Open this photo in gallery:Commercial trucks in Detroit drive towards the Ambassador Bridge to Windsor, Ont., on Feb. 1.Rebecca Cook/ReutersPlease log in to bookmark this story.Starting immediately, all your near-to medium-term financial decisions need a Donald Trump overlay.Sorry to put that image in your head, but rising risk in the economy calls for de-risking at home.The U.S.-Canada tariff war threatens to rob us of economic prosperity and make us poorer. If it lasts more than a week or two, jobs could be lost and hours cut. Investments and retirement savings could take a temporary hit, homes could fall in value and some food and other consumer goods may get more expensive. Prepare for weird shortages, and probably some price spikes.As mentioned in my personal finance briefing on Mr. Trump’s inauguration day, having money parked safely for emergencies is paramount right now. But there’s more we need to do.We have to put ourselves on an economic war footing that accepts sacrifice in the weeks and months to come. Politicians and business and labour leaders must earn our faith in them for the hard bargaining ahead. Our contribution is to be realistic about potential costs at the household level, and plan accordingly.The winners of the last economic disaster are badly needed to help us weather the latest catastrophe. These would be the people who during the upheaval of the pandemic were able to pile up billions of dollars in savings.A lot of that money is still sitting in bank savings accounts, savings products for investors and guaranteed investment certificates at interest rates that are well down from pandemic peaks. Maybe it’s a stretch, but it’s almost as if this money is being hoarded right now. A patriotic alternative is to start pouring it into the economy.If you have the bucks, support local and national businesses. Buy some meals from restaurants, drink Canadian wine, beer and booze, reno your family room or travel domestically this summer.Maybe you feel you’ve been nagged to buy Canadian in the past. Now, it’s an economic necessity. Check the Tuesday edition of the Carrick on Money newsletter for resources to find Canadian products.Some households are still suffering from the economic after-effects of the pandemic, notably the run-up in food costs in recent years and increases in costs for mortgages and other borrowing. They need to think of ways of building financial self-sufficiency. Owe less, save more, take fewer chances. Live on a pay-as-you-go basis, while keeping a cash reserve where possible.Enduring the economic blowback of tariffs is something we’ll all have to contend with. The federal government is planning a multi-billion financial assistance package for workers and businesses affected by tariffs, similar to what was offered in the pandemic. Unfortunately, the cost of this assistance will put further strain on federal finances and potentially require hard spending decisions ahead.U.S. tariffs will likely push
Dom. Feb 2nd, 2025
