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As the world and markets wake to the full impact of U.S. President Donald Trump’s global “reciprocal” tariffs , FP Video sits down with the CEOs of Canadian Manufacturers & Exporters and Starlight Capital, plus an associate professor from the Sprott School of Business, to discuss how investors , manufacturers and Canada can make the most out of the trade war turmoil.

Trump’s trade war stalls manufacturing investment

Dennis Darby, chief executive of Canadian Manufacturers and Exporters, talks about how manufacturers are coping in the uncertainty around Trump’s tariffs and how renegotiating CUSMA is the solution.

These investments are ‘immune’ to tariff turmoil

Dennis Mitchell, chief executive and chief investment officer at Starlight Capital, talks about what strategies are best for investors amid trade uncertainty and volatile markets.

How Canada could win a ‘no tariffs’ deal

Ian Lee, associate professor at Sprott School of Business, Carleton University, talks about how the Great Depression is ‘a great case study’ when it comes to understanding current trade tensions.

• Auto tariffs and the federal election: FP video
• These investments are 'immune' to Trump's trade war
• How Canada could win a 'no tariffs' deal

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Housing is about to get a lot more expensive in the next decade if the federal government’s immigration program bringing in skilled workers isn’t revamped. Many in the construction industry say there aren’t enough domestic workers going into jobs that don’t require an apprenticeship or certificate and the current system bringing in newcomers only covers highly skilled workers.

About US$5 trillion in shareholder value was wiped off the S&P 500 on Thursday and Friday, as concerns over an escalating global trade war hit markets.

The selloff in stocks deepened following United States President Donald Trump’s “Liberation Day” announcements of the harshest tariffs in about a century. On Friday, China announced a 34 per cent tariff on all U.S. imports in retaliation, as fears grow that tariff moves will trigger a global recession.

Here’s what investors need to know about the selloff, the worst two-day market decline since the COVID pandemic.

Major indexes

The S&P 500 index ended Friday in its worst two-day rout since March 2020, dropping more than 10 per cent and losing about US$5 trillion in value. The Nasdaq 100 declined by about six per cent, pushing it into bear market territory. The Dow Jones industrial average also fell more than five per cent. In Canada, the S&P/TSX composite index closed 4.7 per cent lower, to 23,193.47 points, reaching its lowest level since September 2024. Though Morningstar’s Canada index plummeted 3.25 per cent Friday morning, it has continued to outperform the firm’s U.S. index.

Volatility index

The Cboe Volatility Index (VIX), the market’s “fear gauge,” surged to nearly 45.31, a closing level last reached in the opening months of the COVID-19 pandemic, indicating heightened investor anxiety. This reflects concerns over the escalating trade war and its potential to trigger a global recession. ​Since its launch, the VIX, which measures the expected volatility of the S&P 500, has averaged about 20 per cent. “When there is fear in the market, as the VIX is telling us, everything will sell off,” Jay Woods, chief global strategist at Freedom Capital Markets, told Bloomberg.

Sectors hardest hit

Energy and technology sectors experienced notable declines due to their sensitivity to global trade dynamics. Oil hit a four-year low on expectations of a global slowdown, with West Texas Intermediate crude falling more than six per cent to about US$62 a barrel, according to Oilprice.com. Brent crude was down about six per cent to about US$66, the lowest since 2021, as OPEC+ moves to increase output just as tariffs threaten energy demand.

Big Tech stocks with exposure to tariff-hit China slumped, including Nvidia Corp., which dropped more than seven per cent, Tesla Inc., which dropped more than 10 per cent, and Apple Inc., which dropped more than seven per cent.

Other stocks hit hard included Boeing Co., which fell more than nine per cent, and Goldman Sachs Group Inc., which declined more than seven per cent, leading the Dow lower.

Safe havens: bonds, crypto and gold

Investors are buying government bonds, leading to a significant drop in yields. The 10-year Treasury yield has fallen below four per cent. Bitcoin was trading about one per cent higher at just over US$84,000 on Friday. Investors have been buying more gold and gold funds recently, pushing the price to a record US$3,148.88 a troy ounce this week as they seek a safe haven from market uncertainty. But bullion slipped more than two per cent to US$3,037.65 an ounce, caught up in the selloff.

• Stocks plunge and that may be start of pain for Canadian consumers
• Bank of Canada April rate cut in play as job market weakens
• History shows market meltdowns are short-lived

Buy the dip?

Though retail investors often see opportunity when stocks dip, even they seem to be spooked. JPMorgan Chase & Co. reported retail orders amount to net selling of US$1.5 billion as of noon, compared with figures showing individuals were net buyers of US$4.7 billion of shares just a day ago.

The fastest U.S. stock market selloff since the depths of the COVID pandemic has left valuations looking cheaper than they have been for a while, but the S&P 500’s trailing price-to-earnings ratio still sits at 23, with room to fall further.

• Stocks plunge and that may be start of pain for Canadian consumers
• Bank of Canada April rate cut in play as job market weakens
• History shows market meltdowns are short-lived

Given concerns about inflation and tariffs, analysts lowered earnings per share estimates for S&P 500 companies for the first quarter by a larger margin compared with the three most recent averages , according to FactSet Research Systems Inc. “What we’re seeing is a big reassessment of global risk but obviously focused on the U.S.,” James Rossiter, head of global macro strategy at TD Securities, told CNBC.

— With files from Bloomberg.com

 

The shock of United States President Donald Trump’s global trade war has already hit the stock portfolios of Canadian consumers, but that may be just the beginning of the pain.

“This is the biggest realignment in global trade ever,” said Walid Hejazi, an associate professor of international business at the Rotman School of Management.

Here’s a look at the risks facing consumers.

Stock market losses

U.S. stock markets have shed a staggering US$6.4 trillion in market capitalization in just two days, according to The Wall Street Journal. On Thursday, after reciprocal tariffs were announced, the S&P 500 index fell five per cent, its biggest one-day drop since 2020 and followed that up with a bigger decline on Friday.

China soon retaliated to Trump’s reciprocal tariffs (he slapped tariffs of 34 per cent on the nation) with matching levies on all imported goods from the U.S., which only rattled the market further. The S&P 500 was down more than 17 per cent from its mid-February high on Friday.

The losses continued Monday with the S&P 500 down 3.8 per cent in early trading. The index has lost more than 20 per cent since setting a record less than two months ago and if it finishes the day below that mark will be in a bear market.

The S&P/TSX composite index was trading down 825.74 points or 3.56 per cent.

In the meanwhile, multiple brokerages, including UBS Group AG and Royal Bank of Canada Capital Markets, slashed their year-end targets for the S&P 500.

Hejazi said that if Canada and Mexico come to a deal with the U.S., there might be some recovery in financial markets — though this could be stifled if more countries retaliate with tariffs like China.

Recession fears are growing

JPMorgan analysts recently said the odds of a global recession  have increased to 60 per cent.

“The big threat is uncertainty, and people don’t know what’s coming,” Hejazi warned. “The longer this goes on, the bigger the impact you’re going to see on the real economy.”

Canada already lost 33,000 jobs in March and the unemployment rate ticked up to 6.7 per cent.

“Now that many tariffs are in place, the trend in the upcoming months is more layoffs and unemployment as tariffs cause widespread economic pains,” wrote Tu Nguyen, an economist at RSM Canada LLP, in a recent note.

“This will be especially prominent in trade-dependent industries such as wholesale and retail trade, manufacturing, especially auto production, and steel and aluminum, due to tariffs.”

Nguyen added that shrinking demand for goods and services will reduce the appetite for talent, which coupled with recession fears, could potentially lead to layoffs and a slowdown in hiring across sectors.

Hejazi said negative expectations could take on a life of their own.

“When people become pessimistic, they stop spending,” he said. “It’s a self-fulfilling prophecy … and it makes the recession more likely.”

Rising prices

Economists from Toronto-Dominion Bank recently said U.S. inflation is at risk of approaching four per cent or more, with consumers already starting to “tap the brakes” on spending.

In comparison, they anticipate consumer price growth in Canada to stretch to more than three per cent this summer.

Hejazi noted that Canada is only grappling with a trade war with the U.S., while the latter has launched a trade war “with everybody,” exacerbating the breadth and scale of price growth for American consumers.

Yale University’s The Budget Lab predicted 2025 tariffs will cause U.S. prices to rise 2.3 per cent in the short-term, the equivalent to a US$3,800 loss per household.

The report said clothing and textiles will be disproportionately impacted, with apparel prices surging 17 per cent, but goods like metals, electrical equipment and rice could see hefty price increases as well.

Canadian consumers won’t be immune to the pain of higher prices, and they aren’t just going to be placed on American goods with tariffs, Hejazi warned.

• Bank of Canada April rate cut in play as job market weakens
• Canada dodged tariff slamdown, but recession still coming

“When American products become more expensive, Canadian companies raise their prices as well,” Hejazi said, adding that the longer we experience sustained inflation , the harder it can be to bring it under control.

“The challenge is that we’re probably going to see prices rise gradually and it’s going back to that self-fulfilling (prophecy) and inflationary expectations becoming entrenched.”

• Email: slouis@postmedia.com

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U.S. President Donald Trump extended a deadline by 75 days for Chinese technology company ByteDance to sell U.S. assets of popular short video app TikTok to a non-Chinese buyer or face a ban that was supposed to have taken effect in January under a 2024 law.

It’s hard for political parties to find breakthrough campaign promises in an election overshadowed by a global economic crisis, but Conservative leader Pierre Poilievre’s proposed capital gains tax deferral for money reinvested in Canada managed to prick many ears. Here, the Financial Post looks at the policy, how it would work and whether it could be the economic “rocket fuel” Poilievre claims.

What is the proposal?

Currently, the capital gain inclusion rate is 50 per cent, meaning half of any profit made from selling stocks, bonds, real estate or other investment is taxable.

Under the Conservatives’ proposed Canada First Reinvestment Tax Cut policy , an individual or corporation that sells an asset can defer paying taxes on capital gains if they reinvest the proceeds in Canada. Examples given by the Conservatives include Canadian businesses, stocks, farms, homebuilding, technology and manufacturing.

The tax deferral would apply to reinvestments made between July 1, 2025, and Dec. 31, 2026. The Conservatives said in a press release that if the policy generates a “major economic boom,” they’ll make it permanent.

The Conservatives note that the current lifetime capital gains exemption limit for the sale of small business corporation shares, farm property and fishing property won’t change, so small business owners and farmers would still qualify for both the new proposed tax break and the existing exemption.

How would it work and how much would it cost?

In a video explaining the policy, Poilievre said “Canadians will only pay capital gains tax on accumulated gains when they cash out for good or take their money out of Canada.”

Examples of eligible tax break scenarios provided by the Conservatives include a deli owner who sells their business and reinvests the proceeds in a new Canadian company; a manufacturing business that reinvests in a new Canadian factory, or a rental company that sells a building and reinvests the money to build more apartment complexes.

The Conservatives argue the short-term loss in government revenue would be offset by job creation and economic growth. They also said Canadian companies that invest abroad will have a “powerful incentive” to reinvest their money within Canada. In the video, Poilievre claimed when investors do cash out and pay capital gains tax on all investment gains, the “government will still get its share, but later and bigger.”

At a news conference on March 30, Poilievre said the investment credit would cost the government a total of $10.5 billion over two fiscal years: $5 billion in 2025-26 and $5.5 billion in 2026-27.

Who would benefit from the proposal?

The policy would benefit both individuals and businesses that have been sitting on an appreciated asset and reluctant to sell for fear of the tax hit. Companies in particular would stand to gain from the deferral by unlocking frozen capital and redeploying it to invest in their business, by, say, buying land for a bigger factory or new machinery or technology to increase their capacity.

Real estate developers would be incentivized to start new projects and companies or individuals with investments abroad could be motivated to move capital back into the country.

There is also potential upside for the broader economy, since it could spur investment and unlock otherwise dormant capital — or help eliminate what is known in behavioural economics as the “capital gains lock-in effect.”

The incentive could be a “game changer” as a longer-term or permanent measure, though the initial 18-month window might seem like a gamble to investors, said economist Don Drummond, Stauffer-Dunning fellow at Queen’s University and a fellow-in-residence at the C.D. Howe Institute.

What are people saying about it?

While the Conservatives haven’t released specific details on how the policy would work or be administered, the responses from business associations and corporate leaders have been largely positive.

Dan Kelly, head of the Canadian Federation of Independent Businesses, said in a post on X that the idea had the potential to really help Canadian small businesses. “Good to see capital gains raised as an election issue. Looking forward to details,” he said.

Franco Terrazzano, Federal Director of the Canadian Taxpayers Federation, said in a statement, “Capital gains taxes are a huge drag on Canada’s economy. Poilievre’s announcement is a big move to encourage more investment, more development and more growth in Canada.

François Brouard, professor of accounting and taxation at the Sprott School of Business at Carleton University, told the Financial Post that while reinvestment in Canada is a valuable objective, defining what qualifies as a Canadian investment and tracking the paper trails of millions of Canadians could be an administrative “nightmare.”

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Brouard gave the example of buying and selling shares in a mutual fund that holds a mix of investments from Canada and other countries. “You will need to trace each of the different investments that will be subsequent to the initial one, and you need to do this for everyone,” he said.

Drummond pointed out that the policy would largely appeal to high-income investors, and that Canadians with more modest incomes already have other tax deferral options available.

“If they have their investments within a tax-sheltered vehicle, an RRSP or a TFSA, they’ve already got the ultimate in capital gains deferral until they have to start taking it out of a RIF,” he said.

• Email: jswitzer@postmedia.com

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Dennis Darby, chief executive of Canadian Manufacturers and Exporters , talks with Financial Post’s Larysa Harapyn about how manufacturers are coping in the uncertainty around Donald Trump’s tariffs and how renegotiating CUSMA is the solution.

• How Canada could win a 'no tariffs' deal
• These investments are 'immune' to Trump's trade war
• Interprovincial trade is silver lining in Trump's trade war

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Thousands of businesses convened on Hanover Germany this week for one of the largest industrial technology fairs in the world at a time when many nations, including Canada, are trying to adapt to U.S. tariffs and protectionism.

Canada’s economy lost jobs in March for the first time since January 2022, with the unemployment rate rising to 6.7 per cent from 6.6 per cent the month before, Statistics Canada said Friday.

The economy gave up 33,000 positions last month, missing analysts’ estimates for a gain of 10,000 jobs. However, their unemployment rate prediction was correct.

The jobless rate still sits below its recent high of 6.9 per cent in November 2024, but Statistics Canada said the rate has been trending higher since March 2023, when it stood at five per cent.

“Since March 2024, the unemployment rate has remained above its pre-COVID-19 pandemic average of six per cent (from 2017 to 2019),” the agency said in the release, adding it is taking longer for unemployed people to find work.

Here’s what economists think the latest employment data means for the economy, the Bank of Canada and interest rates .

Full-time jobs hit hard: Bank of Montreal

The March data signalled that “the widespread decline in business (and consumer) sentiment in the past two months played out in real decisions last month,” Douglas Porter, chief economist at BMO Capital Markets, said in a note on Friday.

Full-time and private-sector positions took the brunt of the hit, with the former falling by what he called a “heavy 62,000.”

Porter said the unemployment rate would have chugged even higher had the participation rate not fallen.

He pointed to the increase in hours worked as one potential bright spot, but he interpreted it to mean that employers asked people to work longer hours rather than adding to their payrolls.

Porter thinks it’s too early to directly attribute the losses to U.S. tariffs, especially since the survey was taken prior to steel and aluminum duties coming into effect on March 12.

However, he does think the regional data tells the tale of the coming impact of tariffs, pointing to job losses in Ontario, Quebec and Manitoba. Alberta also lost positions.

“Ultimately, we believe that Ontario is most at risk from U.S. protectionism, and its jobless rate rose two ticks to 7.5 per cent,” he said.

He said he thinks the Bank of Canada will want to see more data before it implements another rate cut.

Policymakers “made it clear” following the interest rate cut in March that the only reason they did so was in response to United States President Donald Trump’s tariff threats.

“Falling energy prices and the end of the carbon tax will help dampen inflation pressures,” taking some pressure off the Bank of Canada, Porter said. However, poor employment numbers and slumping stock markets will “keep prospects of an April rate cut very much alive.”

For now, BMO is calling for the Bank of Canada to hold off on further rate cuts, “but the situation is, shall we say, fluid.”

 

Higher jobless rate on the way: Capital Economics

“The broad-based weakness in last month’s Labour Force Survey does not bode well for the outlook,” Bradley Saunders, North America economist at Capital Economics Ltd., said in a note, adding that theory is supported by surveys showing company hiring intentions have “sharply” fallen.

He said U.S. tariffs played a role in some of March’s job losses, attributing the 7,000 drop in manufacturing positions to Trump’s upending of trade routes and norms, but that is just the tip of the iceberg.

“While Canadian exporters may have escaped ‘Liberation Day’ relatively unscathed, we still expect U.S. tariffs to weigh on GDP growth — and, in turn, hiring — this year,” he said.

Saunders pointed to carmaker Stellantis NV’s decision to close its auto plant in Windsor, Ont., for at least two weeks starting Monday, which will affect 4,000 positions, as “evidence of the uncertainty that U.S. tariffs will pose for Canadian manufacturers going forward.”

Capital Economics thinks the unemployment rate will rise to seven per cent and that economic weakness will force the Bank of Canada to cut interest rates at the upcoming announcement on April 16.

‘Vast fluctuations’: RSM Canada

“Trade uncertainty is causing vast fluctuations in job numbers,” Tu Nguyen, an economist at tax consultancy RSM Canada LLP, said in a note.

Employment in Canada “fluctuated” earlier in the year as employers added positions to get ahead of the coming tariff storm.

“However, now that many tariffs are in place, the trend in the upcoming months is more layoffs and unemployment as tariffs cause widespread economic pain,” she said.

Nguyen expects this to especially be the case in trade-dependent sectors such as wholesale and retail, manufacturing, especially auto production, and steel and aluminum, with 25 per cent tariffs now in force in the automotive and the steel and aluminum sectors.

“Weariness about the macroeconomy and recession fears, including that of a global recession, will cause layoffs and delays in hiring across sectors,” she said.

Given that the extent of the job losses in March was a surprise, she said the Bank of Canada might feel compelled to cut rates by another 25 basis points to 2.5 per cent in April, even though Canada missed the reciprocal tariff bullet.

• Canada's economy loses 33,000 jobs
• Tariffs could lead to 160,000 job losses in second quarter

• Email: gmvsuhanic@postmedia.com

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The worldwide sell-off for financial markets slammed into an even higher, scarier gear on Friday after China matched U.S. President Donald Trump's big raise in tariffs in an escalating trade war, with markets facing their worst crisis since the COVID crash. 

Canadian consumers are bracing for higher prices and a potential economic downturn after the United States rolled out its latest round of tariffs .

Despite escaping U.S. President Donald Trump’s latest onslaught of reciprocal tariffs on countries around the world, Canada isn’t out of the woods by any means, Tu Ngyuen, an economist at consultant RSM Canada LLP, said.

“Economic uncertainty remains firmly entrenched, and more tariff announcements could be in the picture in the upcoming months,” she said in a recent note.

Canadians are already grappling with unpredictable and often unclear economic threats , but here’s how the tariffs that are currently in place could affect consumer pocketbooks .

What tariffs are currently in place?

The U.S. has imposed 25 per cent tariffs on Canadian goods that aren’t compliant under the Canada-United States-Mexico Agreement (CUSMA), with a 10 per cent carveout for energy and potash, due to what the Trump administration claims are concerns about border security and fentanyl.

In the event that these tariffs are lifted, Canada will still face 12 per cent tariffs on non-CUSMA-compliant products due to Trump’s latest reciprocal tariff order . Other countries face reciprocal tariffs ranging from a minimum of 10 per cent to as high as 50 per cent. There are also 25 per cent tariffs against Canadian steel, aluminum and vehicles.

“It’s estimated that around 40 per cent of the dollar value of goods travelling across the border are declared as CUSMA-compliant, although more firms may make the effort to become compliant,” Toronto-Dominion Bank economists said in a note, adding that 80 per cent to 90 per cent of the value of exports is expected to become CUSMA-compliant in the near future.

“As it stands, the effective tariff on Canada is now around 10 per cent, up from less than two per cent before President Trump came into office,” the economists said.

Canada has matched Trump’s tariffs with 25 per cent tariffs on American imports as well, including on vehicles that are not compliant with CUSMA.

The first round of tariffs was focused on $30-billion worth of U.S. imports and was less likely to hurt Canadian consumers, but the tariffs on an additional $125-billion worth of goods are scheduled to follow.

Who pays the tariffs?

Tariffs are first paid by the importer, which means the 25 per cent tariff imposed on a Canadian product is paid by the company importing it from Canada into the U.S., with the revenue going toward the U.S. government, and vice versa for goods imported into Canada.

The importer can choose to either absorb the higher costs or pass some or all of the costs onto consumers. It’s less typical for the exporter to lower the price of their goods.

Michael McAdoo, a partner and director at Boston Consulting Group in Montreal, said different products have varying price elasticity and margins, which can impact how the importer manages the higher fees.

For example, a French luxury handbag could cost $400 to make and retail for $2,000 in the U.S. The 20 per cent reciprocal tariff the U.S. has imposed on France means the handbag now costs an extra $80 for the U.S. importer, which could end up just absorbing the higher costs since there’s a massive margin that gives them more cushioning.

On the other hand, an industrial product with a lower margin — say, something that costs $90 to manufacture, but retails for $100 — would be much more hurt by a 20 per cent tariff, since that takes the cost up to $108. In this scenario, the importer is more likely to pass on the higher price or find another way to reduce their costs.

However, McAdoo warned that some companies may also use tariffs as a pretext to raise their prices higher than the value of the tariff as well.

How will tariffs affect consumers?

Canadian tariffs on American imports mean consumers will shell out more money to pay for goods that they can’t substitute with cheaper products that are domestically produced or come from other countries.

But the cost to American consumers will be “significantly more devastating,” David Soberman, the Canadian national chair in strategic marketing at the Rotman School of Management, said. The U.S. has levied a barrage of tariffs on trading partners across the globe, while Canada is only paying more for American goods.

U.S. tariffs on Canadian imports won’t directly affect Canadians’ pocketbooks, but the fees become more complicated for finished goods that require parts or materials from Canada, are assembled in the U.S. and are then sold back to Canada.

For example, Soberman pointed to U.S. automobiles, which often require parts from Canada and move back and forth across the border, getting tariffed each time.

“(Economists fear) this is going to result in general increases in prices for everybody,” he said. “Even though we do produce a lot of finished goods here … most of our exports are things like lumber, oil and gas, potash and aluminum. These are typically raw materials that go into making other products that are then transformed and then sold back to consumers in both countries.”

Inflation in Canada is expected to eclipse the three per cent mark over the summer, according to economists at TD.

McAdoo suggested that the reciprocal trade tariffs on other countries could potentially benefit Canada if some exporters seeking a market with a similar consumer profile, but not charging tariffs choose to send more of their products here instead of to the U.S.

However, Soberman said the tariffs on goods from other countries could potentially reduce their demand and therefore their production, causing these countries to raise the price of their goods being sent to Canada as well.

What are the other indirect effects?

“The predictions now are fairly dire that if tariffs stay in place, they are going to drive the global economy into a recession because everyone is going to be hit really hard,” Hampson said.

Soberman said companies could start laying off employees, pointing to the recent pause at a Stellantis NV assembly plant in Windsor, Ont., and that will impact people’s incomes.

“Of course, when a factory closes, what also happens is that all the ancillary businesses that supply that factory also suffer,” he said, adding that spending within the local community may be reduced as well. “The ripple effects of these things are pretty significant.”

Soberman said the U.S. employment rate is less likely to take a hit since many American companies primarily supply American consumers.

Investors on both sides of the border are also feeling the pain, with stock markets around the world plunging due to growth fears.

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“The big Canadian pension funds invest heavily in U.S. equity markets, so their valuations are going to be affected,” said Hampson, adding that while Canadian investors with American stocks will undoubtedly take a hit, Canadian stocks are also sliding.

The S&P/TSX composite index dropped more than 3.8 per cent on Thursday, its biggest intraday drop since January 2022. However, it still outperformed the S&P 500, which plummeted to its lowest level since August.

• Email: slouis@postmedia.com

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Statistics Canada says this is the biggest monthly job loss since January 2022, and comes as the U.S. posts unexpectedly high job gains.

Canada’s unemployment rate climbed to 6.7 per cent in March, up from 6.6 per cent the month before, as the economy lost 33,000 jobs , Statistics Canada said on Friday.

The job losses were the largest decrease in employment since January 2022. Economists polled by Reuters had expected a gain of 10,000 jobs in the month.

Nearly 1.5 million people were unemployed in March, up 36,000 from the previous month and 167,000 from a year ago. Employment fell in the wholesale and retail trade, information, culture and recreation, agriculture, manufacturing and construction sectors.

“The wheels may be starting to fall off the Canadian labour market, with a 33,000 decline in jobs during March falling well short of consensus forecasts for a 10,000 gain,” Andrew Grantham, an economist at CIBC Capital Markets, said in a note after the data was released.

Private-sector employment fell by 48,000 in March, while public-sector employment was little changed. The overall drop in employment was driven by a 0.4 per cent decline in full-time work.

“The impact of trade tariffs appears to be working its way through the economy,” James Orlando, senior economist at Toronto-Dominion Bank, said in a note to clients. “Businesses and consumers are naturally hesitant in the face of heightened political uncertainty.”

Last month, when the Bank of Canada cut its interest rate to 2.75 per cent, it posted findings from business and consumer surveys that showed businesses plan to pull back on hiring amid trade uncertainty with the United States.

In early March, U.S. President Donald Trump imposed a 25 per cent tariff on Canadian goods not in compliance with the Canada-United States-Mexico Agreement (CUSMA) and a 10 per cent tariff on Canadian energy not in compliance with CUSMA. He also imposed a 25 per cent tariff on Canadian steel and aluminum on March 12 and on autos not made in the U.S. on April 3.

“As a result of all these trade-related factors, many businesses have scaled back their hiring and investment plans,” Bank of Canada governor Tiff Macklem said during the bank’s last policy rate announcement on March 12.

Statistics Canada on Friday said 0.7 per cent of those who were employed in February became unemployed in March due to layoffs. The layoff rate is little changed from what it was a year ago and is identical to the pre-pandemic average.

“Gauging the contribution of swirling tariff winds is the key question in the soft March numbers, but we didn’t see the smoking gun,” Brendon Bernard, senior economist at Indeed Canada, said in a note. “Instead, March’s weakness stemmed from a continuation of the trends that weighed on the job market in 2024, namely, slow hiring, which has made it tougher for those out of work to land a job.”

The weak jobs report could give the Bank of Canada room to cut its rate at its next decision on April 16, economists said.

“While pricing for April is still undecided, we think the bank should keep cutting by at least another 50 basis points (cumulative) over the coming months in order to cushion the blow from tariffs,” Orlando said. “Today’s discouraging jobs report showcases the downside risks to the economy, which warrants further action from the Bank of Canada.”

Grantham said the job market is expected to continue to decline, especially in sectors most directly impacted by U.S. tariffs. CIBC expects the unemployment rate to peak slightly above seven per cent in the second half of this year.

The Bank of Canada’s business and consumer outlook survey out Monday will also be key to the central bank’s next rate decision, he said.

Total hours worked rose by 0.4 per cent during the month and 1.2 per cent from a year ago. Average hourly wages were up 3.6 per cent on a year-over-year basis, following 3.8 per cent growth in February.

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In the wake of Donald Trump’s reciprocal tariff bombshell, JPMorgan Chase & Co. raised the chances of a U.S. recession to 60 per cent from 40 per cent. That is bad news for the economies around the world including Canada’s.

“These policies, if sustained, would likely push the U.S. and possibly (the) global economy into recession this year,” analysts in the bank’s global economic research unit said in a note titled “There will be blood.”

Canada dodged Trump’s tariff bullet , but economists are still warning an economic contraction this year is very much in the cards.

“The negative impact of U.S. tariffs on the Canadian economy remains significant,” Charles St-Arnaud, chief economist at credit union Alberta Central, said in a note. “ An economic contraction in the second quarter of 2025 is fast becoming a reality.”

Economists had been calling for Canada to fall into a recession in the second quarter prior to Trump’s announcement of tariffs ranging from 10 per cent to 49 per cent against countries around the world, but Canada and Mexico are still affected by a previous 25 per cent levy on many goods exported to the United States unless they are compliant with the Canada-United States-Mexico Agreement (CUSMA).

St-Arnaud said Canada’s economy will land in a hole more “indirectly,” with growth in Canada likely shrinking as worldwide tariffs apply “an important negative shock to the global economy.” That will impair growth, curb demand and reduce prices, especially for commodities, leaving resource-exporting provinces such as British Columbia, Alberta and Saskatchewan particularly exposed.

Furthermore, if the U.S. falls into a recession, Canada’s economy will suffer due to its dependence on demand from its neighbour

Economists at Bank of Nova Scotia , who had previously forecasted U.S. growth of 1.5 per cent to two per cent for 2025, are now projecting “the estimated shock from tariffs would tip that to zero growth if not a contraction.”

The pain doesn’t end there.

Canada is still shouldering 25 per cent tariffs on steel, aluminum and automobiles (minus the value of American-made components) and 10 per cent tariffs on non-CUSMA-compliant energy exports and potash. Trump could also impose tariffs on other products such as lumber , copper and pharmaceuticals.

“Uncertainty is extremely elevated,” St-Arnaud said. “(It) can be a slow killer of the economy, with spending decisions being postponed and cancelled.”

He suggested that if business confidence erodes, companies could opt to delay making new investments or ultimately decide against upgrading their aging operations and move instead to the U.S.

“The longer uncertainty persists, the broader and more persistent the impact will be on investment and the economy,” he said.

The tariff chaos is already taking its toll. The Conference Board of Canada’s consumer confidence index fell to a near-record low in February and the Canadian Federation of Independent Business’s Business Barometer fell to its lowest level ever in February. It slightly rebounded in March, but that was before Trump’s latest tariff bombshell.

“Both indicators are likely to deteriorate further,” St-Arnaud said.

National Bank of Canada also has a gloomy economic outlook for Canada.

“Unless the U.S. administration reverses course, the Canadian economy remains on track for a noticeable deceleration throughout the remainder of 2025,” it said in a note.

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Canada’s exports plunged by 5.5 per cent in February, reversing course after rising almost 16 per cent between November 2024 and January 2025 as the United States’ tariff agenda started to turn global trading flows on their head.

The hit to exports means that Canada’s trade balance went from a surplus in January of $3.1 billion to a deficit of $1.5 billion in February, Statistics Canada said.

“The strong volatility in recent months occurred amid threats by the United States to impose tariffs on Canadian goods,” the data agency said Thursday. Exports fell in 10 of 11 categories.

Exports to the U.S. declined 3.6 per cent in February, and exports to other countries fell 12.4 per cent.

Economists had expected Canada to post a trade surplus of $3.5 billion.

“Looking ahead, although USMCA (United-States-Mexico-Canada Agreement) goods were exempt from tariffs in March, U.S. businesses appear to have accumulated enough inventory in prior months, and exports will remain under pressure as a result,” Katherine Judge, an economist at CIBC Capital Markets said in a note.

“Export demand will also be dented for autos, steel/aluminum, and lumber, which are subject to previously announced tariffs, despite Canada escaping the reciprocal tariffs,” she said.

 

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If you don’t prepare your own tax return each year, you’re missing out on what’s possibly the best education you can get about our Canadian tax system. Each week during tax season, Jamie Golombek gets dozens of emails from readers asking a variety of questions. He says many are excellent and require a bit of research to properly respond. Others, however, show that some Canadians don’t really have a good understanding of how our tax system works. This week, Golombek takes readers back to basics and takes a closer look at how the Canadian personal tax system, with its progressive tax brackets, deductions and credits, works. Keep reading here to find out more.

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Canadian companies, from smaller retail businesses to third-party logistics providers, will soon start paying tariffs on low-value shipments from China and Hong Kong bound for the United States.

In a Wednesday executive order, U.S. President Donald Trump declared that he was eliminating the “de minimis” trade provision for goods originating from China and Hong Kong starting on May 2. The trade rule, also called Section 321, allowed goods valued at US$800 and under to enter the U.S. duty-free, allowing bargain e-commerce sites such as China’s Shein and Temu to rapidly expand in the U.S. in recent years. Approximately four million low-value shipments enter the U.S. daily.

Trump initially cancelled the provision in February, but reversed his order the same month until the government could implement new systems to collect the revenue. The White House is now mulling the creation of an “External Revenue Service” to collect new tariff revenues.

While Trump’s order applies only to China- and Hong Kong-origin products, it will have ripple effects throughout the global e-commerce and shipping industries, forcing companies to overhaul their fulfillment and manufacturing strategies.

Under the new trade rules, all low-value imports that originate from China and Hong Kong — even if routed through Canada or Mexico — will be required to pay duties and taxes when they enter into the U.S.

In 2024, around 1.36 billion shipments entered the U.S. under the de minimis rule — an increase of 114 per cent in four years, according to the U.S. Customs and Border Protection. Canada is the third-largest source of de minimis goods into the U.S., accounting for around $5 billion worth of low-value imports in 2021.

The change will strike a blow to discount marketplaces that ship from China and whose business models depend on the de minimis exception. Companies that have shifted to this model in recent years — from Chinese e-commerce platforms to U.S. giant Amazon.com Inc. to smaller Canadian apparel companies — will be forced to pivot and ship in bulk to the U.S., raising costs for the companies and consumers, said Tony Pelli, director of supply chain security and resilience at BSI Consulting.

“Sending fewer shipments in bulk will cost them less than filing for each individual smaller shipment,” Pelli said.

Companies will now need to pay a 16 per cent tariff on low-value items that previously qualified for de minimis; a baseline 10 per cent tariff on all imports to the U.S.; a 7.5 per cent additional tariff on products from China; as well as the 34 per cent tariff on China-origin goods announced on Wednesday, Pelli said, adding that it wasn’t immediately clear how the latest tariffs would be enforced.

“There’s also a cost in either hiring a customs broker or developing internal expertise to ensure that tariffs are applied correctly, in addition to potential warehousing costs,” he said.

Some companies have explored diversifying their supplier and manufacturing base beyond China. But the U.S.’s latest round of global tariffs — which includes a 46 per cent tariff rate on Vietnam, one of the highest “reciprocal” rates — will likely slow any outsourcing to Vietnam and other manufacturing hubs such as Bangladesh and Thailand, which have been hit with 37 per cent and 36 per cent tariff rates, respectively, said Derek Lossing, a supply chain consultant and founder of Cirrus Global Advisors Inc.

Globally, international air cargo airlines will be forced to redeploy their global air fleets to other markets, Lossing said. He predicts that the industry will take a US$3 billion-plus hit over three years in “lost revenue for airlines and forwarders due to this evolving shift.”

The flow of goods into the U.S. is also set to slow. Customs inspections will become more granular given that “deeper data classifications are required” for goods entering the U.S. without the de minimis provision, Lossing said. “More friction … will slow the delivery of goods by one to two days.”

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Trump’s de minimis cancellation could see other economies retaliate in kind, with the European Union considering eliminating its own de minimis exemption.

“The EU is concerned that this has allowed companies to avoid strict safety, environmental, and intellectual property laws. There has been some indication that the U.K. could follow as well,” Pelli said.

Around 4.6 billion low-value shipments entered the EU market in 2024, a threefold increase over two years.

• Email: ylau@postmedia.com

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Immigration advocates are suing the Trump administration over its coming registration requirement for non-U.S. citizens staying longer than 29 days, offering a possible reprieve for Canadian snowbirds.

U.S. President Donald Trump showed off a giant chart on Wednesday full of new “reciprocal” tariffs, which start at 10 per cent and grow steeper for countries with larger trade deficits with the U.S. But experts quickly noticed that these numbers don't add up. So what are these tariffs actually based on?

The Trump administration announced a new suite of trade measures on dozens of countries Wednesday. Here are answers to some frequently asked tariff questions.

On the one hand, the U.S. president wants to upend 70 years of global trade and fundamentally change the way the world does business. But in handing out exemptions and carve-outs, he’s trying to do that in a way that doesn’t cause much pain for American businesses and consumers.

Competing with Canada’s Big Six banks isn’t going to be easy, but the recent entry of Banco Santander SA , one of the world’s largest financial institutions, could potentially provide Canadians with better options in the future, some analysts say.

The world’s 16th-largest bank by total assets received a licence for its subsidiary to operate in Canada last month, something confirmed by a notice published in the Canada Gazette, the government’s official newspaper, on March 29.

Being granted a banking licence means Santander Consumer Bank (SCB) can now take deposits from consumers.

“Expansion of activities by banks such as SCB may provide the impetus to increase competition, which should be beneficial for Canadians in the form of more choice and better pricing on both loans and deposits,” Sailie Ashtekar, senior analyst, North American Financial Institution Credit Ratings, at Morningstar DBRS, said.

But she said competing with the Big Six is “easier said than done” since the group dominates the market.

“Nonetheless, any developments that add potential new entrants or initiatives that increase access to the Canadian market … are opportunities to increase competition,” she said.

Santander’s presence in Canada dates back about 10 years, when it spent $300 million to buy Edmonton-based Carfinco Financial Group Inc., which provided vehicle loans to borrowers unable to obtain financing.

The company hasn’t disclosed what its approach in Canada will be, but Ashtekar said she believes the most likely avenue forward will be to “bolster the existing auto financing franchise” by reducing funding costs by replacing wholesale funding with cheaper customer deposits and then working to expand into other retail products and services .

“Any strategy must be built on the premise that the dominant positions of the Big Six will remain intact going forward,” she said. “Any strategy will need to target specific niches, most likely focusing on consumer/retail financial services, an area in which Santander has a strong reputation globally.”

Santander has focused on “specific niches where they feel they can compete more effectively” in the United States and Mexico, Ashtekar said in a note on March 31.

With 168 million customers worldwide, Santander boasts a strong presence globally. The company has largely achieved its goal of attaining at least a 10 per cent market share in each of its core markets outside Spain, except in the U.S., the note said.

The bank could leverage each of these strengths to grow in Canada, Ashtekar said.

“The bank could pursue cross-selling of already developed solutions elsewhere that could benefit the Canadian market, such as private banking, asset management and perhaps trade finance of international payments.”

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But the Big Six, accounting for 95 per cent of the total bank assets in Canada, represents a “material barrier to entry,” Ashtekar said.

“It is commonplace for Canadians to open their very first bank account with one of the Big Six and remain loyal for decades,” she said. “Additionally, Canadians who use multiple banking services and products are less likely to switch banks.”

• Email: nkarim@postmedia.com

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