Making financial news make sense
Welcome to the Carillon’s “Finance with Pall,” a news finance column covering important economic and financial news from Canada and around the world, focusing on explaining what that news means for students. From tuition costs to job markets, we’ll break down how these changes affect you, making finance easy to understand and relevant to your life. If you have any topic requests or want me to highlight a stock price – shoot me an email at pall@carillonregina.com.
Disclaimer: The information in this column is intended for educational purposes and is not financial advice. For personalized financial guidance, please consult a licensed professional.
Term of the week:
Tariff: Similar to the way each citizen pays taxes in a country, a country also needs to pay tax when it is importing goods or services from another country. Tariffs are taxes that a government places on goods imported from other countries, and the purpose of one country imposing tariffs on another is to make imported items more expensive.
Theoretically, this protects local and national business from too much competition with foreign goods. Tariffs also help increase the revenue for governments. This type of tariff is called revenue tariff.
Other than this, governments also impose tariffs as an extension of foreign policy. Investopedia explains, “Tariffs […] used as an extension of foreign policy as their imposition on a trading partner’s main exports may be used to exert economic leverage.”
News of the week:
U.S. President Donald Trump is the 47th President-elect, and intends to pass along the cost of his proposed import tariffs to consumers leading to higher prices for a range of products. In his previous first term in the office, his administration-imposed tariffs up to 25 per cent on more than $360 billion in products from China, according to CBS News.
What does this mean? Anyone importing any good or service from China in Trump’s first term had to pay those extra costs, which added significantly to their expenses. To cover these added expenses, companies usually raise the prices of these goods for consumers.
So, when tariffs are imposed, there are higher prices for American consumers on a range of everyday products that were made or assembled in China, from electronics, to clothing, to furniture. The goal of this tariff is to make America independent, with a focus on the ability to locally source goods, rather than to depend on countries like China to source raw materials or goods.
Theoretically, this encourages local businesses to grow within the country. However, tariffs particularly impact lower-income households that are more sensitive to price increases, and which are already facing the brunt of inflation.
Technology driven companies like Tesla, however, seem to benefit from a Trump victory.
Following Donald Trump’s election victory, Tesla (TSLA) experienced a significant stock surge, rising 14 per cent shortly after the market opened and up 12.8 per cent in late morning trading. This boost was largely attributed to Tesla CEO Elon Musk’s vocal support for Trump throughout the campaign, which fueled positive investor sentiment in the wake of the election.
Investors interpreted Musk’s endorsement and Trump’s pro-business stance as favorable conditions for Tesla’s future, reflecting optimism that the administration’s policies could align with Musk’s vision for the company.
Wedbush Securities analyst Dan Ives noted that a Trump win might present substantial advantages for Tesla, calling it “the biggest positive” for both the company and Musk. Musk, who has received criticism over Tesla’s reliance on government subsidies, could see a favorable business environment under Trump, given a shared emphasis on industry and deregulation. This alignment boosted investor confidence, viewing the Trump administration’s outlook as supportive of Tesla’s long-term growth.
