Winnipeg Free Press

Winnipeg Free Press (Newspaper) - January 22, 2025, Winnipeg, Manitoba REGISTER NOW AT JOINTHECHAMBER.CA Canada and the United States share a deeply integrated economy, characterized by extensive trade, investment, and cross-border collaboration. The possibility of tariffs is the most urgent threat facing businesses today: they endanger the economic stability of both countries and jeopardize the jobs of Canadians and Americans alike. Join us on February 5 for breakfast, networking and a chance to hear from from Candace Laing, President and CEO of the Canadian Chamber of Commerce. She will share insights on the evolving landscape of the Canada- U.S. economic relationship and what the threat of tariffs mean for businesses across Manitoba and Canada. SERIES SUPPORTED BY: Canada’s Economic Outlook and the Evolving Canada-U.S. Economic Relationship Candace Laing President and CEO, Canadian Chamber of Commerce Wednesday, February 5 7:30 - 9:30 AM Fairmont Winnipeg EVENT SPONSORED BY: WITH KEYNOTE SPEAKER: WINNIPEGFREEPRESS.COM ● B7 BUSINESS WEDNESDAY, JANUARY 22, 2025 Inflation ticks down to 1.8% in December, economists expect further BoC rate cuts OTTAWA — Canada’s annual inflation rate ticked lower in December, thanks in part to Ottawa’s temporary GST tax break, but economists still see interest rate cuts on the horizon as potential tariffs loom. Statistics Canada said Tuesday the annual in- flation reading for December came in at 1.8 per cent, down from 1.9 per cent in November. The report noted restaurant food purchases and alcohol bought from stores contributed the most to the deceleration — items which were subject to the tax reprieve, along with children’s clothes and toys, among others. Without the tax break, the agency said the an- nual inflation rate would have risen to 2.3 per cent, driven in part by upward pressure from a month-over-month jump in accommodation costs in British Columbia — coinciding with Taylor Swift wrapping up her Eras Tour in Vancouver in early December. “Looking beyond the tax cut, it was not a great report, frankly, from the inflation standpoint,” BMO chief economist Doug Porter said. “December is a tricky month because typical- ly you get discounting around Boxing Day sales, and there might be some carryover from Black Friday sales.” Statistics Canada noted prices included in its consumer price index are final prices, including all excise and other taxes. With the federal tax break set to last until Feb. 15, the impact of the measure will likely continue to show through in the January and February in- flation reports. “As the tax break came into affect mid-month, a further impact is expected to be seen in January when prices during the full month were subject to the lower rate,” CIBC senior economist Andrew Grantham said in a note. Growth in grocery prices also decelerated from November to 1.9 per cent year-over-year, from 2.6 per cent. Gas prices rose 3.5 per cent year-over-year, in part because what’s know as the “base-year ef- fect” in which prices declined 4.4 per cent in De- cember 2023. Shelter cost inflation ticked down slightly in De- cember to 4.5 per cent, though remains elevated, while rent prices rose at a slower pace year-over- year in December, at 7.1 per cent. Attention now turns to the Bank of Canada, which is set to make an interest rate decision next week. Many economists have called for another quar- ter-percentage point rate cut, following a half- point cut in December. Porter said weighing on the central bank’s decision will be the threat of 25 per cent tariffs from U.S. President Donald Trump. The president mused Monday night about hitting Canada with tariffs on Feb. 1. The date comes after Trump officials, speak- ing anonymously, suggested to reporters that the Republican president would only sign a memoran- dum telling federal agencies to study trade issues, including alleged unfair trade and currency prac- tices by Canada, Mexico and China. “It’s almost like we need two forecasts: one with tariffs and one without,” Porter said. “In the mild scenario where Canada is affected by modest or no tariffs from the U.S., we were assuming three rate cuts through the rest of the year, taking the overnight rate down to 2.5 per cent. “I think we have to revisit the entire forecast if we are indeed subject to 25 per cent tariffs. I think we would be looking at deeper cuts by the Bank of Canada.” TD Economics reiterated its expectation of a quarter-percentage point cut at “every other (rate) decision in 2025.” Meanwhile, Derek Holt, head of capital mar- kets economics at Scotiabank, said he thinks BoC should keep its policy interest rate on hold next week, considering consumption has rebounded on a per-capita basis and the threat of tariffs. — The Canadian Press NICK MURRAY Canada's inflation rate 12-month % change in prices '24'23'22'21'20'19 -2.0% 0% 2.0% 4.0% 6.0% 8.0% 10.0% Source: Statistics Canada The Canadian Press with LocalFocus Dec. 1.8% OTTAWA — Canada’s annual inflation rate was 1.8 per cent in December, Statistics Canada says. Here’s what happened in the provinces (previous month in brackets): — Newfoundland and Labrador: 0.6 per cent (1.2) — Prince Edward Island: 0.4 per cent (1.8) — Nova Scotia: 0.9 per cent (1.7) — New Brunswick: 1.6 per cent (2.0) — Quebec: 1.6 per cent (1.5) — Ontario: 1.7 per cent (1.8) — Manitoba: 1.1 per cent (0.9) — Saskatchewan: 1.8 per cent (1.6) — Alberta: 2.5 per cent (2.8) — British Columbia: 2.6 per cent (2.3) Rates for major cities (figures may have fluctuated widely because they are based on small statistical samples): — Halifax: 1.3 per cent (2.1) — Montreal: 2.0 per cent (1.9) — Ottawa: 1.8 per cent (1.9) — Toronto: 1.8 per cent (2.3) — Winnipeg: 1.2 per cent (1.2) — Regina: 2.1 per cent (2.1) — Saskatoon: 2.2 per cent (1.8) — Edmonton: 2.7 per cent (2.7) — Calgary: 2.4 per cent (3.0) — Vancouver: 3.2 per cent (2.3) Sweeping tariffs could be 3% hit to economy: report TORONTO — A CIBC report says sweep- ing tariffs imposed by the U.S. could cost the Canadian economy as much as 3.25 per cent, even factoring in possible exemptions for the oil and gas sector. An analysis published Tuesday exam- ined four potential scenarios in which U.S. President Donald Trump slaps new taxes on goods imported from Canada, ranging from 10 to 20 per cent and with possible carve-outs for key industries. Speaking with reporters Monday, Trump said he’s thinking about hitting Canada and Mexico with 25 per cent tariffs on Feb. 1. Prime Minister Justin Trudeau has said Canada would respond and that “everything is on the table.” The CIBC report said a 20 per cent tariff that excludes commodities — which make up around 46 per cent of Canadian exports to the U.S. — would still result in a GDP hit of 3.25 per cent. Under a more conservative scenario where only a 10 per cent tariff is ap- plied and excludes both commodities and the auto sector, the impact to the Canadian economy would be around 1.35 per cent. That hypothetical would exempt roughly 60 per cent of Can- adian exports to the U.S. The report suggested the Trump ad- ministration might not want to tax those sectors as they rely heavily on close in- tegration with Canadian counterparts. It noted the oil and gas and auto sectors represent 28 and 14 per cent, respective- ly, of total Canadian exports to the U.S. “Doing so would come at a key cost to American jobs, contradict Trump’s cheap energy initiatives, and material- ly increase inflation,” it said. “Realistically, we do not believe a permanent 25 per cent sweeping tariff is a credible threat in the immediate fu- ture — implementation hurdles, nego- tiation, and the high risk of retaliation in this scenario makes it little feasible that a trade war will get that far — at least in our opinion anyways.” Trump has appeared undeterred in previous remarks about his tariff threat, telling reporters earlier this month “we don’t need their cars and we don’t need the other products.” — The Canadian Press SAMMY HUDES TikTok’s future uncertain, ‘throwing money’ at alternatives may not help T IKTOK is dead. Long live TikTok. After being effectively out- lawed in the U.S. after a Supreme Court ruling, the viral video platform briefly shut down late Saturday. A head-spinning series of events cul- minated on Sunday as U.S. President Donald Trump vowed to take execu- tive action that allows TikTok to turn its lights back on, at least for the time being. Yet, as questions swirl about wheth- er the newly inaugurated president has the authority to give the Chinese-owned company a reprieve, TikTok’s long- term fate in the U.S. remains in limbo. Policymakers continue to view it as a national security threat, and jittery in- fluencers have flocked to TikTok-esque facsimiles to preserve their livelihoods. TikTok is more than just a social media platform: it’s a thriving business model and a centrepiece of a creator economy. Millions of influencers have their livelihoods tied to the app, which gen- erates billions in revenue and has well over a billion global active users. “If TikTok were to shut down, it would be a huge loss for American brands, retailers, creators and shop- pers themselves,” according to Zarina Stanford, chief marketing officer at Ba- zaarvoice, a retail technology company based in Austin, Texas. Social media monetization has be- come a “foundational part of e-com- merce,” and TikTok in particular is “integral for younger shoppers, with half of Gen Z using it for product dis- covery,” Stanford said. The dynamic helps explain why so- cial media was replete with borderline inconsolable TikTok users despondent over the prospect of its going dark — and why billionaire investor Mark Cu- ban issued a call late last week to fund an alternative that could replace Tik- Tok, akin to how Bluesky has attempted to challenge the Elon Musk-owned X platform. For influencers who make a living off social media, “the two clear paths with least friction to move to from Tik- Tok are Instagram Reels, and YouTube shorts,” Simon Trask, a marketing and advertising veteran based in the Dal- las-Fort Worth area, said in an email. “Many TikTok creators already cross-post their TikTok original con- tent to one or both of these platforms, so it will just be a matter of comfort level and business strategy which one they go with.” Trask added that YouTube was the better option given its massive reach and monetization infrastructure. Last week, as TikTok moved closer to domestic doomsday, users flocked to alternative platforms like Red Note, an- other China-based app. It raised the question about wheth- er anything can replace TikTok in the hearts and minds of social media-de- pendent Americans, who already have several options at their disposal, such as Instagram, Facebook, X and You- Tube. “There (are) plenty of opportunities for new platforms … and there are plenty of investors like Cuban out there ready to toss some money at it,” said Jacob Barnes, co-founder of FlowS- avvy. However, Barnes said most of those alternatives pale in comparison to Tik- Tok’s “uncanny” algorithm — widely perceived as a key reason behind owner Bytedance’s refusal to divest. No TikTok competitor — including Instagram Reels or even X, with its stranglehold on public discourse — has been successful in dethroning the viral video app. “Some social platforms are good at this, but none on the level of TikTok. If a new platform can nail that and bring something fresh to the scene, it could take off on the same level,” Barnes add- ed. Red Note caught fire immediately among influencers seeking an alterna- tive amid TikTok’s potential demise. However, its Chinese ownership has led several observers to warn about loom- ing risks. Paromita Pain, an associate profes- sor of global media at University of Nevada, Reno, said there were both “cultural and practical concerns about creators and audiences gravitating to- ward Red Note, or any other Chinese alternative, in the event of TikTok’s ab- sence in the U.S.” Pain added: “These concerns would be rooted in geopolitical, ethical, and practical considerations, including data security and trust. The very issues that led to TikTok’s scrutiny — national security, data privacy, and foreign in- fluence — would likely extend to Red Note.” — Dallas Morning News JAVIER E. DAVID GREG BAKER / AFP/GETTY IMAGES FILES The headquarters of ByteDance, the parent company of video sharing app TikTok, in Beijing. ;