Weekly Brief #55
Trump's 25% tariff would be detrimental to Canada... Amazon invests $4 billion in Anthropic, Databricks valued at $55 billion, Microsoft investigated by the FTC, Hyundai recalls 274k+ cars, and more.
Recently, there were delays in my post schedule. Here’s why, and here’s a little something as an apology (Black Friday special). Posts will resume as normal.
Good morning investors 👋,
Welcome back to the 55th Weekly Brief.
I’m very vocal on my majority allocation into U.S. stocks. I’m also very vocal on being a Canadian investor with that allocation. As much as I appreciate Trump for his positive influence on my stock portfolio lately, there was something he brought up this week that, as a Canadian with a dangerous obsession with economics, caught my attention.
Let’s talk about it. (11 min read)
In this issue:
🚢 Trump’s proposed 25% tariff on Canada
🧑⚖️ Microsoft investigated by the FTC
🕊️ Israel-Hezbollah ceasefire (maybe?)
FEATURED STORY
🚢 Trump’s proposed 25% tariff on Canada
This week, Trump told the world he would be placing 25% tariffs on both Canada and Mexico the same day he steps into office, effectively placing a 25% tax on everything Canada imports to the U.S., writing on Truth Social:
On January 20th, as one of my first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!
Since I’m Canadian, and since over 70% of you folks reading this are Canadian, I will be focusing my time on the potential effects of, and the reasoning behind, a 25% U.S. tariff on Canadian imports in this issue. Donald Trump made tariffs a huge point of his campaign in the U.S. election, but most believed he was referring to China almost exclusively. Heck, I believed he was just referring to China. This week, I learned a different reality.
What are the effects?
A tariff is a tax. A tax on trade between two countries. If the U.S. were to go through with a 25% tax on everything imported from Canada, it would raise the prices of everything imported by 25%. That’s the ‘simplicity of things’ when it comes to economics.
I believe many underestimate the vast amount of trade Canada and the U.S. do with one another. As of 2024, 59% of Canadian economic trade is done with the U.S. Over 75% of Canada’s total exports are sent to the southern border, most of which are oil and gas, but also vegetables, fruit, lumber, cars and car parts, concrete, steel, and so much more. Many would be surprised to hear that for many of these specific exports, the U.S. is highly dependent on Canada.
Some of the examples mentioned (estimated percentages):
Canadian oil: 60% of U.S. crude oil imports.
Canadian vegetables: 17% of U.S. vegetable imports.
Canadian lumber: 80% of U.S. lumber imports.
Canadian cars and car parts: 15% of U.S. car and car parts imports.
Canadian concrete: 13% of U.S. concrete imports.
This proposed tariff would make all of these imports 25% more expensive for American consumers. Oil, veggies at the grocery store, cars, housing construction costs (lumber and concrete), and much more would go up in price exponentially, immediately. To explain how detrimental this would be for American consumers, here’s a brief quote from a recent video by Andrew Chang explaining the topic:
The auto industry is a really good example of how damaging tariffs can be for those who have to pay them, because cars aren’t just built in one country. The engine might be built in one place, the transmission in another, then they’re assembled in yet another place — and all of these components can cross national borders multiple times before they magically turn into a car. A tariff charges a tax every time.
These tariffs would not just impact American consumers, but would seriously impact Canada’s economy. Higher costs for operating in Canada or buying from Canada would incentivize businesses to move out of Canada into the U.S., meaning lower demand, causing a sharp decline in Canadian exports, leading to a decline in economic growth, and possibly a recession.
Tariffs are almost always negative no matter the side, and usually never benefit anyone. A tariff normally leads to a retaliatory tariff, which leads to a trade war, which only further extrapolates the effects I outlined. It’s a no-win situation. It just hurts consumers and economies. Even more so for Canada.
A Canadian retaliatory tariff to a U.S. tariff is comparable to flicking a professional MMA fighter after he punches you in the face. It does nothing except agitate the MMA fighter who could leave you unconscious. Canada can’t win here. The U.S. is the largest economy, and it just so happens to be the largest trading partner with Canada. Canada is immensely dependent on the U.S., and the U.S. is dependent on Canada for many things. But add tariffs into the mix, and things change dramatically, and for the worse.
Why do this?
In his post sharing this tariff on Canada, Trump mentioned that in order to remove the tariff, Canada would have to “stop drugs, in particular fentanyl, and all illegal aliens from coming into the U.S.” from Canada. According to the Migration Policy Institute, Canadians are only responsible for 0.68% of the U.S.’s illegal alien population, and <10% of illegal drugs and substances imports into the country. Mexico is where most of these problems mainly originate from. Disregarding all of that, these still remain very weird contingencies from Trump, for a very flawed policy proposal.
My opinion is simple, like many others are saying: Trump is using this tariff as a negotiation piece for what he wants during his term. During his last term, that was precisely his use case for tariffs; something he leveraged to gain a better advantage. He used this tactic for renegotiating NAFTA, already existing tariffs, and eventually ended his term without tariffs from most countries he said would have them. It’s a political bargaining chip. Nonetheless, the effects are huge if Trump does decide to go through with this proposal. Yet, I have a strong feeling (backed by data, of course) that he won’t.
His inauguration as president is 2 months out, and this is something I’ll be paying close attention to when he’s in office. Happy investing in the meantime, and enjoy the rest of today’s issue.
FINANCE
a. 💰 Amazon invests $4 billion in Anthropic
Amazon invested $4 billion in Anthropic last Friday, doubling its position to $8 billion while continuing to remain a minority investor. Anthropic is an AI startup known mainly for its Claude chatbot. Through this investment, Anthropic will use AWS as its primary cloud provider, with Trainium and Inferentia chips to train and deploy its advanced AI models.
This partnership is yet another display of Amazon’s push into generative AI and its cloud computing dominance as it prepares for the launch of its own generative AI model, Olympus, and an AI-powered Alexa. This investment is Amazon’s largest external investment in 30 years.
Related articles:
b. 🧱 Databricks valued at $55 billion
Databricks, one of the world’s most valuable private tech companies, raised $8 billion in a new funding round this week, valuing the company at $55 billion. The round was set in place to allow employees to sell shares, easing pressure for an IPO (something still expected to occur in late 2025).
Databricks was founded in 2013 and “provides AI-powered software for enterprises like AT&T and Walgreens to manage and analyze large datasets.” I’m still not sure what they do, even with this definition, but they’re backed by Nvidia and are now a $55 billion company, so there’s that.
Related articles:
BUSINESS
c. 🧑⚖️ Microsoft investigated by the FTC
After having their rounds with Meta, Apple, and Google this year, U.S. antitrust regulators have finally turned their attention to Microsoft, with the FTC now investigating the company for potential anti-competitive practices in its cloud computing and software businesses, particularly with its many software bundles that “may disadvantage competitors.”
Microsoft’s plays a key role in supplying the U.S. government’s software, and concerns over its cybersecurity have drawn some attention. The company has managed to avoid antitrust scrutiny since the 1990s, but it seems all things must come to an end in today’s antitrust climate — crazy!
Related articles:
d. 🚘 Hyundai recalls 274,000+ cars
This Wednesday, Hyundai announced it is recalling over 274,509 SUVs and cars in the U.S. and Canada due to rearview camera image problems, where the image may not appear on the screens. The recall affects Santa Fe and Elantra models from 2021 to 2022. Dealers will replace the cameras at no cost to owners.
Hyundai said that, according to U.S. safety regulators, solder joints on a printed circuit board could develop cracks, worsening over time enough for the cameras to fall off, reducing visibility and increasing the risk of injury to pedestrians. A very niche problem, I will say.
The J. Nicholas Vroomsday Counter is now at 8.215 million.
What is the vroomsday counter? Vroomsday is doomsday but for car recalls. The vroomsday counter is the total of all cars mentioned in recalls since the inception of The J. Nicholas.
POLITICS
e. 🕊️ Israel-Hezbollah ceasefire (maybe?)
A ceasefire agreement between Lebanon and Israel was approved by both parties this week (encompassing all Lebonese people, including Hezbollah), supported by the U.S. and France, with the goal of establishing a permanent end to the war. There are a few main points to note in the agreement:
End offensive operations
Both must cease offensive military actions.
Rebuild communication
The U.S. and France will lead a forum making sure the ceasefire is implemented accordingly.
Disarm Hezbollah
Hezbollah must dismantle its military infrastructure in southern Lebanon. Lebanese forces will be in charge of the process.
Israeli withdrawal from Lebanon
Economic and civilian assistance
The U.S. and France will assist Lebanon’s economy and help bring civilians safely to their homes.
I’d recommend reading the full agreement if you want more specificity and a broader understanding, but these are the main points. The funny thing is (I guess it’s not funny, but definitely humorous), just two days after the agreement was approved, both Israel and Lebanon accused each other of violating it. This agreement is looking like a short-term band-aid for the conflict, but maybe it’s too soon to say. Let’s hope it changes with time.
Related articles:
📚 Book of the Week
⭐️ For every book purchased using the links below, 100% of affiliate commissions are donated to charity. (Amount donated so far: $31.11.)
My full bookshelf: Here.
The Worlds I See - Dr. Fei-Fei Li
Book Description:
Known to the world as the creator of ImageNet, a key catalyst of modern artificial intelligence, Dr. Li has spent more than two decades at the forefront of the field. But her career in science was improbable from the start. As immigrants, her family faced a difficult transition from China’s middle class to American poverty.
And their lives were made all the harder as they struggled to care for her ailing mother, who was working tirelessly to help them all gain a foothold in their new land. Fei-Fei’s adolescent knack for physics endured, however, and positioned her to make a crucial contribution to the breakthrough we now call AI, placing her at the center of a global transformation. Over the last decades, her work has brought her face-to-face with the extraordinary possibilities — and the extraordinary dangers — of the technology she loves.
The Worlds I See is a story of science in the first person, documenting one of the century’s defining moments from the inside. It provides a riveting story of a scientist at work and a thrillingly clear explanation of what artificial intelligence actually is — and how it came to be. Emotionally raw and intellectually uncompromising, this book is a testament not only to the passion required for even the most technical scholarship but also to the curiosity forever at its heart.
Thanks for reading. Feel free to reply to this email or comment on the web if you need anything — I always reply. If you enjoyed today’s issue, feel free to share it with friends and family.
All the best,
Jacob