The American and Canadian flags fly at the Ambassador Bridge border crossing in Windsor, Ontario.GEOFF ROBINS/AFP/Getty Images
Introducing the Bye, America plan for your spending in 2025.
When deciding on what to spend your money on and where, take a pass on the United States if it proceeds with tariffs on Canadian exports.
There’s a Buy America aspect to the tariffs – encourage Americans to buy and build domestically by jacking up the price of imports. But these tariffs amount to blunt force trauma on a friend and neighbour. Boycotting the U.S. until it takes tariffs off the table is a way of pushing back, and maybe saving money.
Travelling in Canada instead of the U.S. right now saves you about 40 cents per dollar spent. That’s more or less the foreign exchange cost right now for Canadians paying for things priced in U.S. dollars, and it could get worse if tariffs have the expected impact on our economy.
We lack warm-weather destinations in winter, so how about Mexico, Costa Rica or Guatemala? The Canadian dollar has increased in value by about 12.5 per cent against the Mexican peso in the past 12 months. Against the euro, our dollar has declined only about 2 per cent in the past year.
Travelling in Canada saves you money on foreign exchange, and it helps support our economy in trying times. The thing about tariffs is that they have a way of tainting everything they touch in an economic sense.
U.S. tariffs on Canadian exports mean less demand for our goods, and that in turn raises the risk of layoffs and closures. If the Canadian government responds with tariffs on goods imported from the U.S., these items become more expensive for Canadian consumers.
The Bye, America plan means finding alternatives for U.S. products you normally buy. Ontario Premier Doug Ford has shown some leadership here by saying he’s asked provincially run liquor stores to clear U.S. booze off the shelves if tariffs are introduced.
The Premier singled out bourbon, a.k.a. American whisky. I’m an avid bourbon drinker, but I’ll be looking in Ontario liquor stores for Canadian whisky alternatives. One I tried recently and liked a lot is Alberta Premium Cask Strength Rye.
My wife and I went to the bourbon heartland of Kentucky with friends several years back and had a blast. Same for the seven visits we made to the U.S. in the past two years – Chicago, New York, Honolulu, Denver, Albuquerque, New Orleans and more. For now, my wife and I will be looking at other places to visit, notably the Canadian North.
It’s simply not possible for Canadians to completely stop buying U.S. products, especially if you include media and entertainment. Still, you can make choices on a spot basis. Mexican berries over American? CBC Gem over Netflix? Stop rolling your eyes and give it a try.
One of the most notable ways our finances are intertwined with the U.S. is investing. A sensibly diversified portfolio has to include significant exposure to U.S. stocks as well as Canadian and international ones, plus bonds. For two reasons, it makes no sense to dump American stocks.
The first is that no one will notice or care if you sell your Apple Inc. shares or your S&P 500 exchange-traded fund. Kentucky will feel it if Ontario’s LCBO stores stop buying bourbon, but Apple is way too big for its share price to be influenced by some selling by Canadian investors. The LCBO is a significant global buyer of liquor, so it has some muscle.
The second reason to keep your U.S. stocks is that you could end up hurting yourself most. Selling in non-registered accounts could generate taxable capital gains. You might also undermine your portfolio diversification in a way that becomes apparent in later years through disappointing performance.
Selling U.S. stocks now and buying them back after the current trade dispute is over should especially be avoided, even if you think the U.S. stock market is overvalued. Trying to time moves in and out of the market mostly goes wrong for investors.
U.S. President Donald Trump said this week that 25-per-cent tariffs on Canadian and Mexican goods could be introduced Feb. 1. You have a little more than a week to plan your Bye, America strategy.
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