By Peter Kenter
April 11, 2025
Excerpt from article:
Steve Johnston says he doesn’t enjoy spreading the blame with his message that the imposition of recent U.S. tariffs is only aggravating the effect of self-imposed stagflation policies that Canadian politicians have embraced for years. Worse, he sees the tariffs as just the beginning of an elaborate U.S. policy designed to siphon global investment capital from trading partners to reindustrialize America.
“We’ve been in stagflation—above-trend inflation, below-trend growth—for some time,” says Johnston, the director of Calgary- and Toronto-based private equity firm Omnigence Asset Management. “Canada has growth problems due to capital flight, a lack of capital investment in productive assets, and an overinvestment—about 40 per cent of fixed capital—in non-productive residential real estate. U.S tariffs are only the straw that breaks the camel’s back. They’re going to make Canadian currency structurally weaker and drive even more investment capital out of the Canadian market.”
Yes, tariffs on Canadian exports are a significant concern, but there’s little to be gained by speculating where they will go after the latest 90-day pause, or why the U.S. didn’t give Canada the same blanket 10 per cent deal it gave other countries, Johnston says, (China, now facing U.S. tariffs of 104 per cent, is the notable exception.) In his view, even if tariffs were to go away completely, it wouldn’t fix what’s wrong with the Canadian economy. If President Donald Trump remains committed to a reindustrialization strategy, Johnston notes, the U.S. can also go beyond tariffs, using additional tax and regulatory tools at its disposal to make it happen.
Original article here