American economist John Kenneth Galbraith used to describe the amount of illusionary wealth in an economy.
Bye bye, banana: A cryptocurrency entrepreneur who bought a piece of conceptual art consisting of a simple banana, duct-taped to a wall, for $6.2-million last week ate the fruit in Hong Kong.
Morning update
Global markets were mixed, with Asian shares getting a boost as China reported encouraging manufacturing data. Wall Street futures were in negative territory, ahead of a slate of economic data later this week, while TSX futures pointed higher as crude prices climbed.
Overseas, the pan-European STOXX 600 was up 0.56 per cent in morning trading. Britain’s FTSE 100 rose 0.35 per cent, Germany’s DAX gained 1.18 per cent and France’s CAC 40 advanced 0.08 per cent.
In Asia, Japan’s Nikkei closed 0.8 per cent higher, while Hong Kong’s Hang Seng gained 0.65 per cent.
The Canadian dollar traded at 71.23 U.S. cents.