The U.S. Commerce Department will roll out a ban of transactions in the United States using TikTok and WeChat starting Sunday.
The order Friday was put into place, according to Commerce Secretary Wilbur Ross, to “combat China’s malicious collection of American citizens’ personal data.”
“Today’s actions prove once again that President Trump will do everything in his power to guarantee our national security and protect Americans from the threats of the Chinese Communist Party,” Ross said.
The government previously said that using and downloading the TikTok app to communicate won’t be a banned transaction, although messaging on the app “could be directly or indirectly impaired” by the ban, and people who use it for messaging won’t be subject to penalties.
Some security experts have raised concerns that ByteDance Ltd., the Chinese company that owns TikTok, would maintain access to information on the 100 million TikTok users in the United States, creating a security risk.
The number of Americans applying for unemployment benefits fell last week to 860,000, a historically high figure that reflects economic damage from the coronavirus outbreak.
Before the pandemic hit the economy, the number signing up for jobless aid had never exceeded 700,000 in a week, even during the depths of the 2007-2009 Great Recession. Now they’ve topped 700,000 for 26 straight weeks.
The U.S. Department of Labour said Thursday that U.S. jobless claims fell by 33,000 form the previous week and that 12.6 million are collecting traditional unemployment benefits, compared with just 1.7 million a year ago.
The pandemic has delivered an colossal shock to the economy. Until the pandemic upended the operations of American companies, from factories to family diners, weekly jobless aid applications had never exceeded 700,000 in the U.S.
The overall economy, as measured by the gross domestic product, collapsed at an annual rate of 31.7 per cent from April through June, by far the worst three months on record, as millions of jobs disappeared.
The economy and job market have recovered somewhat from the initial shock. Employers added 10.6 million jobs from May through August, but that’s still less than half the jobs lost in March and April.
The recovery remains fragile, imperiled by continuing COVID-19 infections as schools begin to reopen, and the failure to deliver another economic rescue package in Washington.
An extra $600 US in weekly unemployment benefits ran out July 31, squeezing households that had depended on the beefed-up payments. President Donald Trump issued an executive order Aug. 8 providing a scaled-back version of the expanded jobless aid. Most states signed up for federal grants that let them increase weekly benefits by $300 or $400.
That program is expiring.
Charissa Ward, 37, was furloughed in April from her job as a server at a restaurant in Disney’s Hollywood Studios resort near Orlando, Florida. Since then, she’s been helping at her partner’s online retail business, applying for jobs and waiting to see what Disney will do. “We have no idea when we’re going to get called back,” she said.
The extra $600 US in weekly jobless benefits didn’t replace all her lost income but helped. The reduced $300 she received briefly from Trump’s program made life “a little less stressful.” But Ward said Congress needs to agree to another financial rescue and do “what’s best for working people.”
Last week, nearly 659,000 people applied for jobless aid under a new program that extends eligibility for the first time to self-employed and gig workers, down from 868,000 the previous week. The figure for those seeking Pandemic Employment Assistance isn’t adjusted for seasonal trends, so it’s reported separately.
Altogether, the Labour Department said that 29.8 million people are receiving some form of unemployment benefits, though the figure may be inflated by double-counting by states. Analysts also worry about evidence that the number of people collecting special pandemic aid has been swollen by cases of fraud in California.
A summertime resurgence of COVID-19 cases in the South and West forced many businesses to close again in July — though the data firm Womply finds that closings have mostly stabilized over the last few weeks. Womply did find a sharp increase in spending at bars in southern and western states, including South Carolina, Tennessee and Alabama, as college students returned to campus.
Unemployment claims “remain high even as economic activity is resuming more fully,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote Thursday. “The risk going forward continues to come from virus outbreaks and intermittent interruptions to activity. Overall, the labour market is less weak compared to April but remains at risk of permanent damage from repeated closures.”
Shares in payment processing firm Nuvei Corp. started trading on the Toronto Stock Exchange on Thursday, raising $700 million in the biggest initial public offering of a technology company in the history of the TSX.
Founded in Montreal, Nuvei is a payment processing firm with almost 800 employees, and about 50,000 customers who do $35 billion worth of transactions over the company’s network every year. A large portion of its customers are in the fast growing world of sports betting.
Earlier this month the company announced it planned to sell 26 million shares on the TSX, priced between $20 and $22 apiece. But strong demand for the shares allowed the company to price its shares even higher on Wednesday, at $26 a share.
That values the offering at more than $700 million US, enough to make the company the biggest initial public offering (or IPO) in dollar terms in the history of the TSX — more than BlackBerry and Shopify’s IPOs were worth at the time.
When trading in the shares opened, they almost doubled from their IPO price, changing hands at $45.25 a share, according to Bloomberg data.
Many people wish for lower tax bills and more money in their bank accounts. But a group of young, rich Canadians want the federal government to tax them more.
About 200 wealthy people aged 18 to 40 belong to Resource Movement, an activist group that is expanding across Canada. Their mission is to reduce inequality between Canada’s wealthiest people and the rest of the population.
Its members are advocating for the creation of two new taxes that would have a direct impact on their own bank accounts and those of their parents: a “wealth tax” on the richest 10 per cent of Canadians, and an inheritance tax on the top 10 per cent of estates.
“A wealth tax will have no impact on my life. So, why not?” Montrealer Claire Trottier said in an interview with Radio-Canada. “No one’s going to cry for me if I have to give part of my inheritance.”
The group says it has redistributed more than $450,000 to social justice groups and, more recently, grassroots COVID-19 aid measures through its fundraising efforts since it was founded in 2015.
‘Tax my inheritance. Tax my fortune’
Trottier, a 40-year-old microbiology and immunology professor at McGill University in Montreal, grew up rich.
Her father, Lorne Trottier, co-founded Matrox, a high-tech company, and was ranked 38th wealthiest Canadian in the late ’90s when she was attending a private high school.
“I knew I was very, very lucky,” she said.
“I never had to worry. If I had trouble making rent, for example. I always had a safety cushion to rely on. It helped me make life choices that are difficult for other people.”
In 2000, her family created the Trottier Family Foundation, a charitable foundation that gives out grants every year. In 2018 alone, it donated close to $10 million to environment, health and education projects.
But Trottier said philanthropy is not enough.
“Our family made a conscious choice to give part of its wealth to society. There are many families like ours who do not make this choice,” Trottier said.
“A wealth tax is a way to make sure everyone does their fair share.”
Leading up to what would have been the March federal budget earlier this year — which was cancelled because of the pandemic — Resource Movement prepared a campaign taking aim at Canada’s tax system.
In a video produced for the group’s website and social media channels, members ask the government to “tax my fortune” and “tax my inheritance.”
A federal report found the top 10 per cent of Canada’s richest families have about 56.7 per cent of Canada’s wealth — more than $6.6 trillion, according to the report, which was published in June by the office of Canada’s parliamentary budget officer.
In contrast, the bottom 40 per cent are estimated to have 1.1 per cent of the wealth, about $132 billion.
Resource Movement’s members say a wealth tax alone would bring in $9 billion annually and could help finance affordable housing, a national drug benefit program and access to dental care.
“As people who come from wealth, we know there’s a ton of wealth in this country that is just not being accessed by the state right now, but we need it and we can use it more productively,” said member Daniel Hoyer, a 38-year-old college instructor based in Toronto. His father was a chef and restaurant owner; his mother was an accountant.
He believes a wealth tax is the way to recover the money that currently eludes public coffers by taxing all assets.
How to balance the scales
But one expert said rebalancing the scales is easier said than done. Patrick Leblond, a professor with the University of Ottawa’s Graduate School of Public and International Affairs, is doubtful.
“‘We’ll tax the rich’ sounds good, but is it the most effective way of getting more money in government’s coffers?” he said.
“Government would have to hire people to try to measure all this, to run all over the world because, of course, the richer people are, the more they’re able to hide their assets.”
He suggested other measures could be more easily put in place, such as treating all personal revenue the same way — starting with capital gains.
Right now, if a person sells shares or properties, for instance, only half the profit, called a capital gain, is taxable. People’s wages, on the other hand, are almost all taxable.
Leblond said taxing capital gains less than salaries is “a fiscal advantage for the rich.”
While some experts don’t agree on the measures needed, others in power recognize there is a problem.
The new federal finance minister appears to be one of them.
In 2012, right before going into politics, Chrystia Freeland publishedPlutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, a book on the inequalities between the very rich and the rest of the population.
But she would not comment on the proposed taxes on the wealth and the inheritance of the richest Canadians.
Finance minister previously denounced inequality
In an email, her office noted the Trudeaugovernment had introduced higher personal income taxes for the wealthiest Canadians, lowered those of the middle class and put the Canada Child Benefit in place. But her office recognized that “there is still more to do to ensure every Canadian has a fair chance at success.”
Trottier said the next speech from the throne, scheduled for Sept. 23, is the opportunity for the Trudeau government to do more.
The pandemic has laid bare who’s most deserving in Canada — the front-line workers whose salaries are often on the low end of the scale, she said.
“I think the inequalities in our society became obvious to a lot more people during the pandemic,” she said. “And we realized who are the people doing the essential work. We have lists now. It’s very clear who is doing the essential work.”
In the end, the great tariff war of 2020 didn’t last long. Just as Canada was about to announce its own round of tariffs on products made with American aluminum, the Americans announced Tuesday that a deal had been reached.
But the whole ordeal serves as a reminder of two key things: Tariffs may be dumb, but that doesn’t mean they’re going away any time soon.
Why are they dumb? Perhaps Canada’s deputy prime minister put it best:
“The U.S. is taking the absurd decision to harm its own people at a time when its economy is suffering the deepest crisis since the Great Depression,” Chrystia Freeland said after the U.S. imposed the latest tariffs in August that would have placed a 10 per cent levy on Canadian aluminum imports.
“Any American who buys a can of beer or a soda or a car or a bike will suffer.”
So, the good news for people on both sides of the border is that Freeland was not in the end compelled to introduce her own tariffs, because they would have been just as harmful to Canadians.
Remember, a tariff is just a fancy word for a tax. And their efficacy has been debated for more than a century. Any Canadian tariffs on American imports would have forced Canadian consumers to pay more for products hit by the measure — just as the U.S. tariffs would have driven up the cost of everything from beer to cars by forcing American consumers to pay a tax on products made with Canadian aluminum.
“It really makes no sense whatsoever, if you think about it,” trade lawyer Mark Warner said of the very notion of retaliatory tariffs.
Warner, principal of Toronto-based firm MAAW Law, said retaliatory tariffs make a certain amount of sense from a political standpoint. He said Canadians felt wronged by the U.S. measures against aluminum imports.
“It hurts our sense of ego and our sense of fair play,” he said. “So we retaliate by putting tariffs on American exports to us, so Canadians pay for it.”
Americans got what they wanted
In the end, Warner said, the Americans seem to have accomplished what they really wanted — which is a limit on the amount of aluminum Canadian producers can ship into the U.S. as part of the deal.
“It’s face saving on both sides,” he said. “The Americans get a quota, the Canadians get the tariffs dropped. But remember the Americans wanted the quota to begin with.”
But even if the tit-for-tat measures are no longer in play, some economists feel the distortion from the threat of tariffs will be felt for a long time to come.
“This volatility, this is here to stay,” said Frances Donald, managing director and chief economist with Manulife Investment Management.
Donald said that for much of modern economic history, much of the West has operated under the assumption that globalization and free trade benefit everyone. But as globalization took root and brought down the cost of many products, she said, it also saw the hollowing out of factory towns and the rise of income inequality and racial disparities.
She said de-globalization forces have been in play since 2015 — with populist sentiment against free trade, Donald Trump’s election as U.S. president and Brexit in the United Kingdom all examples of growing opposition to the orthodoxy of free trade.
Then, just as it did to everything else, COVID-19 changed the economic landscape starting in March.
“COVID-19 has been a second de-globalization shock,” Donald said. “Because even if we wanted to do business with the rest of the world, our borders have been shut.”
She said it would make sense for businesses first hit by tariffs and then by closed borders to think about sourcing goods or labour domestically.
“Even if it costs more in the short run, it’s almost like an insurance policy against disruptions in the future,” Donald said.
Ideas like that help to explain why the conversation around globalization has changed.
“We are in the middle of a paradigm shift away from a massive economic theme that defined the last several decades and moving into a new environment,” she said.
The end of globalization?
Donald said globalization won’t go away. Many aspects of it are permanent fixtures, including the digitization of the economy and the ability to buy products around the world and have them shipped to our doorsteps.
But she said consumers and businesses are currently looking around and wondering what sort of world will emerge from the COVID-19 pandemic. The most common themes revolve around more local support for products and services, she said.
The problems that businesses will soon face are ones they didn’t have to think of until recently.
“Businesses are going to feel an increasing amount of barriers and uncertainty toward expanding their supply chain to other countries,” Donald said.
And for that reason, she said, the tariff dispute between Canada and the United States is really just symbolic of something happening around the world on a much grander scale.
And it’s a force that is expected to remain with us for many years to come.
A year after construction was allowed to restart on the Trans Mountain pipeline expansion, its chief executive says it is on budget and on schedule for completion by the end of 2022.
In an interview, CEO Ian Anderson says the project is advancing as expected despite challenges including the COVID-19 pandemic, a global slump in demand for fuel, a $5.2-billion rise in its estimated cost to $12.6 billion in February and ongoing protests by opponents.
The expansion project is designed to triple the capacity of the existing pipeline between Edmonton and a shipping terminal in Burnaby, B.C., to about 890,000 barrels per day of products, including diluted bitumen, lighter crudes and refined fuels such as gasoline.
Anderson says the existing pipeline ran completely full at the height of the pandemic’s dampening impact on North American fuel demand, unlike competing export oil pipelines such as Enbridge Inc.’s Mainline system, a fact he attributed to its ability to reach diverse markets in B.C., overseas and in the United States.
Calgary-based Cenovus Energy Inc. used Trans Mountain this summer to send oil from Alberta to fill an oil tanker at Burnaby and ship it through the Panama Canal to an Irving Oil refinery in Saint John.
Anderson says that feat hasn’t been duplicated since but it illustrates the ability of the pipeline system, purchased by the federal government for $4.5 billion in 2018, to access numerous new markets for its 13 committed shippers when the expansion is completed.
“We’ve got some major elements of the project to still do but they’re all on track and there’s no critical path items I’m worried about at this point,” he said. “We’re making great progress.”
He added the project is about 15 per cent complete now and is expected to be at 30 per cent by year-end.
A rare 102-carat diamond found in Northern Ontario two years ago could be among the most expensive of its kind in an auction that starts online and is set to culminate in person in Hong Kong in early October.
Mined at DeBeers’ now-closed Victor Mine in 2018, the diamond, about the size of a small egg, was cut from a larger 271-carat rough diamond, and then cut and polished for more than a year.
Those in the industry say the stone has a lot of features going for it. The diamond is known as a Type II diamond, which are among the most chemically pure among naturally occurring diamonds. Only about one per cent of all diamonds end up being Type II, Toronto-based high-end jewelry designer Reena Ahluwalia says. It’s also rated D colour and considered flawless, a characterization that British auction house Sotheby’s says is bestowed on only 0.5 per cent of all mined diamonds.
Sotheby’s started the bidding for the stone online this week, and the process will finish off with an in-person auction in Hong Kong on Oct. 5. As a testament to its rarity, the auction is being held without a reserve price, which means there is no minimum bid, and no figure to theoretically limit what a buyer may think it is worth. Sotheby’s says it is the first time a diamond of this calibre has ever been sold without a reserve price.
Sotheby’s said it’s the second-largest oval diamond to ever come up for auction, only slightly smaller than the 118-carat diamond that sold for $30 million US in 2013.
‘Miracle of nature’
Currently, the record price for a diamond at auction was $83 million US for the so-called Pink Star diamond, a 59-carat jewel that sold in 2013. Other diamonds, including those in the British Crown Jewels, and the Hope Diamond in the Smithsonian museum, are likely worth more but never come up for sale.
WATCH | 102-carat diamond was cut and polished for more than a year:
Huge, flawless diamond unearthed in 2018 at the Victor Mine in Northern Ontario is set to fetch millions at auction. 0:28
Ahluwalia calls the stone in question a “miracle of nature” and one that is likely to fetch a large amount because of its unique characteristics.
“These larger diamonds are investment pieces,” she said. “And the rare quality of this one is hard to come by.”
As it has done to many industries, COVID-19 has changed the market for high-end jewelry, Ahluwalia says. In the early days of the pandemic, sales even at the high end slowed to a crawl simply because people weren’t out shopping for them, or for anything else.
But since the international community has gotten behind online selling, demand has come back in a big way. Many more large diamonds, with carats counted in double or triple digits, are slated to go up for auction in the coming months. That’s why some think the price tag for this Canadian diamond could set a record.
$30M or maybe more
Sotheby’s has estimated the ultimate sale price at between $12 million and $30 million US. But guessing the likely sale price is hard to do because the winning bidder may be motivated by the investment potential or by more emotional considerations, Ahluwalia says. She notes that another famous diamond, now known as the Moon of Josephine, was purchased for $64 million US at auction in 2015 by Chinese billionaire Joseph Lau.
Lau spent far more than was expected, Ahluwalia says, because he wanted it for his daughter, Josephine. Someone may feel the same way about this diamond.
“If it’s a personal purchase, maybe it gets mounted and will be enjoyed as a piece of jewelry,” she said. “But some investors are just looking for another opportunity.”
Ahluwalia has a personal connection to the mine where the stone was first discovered. Shortly after the mine opened in 2008, Ahluwalia was commissioned by the Ontario government to redesign the mace that opens and closes sessions at the provincial legislature, and to incorporate diamonds from the mine into the mace.
She says the diamond’s Canadian origin may help nudge up the price, since Canadian gems are considered to have higher standards for ethics and sustainability than those mined in some other countries. But ultimately, the diamond will sell for whatever it sells for on its own merits.
A leading investor group has written to the boards of the world’s biggest corporate emitters of greenhouse gases, warning they must produce a strategy to move their business to net-zero carbon emissions or face pressure at future AGMs.
Climate Action 100+, whose members include most of the world’s biggest investors, collectively managing $47 trillion in assets, said the strategies needed to have clear targets and that companies would be assessed on their performance.
While some companies have already moved to commit to net-zero carbon emissions by 2050 or sooner, many have not. It can also be hard to compare the relative merits of each company’s strategy, which can make engagement harder.
To help fix the problem, CA100+ said on Monday it was launching a new benchmark to help its 500 members and others assess each company’s progress on the way to net-zero against a set of 30 indicators.
In a letter to the boards of 161 companies collectively accounting for around 80 per cent of the world’s greenhouse gas emissions, CA100+ said greater action was needed to meet the terms of the 2015 Paris agreement to limit global warming.
Specifically, the group called on the companies to create strategies that covered their full value chain — including so-called Scope 3 emissions from each company’s products — and were science-based.
Companies also needed to set medium-term objectives and material targets to help demonstrate the longer-term goals were achievable and make it easier for investors to track the necessary changes to their core business strategy.
CA100+ said the companies’ response would guide the way investors engage with the boards, “particularly for unresponsive or poorly performing companies,” which could also include action during future annual general meetings.
“Companies across all sectors need to take more ambitious action to ensure otherwise devastating impacts of climate change are avoided while they still can be,” said Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change, part of the CA100+ coalition.
“The benchmark will ensure it’s clear which companies are acting on climate change as a business-critical issue and embracing a net-zero future. Investors will be paying particular attention to those shown to be falling short.”
Members of the media are often met with skepticism when covering the rate of inflation.
On Wednesday, Statistics Canada issues its latest calculation of the consumer price index, and once again, there will be many who feel the figures simply don’t reflect the rising costs they face for daily necessities from food to housing.
For people like Bank of Canada governor Tiff Macklem, worried about the prospect of deflation — the falling prices that most economists fear can lead to deeper recession — public distrust of the data they rely on sends a mixed message.
Macklem said last week that the public is better off if people understand how the bank tries to keep inflation on target.
“Those benefits hinge importantly on people really understanding the regime and that really comes down to the importance of listening to Canadians and communicating with Canadians,” Macklem said last week in a Q&A session with the Canadian Chamber of Commerce.
But in some ways, complete confidence in the way Statistics Canada counts inflation may not be an entirely good thing when prices are not rising fast enough.
While central banks may not like to admit it, what the bank would consider a misunderstanding that inflation is higher than official calculations show could be beneficial when prices are in danger of falling.
That’s because research has shown that like an Escherian stairwell or waterfall, public perception of high inflation may create a feedback loop that actually contributes to higher inflation.
As with many statistics, exactly how we should correctly measure inflation is disputed, and like all statistics, the consumer price index is a mathematical construct that tries to quantify an economic concept.
As part of its campaign to educate Canadians about inflation and inflation targeting, the Bank of Canada created this explanatory video:
But just as with many other economic concepts meant to impart basic understanding, the reality is far more complex.
Housing is a case in point. A Reddit forum deconstructing a previous column on inflation objected to the suggestion that most Canadians had never experienced inflation. The contributor on Reddit pointed out that “the price of houses has gone up 200 per cent.” That was two years ago. The percentage, especially in Canada’s hottest markets, would be much greater today.
While that Reddit contributor and many others may think of housing as a consumer good, in financial terms it is considered an asset like bonds that rises as interest costs fall. Even as down payments and principal payments soak up a bigger share of your income, making you feel poor, it is interest costs, not loan repayments, that show up in CPI.
Part of the reason, he said, is behavioural psychology. People simply pay more attention to prices that are rising, perhaps because price rises hurt, rather than to falling prices that bypass painlessly.
Another difference between what consumers feel and what the official numbers tell us can seem to many like a sleight of hand. When the price of cars rises, for example, the statisticians insist part of that increase is because you are getting a better car than you would have got in the past, so not all of the increase is counted.
Even more surprising to many, if the price of something like TVs or cellphones stays the same, the statisticians actually count them toward a fall in prices because, once again, you are getting technologically improved gizmos for the same dollars.
While it is possible to argue the case for that kind of conceptual calculation, in a world where having the latest phone is seen as a social necessity, it may be that the rising cost of true necessities such as food to feed your family ends up getting less weight in the basket of consumer goods.
Poor suffer less
In the footnotes for Schembri’s speech on inflationary expectations, the bank says poorer people have actually suffered less from inflation than others over the last five years partly because rents, which have not been rising so quickly, take up a larger percent of budgets. But food, which has been rising, also takes up a greater share of lower-income budgets.
For those who drive, falling oil prices have kept costs down. A rising Canadian dollar has held down the cost of imports. But in the previous inflation figures the big price plunges were in things nobody really wants just now: hotel rooms down 27 per cent and flights down about nine per cent.
As Macklem pointed out in his speech last week, some of Canada’s least well-off suffered serious economic pain, while the incomes of those with desk jobs who could work from home were almost unaffected. Figures on Friday showed that with fewer opportunities to shop and government income support, Canadians have on average been paying down debt, which would indirectly help hold inflation down.
But if you don’t believe the latest inflation figures, you still have time to weigh in. The Bank of Canada’s short survey on how you feel inflation in affecting you is available until the end of this month.
As prices stay low, some worry that the pain for the economy is still ahead as mortgage deferrals run out and the unemployed struggle to replace jobs lost in what Macklem called the deepest recession since the Great Depression.
And for those whose net income is falling, no matter what the inflation statistics tell us this week, everything is more expensive.