Global News: Trump Plans to enact 25% tariffs on Mexico, Canada by Feb 1.
Tariff hike: NLC asks subscribers to prepare for telecoms boycott..
President Donald Trump said in an Oval Office signing ceremony Monday evening that his administration will impose 25% tariffs on Mexico and Canada on February 1, an extraordinary change in North American trade policy that could raise prices for American consumers.
Our thoughts
So, President Trump is proposing 25% increase in tariffs on Canadian and Mexico, and the proposed date is February 1. Now, the question is, why is he doing this?
What are his reasons for this? He says that they are not managing their border, and so there are lots of illegal immigrants coming in and smuggling illegal goods through their borders. Now, what is the impact?
The first thing in terms of the impact is what's the volume of trade between Canada and America. So, Canada exports oil, exports steel, exports some critical minerals, like aluminum, uranium products to America. While, on the other hand, America exports a lot of goods to Canada.
Well, what's happening is that if they increase their tariffs by 25%, then Canada is going to retaliate also. The Canadian Prime Minister has committed to retaliating by increasing tariffs. He also agrees to the fact that Canadians would suffer, but U.S. citizens would suffer also.
Now, why would Canadians suffer? Because prices of their everyday goods would go up as they import a lot of things from America but on the other hand he's saying that the things coming into Canada would also have VAT increase.
The impact is on both sides: (1). For the consumers in Canada, they would have higher prices (2). For the businesses in Canada that export to America, the cost of their goods would go up and they would become less competitive to other markets.
In terms of a response on both sides what i think will happen is that over time if they actually go on with this tariff increase they would cease to be as much of trick partners as they are currently. This is because if 25% makes a pack of Panadol go up from 30 dollars to 37.5 dollars and there is a way for me to import that same Panadol from UK and the cost will be 35 dollars.
What will happen is that over time I will start substituting my partners and finding partners around the world. The only product that would be that exchange for Canada to the US would be the ones where even with the tariff increase there's still a competitive advantage.
What this does generally is: 1. definitely prices will go up except if there's some kind of innovation that comes in to bring things down but on the other hand businesses may collapse on both sides especially so it's almost like the political environment is going to impact businesses except if the government is able to subsidize or is able to augment or give them some kind of relief package
On the other hand if you think about it , if they are substituting with other countries that do not have those kind of restrictions or those kind of tariffs it means that for those businesses there is a new opportunity . This could be a redirection or a redistribution of wealth across countries. For example, I'm in the steel industry and I know that I can supply America and I can see how based on shipping I can actually beat the price that it would cost if it was coming from Canada and I can meet up with the same requirements or same standards as Canada then obviously I should be pitching right now and lobbying or engaging those businesses to become their trade partners because in the end it's about the numbers.
The same on the Canadian side, I see that while it might look like a bad thing because obviously if things are already set up and the status quo is already in place ,the trading lines, the shipping processes are already in place then you want to keep it going but if it's not happening I see how there could be a creation of wealth or redistribution of wealth to other countries to other businesses to other companies around the world and another thing that could fall out of it also is that a business that has different branches around the world can now officially start shipping from their Kenya branch as against seeing their shipping from Canada to the United States.
This might increase the shipping cost because Canada to America is a shorter shipping distance but on the other hand if it still beats the pricing from the increase in tariffs then it might be something that will come up. At every point in time, while there are changes, we have to keep abreast of those changes but there are opportunities opening up and is to find how we can plug into them. I wish everybody well.
African News: Kenya, UAE Discuss extending railway to Uganda and South Sudan.
Kenya is in discussions with the United Arab Emirates (UAE) to extend its Standard Gauge Railway (SGR) to Uganda and South Sudan, President William Ruto announced.
Our thoughts
This is actually good news especially if it goes through because one of the things that has plagued Africa is the lack of interconnectivity. If you think about the way you can go into Europe and move from one country to another via rail without needing to stamp your passport.
This is actually the making of those things--that kind of experience in East Africa. Another thing that this kind of move supports is trade because one of the most efficient ways to move things over long distances is rail. If the journey is 11 hours it will always be 11 hours there would always be power to to keep everything cool that needs to be kept cold. If it is food produce that is perishable, everything will be intact and you can plan move a lot at the same time.
These are the things that make for the building of Africa and as such it would be great if West Africa could adopt this as against the routes that they have announced the would build across West Africa which is a good project relatively but those same funds can be deployed more effectively if they set up rail lines and in that way it is easier and faster with less bottlenecks for people to move across countries.
Nigerian News: Tariff hike: NLC asks subscribers to prepare for telecoms boycott.
The Nigeria Labor Congress has called on Nigerians to prepare for a nationwide boycott of telecommunication services in response to the Federal Government’s recent approval of a 50 per cent increase in telecommunication tariffs.
Our thoughts
So these are social issues and quite unfortunate. However, it is understandable from the NLC point of view because it increases costs for the individual. However, if we actually consider the quality of service that has dwindled significantly across the top telcos and the fact that they have really had to shut down a lot of their services or they had had to scale down on the quality of their service because of pricing,
then it might actually be a trade-off where the improvement in services, the less call drops, the fact that your internet is going smoothly might actually be a productivity boost and you spend less time doing things that you're currently doing.
So while the NLC may or may not have a case, it's one of those things where do we as a nation really want to stay where we are with the struggles that we do have in terms of telecommunications. It will be interesting to see how they manage it because I do not understand why or how they want to boycott because every business in Nigeria literally, every reasonable business in Nigeria depends on telecoms for one thing or the other.
So if you tell everyone to boycott, who and how are you going to regulate it? But I guess they must speak and another thing I guess they must at least try and let's see what comes out of it. The flip side also is the condition that the Ministry has given, the Nigerian Commission, the NCC has given for the tariff increase.
First thing to note is that it is up to 50%, note that you mostly increased by 50% and the second thing to note is that they have given them a standard of quality that the quality must improve in a bid to actually serve people. You cannot keep the quality as it is and then increase the tariffs. If the tariffs are going to go up then the quality of the service must also go up along with it.
I think this is fair right and that people would benefit more from the better quality of service than if the prices stay where it is and we all keep suffering.
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