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California Gov. Gavin Newsom said Wednesday his state will file a lawsuit challenging U.S. President Donald Trump's authority to impose sweeping tariffs, which have set off a global trade war.

The Bank of Canada today maintained its target for the overnight rate at 2.75 per cent, with the Bank Rate at three per cent and the deposit rate at 2.70 per cent.

The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally. Instead, the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for U.S. trade policy. In the first scenario, uncertainty is high but tariffs are limited in scope. Canadian growth weakens temporarily and inflation remains around the two per cent target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above three per cent next year. Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic outcomes within any scenario, since the magnitude and speed of the shift in U.S. trade policy are unprecedented.

Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the United States, the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the euro area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.

Financial markets have been roiled by serial tariff announcements, postponements and continued threats of escalation. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth. Canada’s exchange rate has recently appreciated as a result of broad U.S. dollar weakness.

In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.

Inflation was 2.3 per cent in March, lower than in February but still higher than 1.8 per cent at the time of the January MPR. The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax . Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed.

Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Our focus will be on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while ensuring that inflation remains well controlled.

• Bank of Canada holds interest rate at 2.75%
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Governing Council will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve.

Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.

The Bank of Canada on Wednesday held its key policy rate at 2.75 per cent, its first pause after seven consecutive cuts, and said the uncertainty around U.S. tariffs made it impossible to issue regular economic forecasts.

The Bank of Canada held its interest rate at 2.75 per cent on Wednesday, citing uncertainty brought on by United States trade policy for its first pause after a string of seven consecutive cuts that began in June 2024.

“At this meeting, we decided to hold our policy rate unchanged as we gain more information about both the path forward for U.S. tariffs and their impacts,” Bank of Canada governor Tiff Macklem said in prepared remarks in Ottawa. “Faced with pervasive uncertainty, Governing Council will proceed carefully, with particular attention to the risks.”

U.S. President Donald Trump’s trade actions have caused global market volatility and increased uncertainty for Canadian businesses and households. Tariffs remain in place on Canadian steel and aluminum, motor vehicles and goods not in compliance with the Canada-United-States-Mexico Agreement (CUSMA) . On April 2, Trump introduced tariffs on countries worldwide, before announcing a 90-day pause on April 9, while keeping a 10 per cent baseline tariff on most countries. Canada is not subject to the 10 per cent tariff.

“The path of U.S. trade policy remains highly unpredictable,” said Macklem. “There is also considerable uncertainty about the impacts of a trade war on our economy.”

In light of the volatility, the Bank of Canada did not think it was useful to provide a forecast, instead opting to publish two scenarios in its monetary policy report to help illustrate the possible impacts on the Canadian economy.

In “Scenario 1” the bank assumes most tariffs imposed are negotiated away, but the process remains unpredictable until the end of 2026. In “Scenario 2” a number of tariffs remain in place on a permanent basis, causing a long-lasting global trade war and ongoing uncertainty.

The first scenario shows Canada’s GDP stalling in the second quarter of 2025, with exports falling sharply and business investment contracting. Domestic demand is weak over the near term, with quarterly consumption growth modest in 2025, before slowly strengthening in 2026 and 2027. In this scenario, the removal of the federal consumer carbon price lowers energy prices starting in April of this year, reducing CPI inflation by 0.7 percentage points for one year and bringing average inflation for the year to 1.5 per cent.

The second scenario has Canada’s economy contracting over the next year, with growth averaging -1.2 per cent for four quarters, before gradually recovering to around 1.8 per cent in 2027. Inflation averages close to two per cent through the first quarter of 2026, before rising to three per cent in the second quarter, before going back down to two per cent in 2027. This scenario also has business investment declining significantly and an increase in unemployment, due to Canadian exporters reducing production and laying off workers.

“To be clear, these are only two of many possible scenarios, and even these do not span the possible outcomes,” said Macklem. “The April 2 announcement put the situation closer to Scenario 2, but the partial rollback on April 9 and new exemptions in recent days have moved trade policy back towards the middle of the two scenarios.”

The Canadian economy ended on a strong note at the end of 2024, but trade uncertainty is already having an impact this year. The Bank of Canada estimates growth to have slowed to 1.8 per cent in the first quarter of 2025 and growth in consumption to have slowed from 5.5 per cent in the fourth quarter of 2024, to 1.5 per cent during the first quarter of this year. Business investment is expected to have declined by two per cent, reflecting the results from the bank’s recent business outlook survey which showed a large portion of firms planned to hold back on strategic new investments, in light of the trade situation.

Macklem was asked why the bank did not cut, in light of the declines in business investment, consumer spending and lower real estate activity. In response, the governor said the bank was navigating “carefully.”

“Our goal is to ensure that Canadians stay confident in price stability,” he said.

Bank of Montreal chief economist Douglas Porter, said not much time should be spent “parsing every word from the bank” given how quickly the economic landscape can shift, but added BMO expects the Bank of Canada will cut again this year, as trade uncertainty drags on growth.

“We believe that the deep trade uncertainty will weigh heavily on growth in Q2 and Q3, blunting inflation pressures, and eventually prompting the bank to trim rates further, ultimately taking them slightly below neutral – which would be entirely appropriate in a world of trade trauma,” he said in a note.

Rosenberg Research & Associates Inc. founder and president David Rosenberg  said an “economic storm” still lies ahead, which could see the unemployment rate climb as high as eight per cent. Rosenberg said the concerns over inflation are misplaced and he expects the bank will continue its easing cycle.

“While it was no surprise to see the bank hold its fire today, this easing cycle is far from over, and the Bank of Canada will end up doing quite a bit more than the two additional rate cuts the markets have priced in,” he said in a note to clients.

“I will stick with the historical record that each of the past five easing cycles going back the past quarter-century saw the trough in the policy rate at two per cent or lower (and two did not involve a recession, which now looks to be in the cards).”

• Read the Bank of Canada's official statement
• Bank of Canada should cut rates deeper to save housing market
• Loonie traders are betting on a steady outlook

Macklem reiterated that monetary policy cannot completely offset the impacts of a trade war, but the central bank will continue to monitor not only the uncertainty associated with the tariffs, but the uncertainty of how businesses, households and governments will react to those tariffs.

“Monetary policy will ensure inflation remains well controlled and support economic growth as Canada confronts this unwanted trade war,” said Macklem. “As always, we will be guided by our monetary policy framework and our commitment to maintain price stability over time.”

• Email: jgowling@postmedia.com

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The Bank of Canada needs to cut interest rates to get housing activity moving again or risk Canada’s economic growth, economists warn.

Home sales in Canada fell for the fourth straight month, down 4.8 per cent in March from February and 20 per cent from November, according to Canadian Real Estate Association (CREA) data, even though the shelter component of Statistics Canada’s consumer price index slowed year over year to 3.9 per cent in March from 4.2 per cent. On a monthly basis, it came in below 0.2 per cent for the second consecutive month.

Economic uncertainty brought on by United States President Donald Trump ‘s chaotic trade war has been singled out as the main culprit for making homebuyers squeamish about taking the housing plunge.

But two economists also think interest rates remain too high to turbocharge the sector, which is a major contributor to Canada’s economy and also highly sensitive to interest rates.

“There was so much worry when the Bank of Canada began to cut rates that it would ignite a renewed housing sector bubble,” David Rosenberg , founder of Rosenberg Research and Associates Inc., said in a note. “As we said then, and as we are seeing in real time, those concerns were and are unfounded.”

Canada’s real estate market, once among the world’s hottest has been on ice for the past four months.

Sales have slumped, but prices are sliding as well, CREA said in a release on Tuesday.

The national average home price fell 3.7 per cent year over year to $678,331 in March, while the national composite MLS home price index declined one per cent last month, which was “the largest monthly decrease since November 2023,” CREA said.

Meanwhile, “the shelter components (of inflation ) are starting to play a leading role in the disinflation process,” Rosenberg said.

Disinflation is bad news because it can lead to recessions or economic slowdowns and higher unemployment .

“So, this prior source of upside inflation pressure is clearly subsiding (especially rents and mortgage interest costs),” Rosenberg said. Mortgage inflation grew 10 per cent in March, down significantly after peaking at 31 per cent year over year in August 2023.

Housing prices are still relatively elevated compared to incomes, but “there is a risk that prices will continue to decline unless the Bank (of Canada) cuts interest rates much further than we currently forecast,” Stephen Brown and Harry Chambers, economists at Capital Economics Ltd., said in a note.

Weakness in Canada’s housing market is becoming more widespread, they said.

Much of the weakness last year could be attributed to slowing apartment sales as “investors shunned the market amid falling rents,” they said, but it now appears to have shifted to single-family homes occupied by owners.

Prices for that type of housing were down a bit more than one per cent in March compared with a drop of around 0.7 per cent in apartments.

“This would seem to suggest that weaker demand from owner-occupiers, likely amid increased economic uncertainty, is to blame for the renewed weakness in the housing market,” Brown and Chambers said.

Furthermore, CREA said the ratio of sales to new listings continued to slump, suggesting home prices will do the same.

“That is exactly what happened last month, with the MLS house price index falling by one per cent,” Brown and Chambers said. “That suggests our forecast for prices to soon stabilize, and fall by just 1.5 per cent in 2025, now looks too optimistic.”

Rosenberg Research is calling for the Bank of Canada to cut interest rates to at least 2.25 per cent, which is the low end of the neutral range.

Questions about your personal finances ahead of the federal election? Join us today at noon for a live online Q&A with Ted Rechtshaffen, president and portfolio manager at TriDelta Private Wealth, and Jason Heath, certified financial planner at Objective Financial Partners Inc. Register here

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Russia’s ruble has surged to become the best performing global currency, posting this year’s strongest gains against the U.S. dollar to outpace even the traditional safe haven of gold.

The ruble has strengthened 38 per cent versus the dollar on the over-the-counter market since the beginning of this year, data compiled by Bloomberg shows. While the greenback has reeled from mounting pressure caused by United States President Donald Trump’s escalating tariff wars, Russia’s currency has also been buoyed by factors unique to the country, including record-high local interest rates. — Bloomberg

Read the full story here.

 

• Bank of Canada announces its interest rate decision and releases monetary policy report at 9:45 a.m. ET
• OMERS chief executive Blake Hutcheson speaks on investing in challenging times at the Canadian Club Toronto
• Today’s Data: U.S. retail sales for March.
• Earnings: Metro Inc., Alcoa Corp., Kinder Morgan Inc.

 

• Why the future of Old Age Security is making seniors anxious this election
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• Investors have Canadian defence tech in their sights amid pressure to boost military spending

In the lead-up to the federal election on April 28, we’ve heard many proposals from party leaders that will directly affect your pocketbook. The impact of tariffs — including the spectre of job losses and inflation, along with the resulting stock market volatility — has made personal finance policies especially important for voters. Check here for a rundown of the key promises from each of the three main candidates. 

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at  posthaste@postmedia.com .

• Canada's inflation rate cools more than expected
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Canadians approaching retirement age are among those most vulnerable to market volatility caused by U.S. President Donald Trump's trade war, with one Ottawa grandmother contemplating a return to work to compensate for her recent losses.

Higher prices are showing up on some items that are being counter-tariffed by Canada. But levies were left off many food items from the U.S., which has moderated the overall impact on grocery budgets.

Benjamin Tal, Deputy Chief Economist CIBC Capital Markets, talks with Financial Post’s Larysa Harapyn about the impact of uncertainty under Donald Trump on Canada’s economy , which may already be in recession.

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• Share via email Reddit X Share on Linkedin 'Unprecedented' times will test investors: Kelley Keehn

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Inflation grew less than expected in March, rising 2.3 per cent year over year versus forecasts of 2.7 per cent.

But without the decline in gasoline prices , inflation grew 2.5 per cent in March from the same time last year. In February, headline inflation grew 2.6 per cent.

Here’s what economists think the latest inflation numbers mean for the Bank of Canada and interest rates as policymakers get set to release their latest decision on Wednesday.

‘Temporary, volatile’: Alberta Central

“Temporary and volatile factors,” including the end of the GST tax break and falling oil prices and travel costs, were responsible for the overall inflation rate slowing in March, Charles St-Arnaud, chief economist at credit union Alberta Central, said in a note.

He also highlighted that the share of items in the consumer price index basket that increased by more than three per cent rose in March to “its highest in more than a year and well above historical norms.”

Overall, the report suggests that “while inflation eased in March, it may not be sustainable,” St-Arnaud said, pointing to some “stickiness” in core prices that exclude volatile items such as food and energy, and looming pressure from the trade conflict with the U.S.

“While the weaker inflation increases the likelihood of a cut at tomorrow’s meeting, we think the Bank of Canada is likely to take a pause to better assess the situation, especially in light of broadening inflationary pressures,” he said.

Bets for cut rise: Oxford Economics

“March marked the first month of Canada’s counter tariffs on $60 billion of U.S. imported goods, but there were few signs that firms had passed those higher costs onto consumers,” economists Tony Stillo and Michael Davenport at Oxford Economics Ltd. said in a note.

They expect inflation to cool again in April to around two per cent year over year on the elimination of the carbon tax and the drop in oil prices.

However, they think inflation will flare up again in the second quarter and gain momentum as counter tariffs on $35-billion worth of automobiles made in the United States — implemented on April 9 — work their way into the economy. They are forecasting inflation to grow to nearly three per cent year over year by year-end, driven by the Canada-U.S. trade war.

The market briefly boosted bets on a rate cut to about 45 per cent after the release of the data, before sinking back at about 35 per cent.

“However, with rates firmly within neutral territory and plenty of uncertainty about trade and fiscal policy, we still expect the bank to pause as it tries to balance the upside risks to inflation from tariffs against the downside risks to the economy,” Stillo and Davenport said.

‘Cut is back in play’: Monex

“The March inflation data undershot expectations to put a Bank of Canada rate cut this week back in play,” Nick Rees, head of macro research at Monex Europe Holdings Ltd., said in a note.

Much of the slowdown could be attributed to a drop in gasoline and transportation costs, which retreated significantly from February.

Rees said the same dynamic was recorded in U.S. inflation data released last week.

He said a drop in cross-border travel from Canada to the U.S., which hit domestic demand, also contributed to the drop in costs.

Policymakers would have held rates at last month’s interest rate decision rather than cut by 25 basis points had it not been for Donald Trump ‘s escalating tariff threats against Canada, according to minutes of the Bank of Canada meeting.

Rees said the risks appear to have “faded” somewhat on Trump’s mounting reversals, including signals that he is considering the end of 25 per cent tariffs on Canadian-made vehicles.

“That leaves the governing council with a much freer hand to focus on domestic economic conditions and, as such, we suspect that they will take the opportunity to pause,” he said.

Avoiding ‘regret’: Desjardins

In a trade war, “o fficials have the luxury of not being forced into a decision they may later regret ,” Royce Mendes and Tiago Figueiredo at Desjardins Group said in a note, referring to a scenario where the Bank of Canada cuts rates only to have to backtrack as inflation heats up on the fallout from Trump’s tariffs.

The Bank of Canada has cut interest rates 225 basis points to 2.75 per cent from five per cent in June 2024, the biggest cut by any Group of Seven central bank.

“Given the lags in monetary policy, some of that stimulus is still working its way through the economy,” Mendes and Figueiredo said.

Businesses and consumers are also expecting higher inflation, so the Bank of Canada will be wary of doing anything that encourages those expectations, they said. Policymakers were burned by inflation that soared in the aftermath of the pandemic.

They think officials will opt to wait and see whether the inflation that an all-out trade war would likely unleash actually materializes.

“We believe the Bank of Canada will opt to hold its policy rate steady at 2.75 per cent,” they said.

Trade war ‘de-escalating’: Capital Economics

The Bank of Canada’s preferred inflation measures slowed in March after posting above-target monthly increases for the past seven months, Thomas Ryan, North America economist at Capital Economics Ltd., said.

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The average three-month annualized rate for CPI-trim and CPI-median slowed to 2.7 per cent from three per cent, “but at that level, underlying inflation remains too high for the Bank of Canada’s comfort,” he said in a note.

With inflation concerns easing for the moment and signs that the trade war between Canada and the U.S. could be de-escalating, “we expect the Bank of Canada to keep interest rates on hold while it waits to assess the impact of retaliatory tariffs.”

• Email: gmvsuhanic@postmedia.com

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Federal Finance Minister François-Philippe Champagne has announced help for Canadian businesses affected by the trade dispute with the U.S., giving them time to adjust their supply chains.

Hudson’s Bay Co. has been hoping to find an amicable way forward ever since it went to court in March to seek protection from its creditors because it was struggling to pay its dues to landlords, vendors and service providers, but its future is as cloudy as ever despite multiple trips back to court.

Court orders have provided some direction on the liquidation sale now occurring at Canada’s oldest department store chain , but there have been some disagreements with creditors that still need to be dealt with. Here’s what has happened in the past month and what can be expected going forward, given the deadline for buyers to submit bids is April 30.

From full liquidation to an attempt to save six stores

Hudson’s Bay on March 7 decided to seek protection from its creditors through the Companies’ Creditors Arrangement Act (CCAA), with the application granted by the court that same day.

HBC’s move was supposed to provide the company, which has been struggling with the shift towards online shopping, with “breathing room” as it looks for financing. But that plan didn’t work out, as it said trade tensions between the United States and Canada have pushed potential financiers to the sidelines.

The company on March 14 said it would have to liquidate all 96 of its stores unless “an alternative solution” emerged, but it needed a court order to do so since it was under CCAA.

That was granted on March 21 and allowed HBC to start liquidating all but six of its stores: its flagship store in downtown Toronto, as well as two others in the Greater Toronto Area and three in the Greater Montreal Area.

But that doesn’t mean those six stores won’t eventually be a part of the liquidation process. HBC still needs to find a way to make a firm commitment to pay its creditors by the end of April. If it can’t, then these stores may also be liquidated.

“In discussions with the liquidator, we were able to negotiate for their removal, at least on a temporary basis,” Ashley Taylor, a lawyer at Stikeman Elliott LLP representing HBC, told the court on March 21. “There may be some opportunity to restructure around those stores. However, the time to do so remains very short.”

He also said he wanted “to be crystal clear” that HBC did not at the time have an agreement on which it could base a restructuring plan.

Judge Peter Osborne, who has been hearing the motions at the Ontario Superior Court of Justice in Toronto since March 7, said the more stores “carved out” from liquidation, the better.

“There’s no alternative but to approve the liquidation effective immediately to maximize the chances of success,” he said on March 21.

The restructuring plan that wasn’t approved

Osborne has approved several requests from HBC, including its liquidation plan, its plan to monetize its leases and its sale and investment solicitation process (SISP), which essentially paves the way for it to earn money by either selling assets or by getting investments.

But he didn’t approve a restructuring plan created by HBC and some of its senior lenders that imposed restrictions and controls on the retailer’s next steps. The deal was characterized as a positive step because it allowed for the liquidation sale, but imposed various “guardrails” within which the company must operate if it is to have the confidence of the lenders, the judge said in a court filing.

For example, it would have required HBC to comply with an agreed-upon budget.

But Osbourne rejected the agreement because he didn’t find it “necessary nor appropriate” since “controls” were already in place and the oversight of the court-appointed monitor was sufficient enough to protect the lenders’ interests.

Some other parties also didn’t agree with certain conditions of the agreement. For example, lawyers representing some HBC workers last month said the move would have prevented any attempt to provide representative counsel to employees.

“There will be a strong need for a representative counsel to be appointed for the employees and retirees,” Koskie Minsky LLP lawyers said in a filing. “The (agreement), with its vice-like grip on what HBC can do in these proceedings, preemptively prohibits any attempts to provide representative counsel to those employees … it should not be approved.”

More than 9,000 HBC workers are expected to be impacted as a result of the liquidation. Jody Nesbit, president of Union Local 240, which represents about 60 Bay employees, said last month that some workers may be eligible to receive a maximum of about $8,800 as per the federal Wage Earner Protection Program Act, but that’s a third of what the company reportedly offered some workers at her union about 18 months ago during a previous restructuring attempt.

She said reality is “slowly setting in” for the employees, many of whom have worked at HBC for almost their entire working lives, including one person who was there for 38 years.

Are there any buyers?

HBC is still looking for funding in April by earning money through liquidation sales, monetizing some of its leases and through the SISP. The deadline for buyers to submit binding bids is April 30, as is the deadline for anyone wanting to buy the leases it holds.

It hasn’t revealed any bids as yet, but British Columbia-based Chinese billionaire Weihong Liu is reportedly interested in buying dozens of HBC locations. She is chair of Central Walk, a retail investment company that owns three malls in B.C.

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A document called Insider Protocol was also sent last week to all parties involved in the HBC case, suggesting someone within HBC could be interested in placing a bid, though that’s not a certainty.

“This protocol has been established to ensure the integrity and fairness of the SISP and/or the lease monetization process for all participants, in view of a potential insider bid that may involve certain members of management for purposes of assisting the insider in considering, advancing and submitting a potential insider bid,” the document said.

• Email: nkarim@postmedia.com

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Honda Canada says it is not planning to move production out of Canada to the U.S., contrary to reports from a Japanese news outlet. 

StatCan said gas prices fell 1.6 per cent year-over-year in March, coming off a hike of 5.1 per cent in February

Buy Canadian is sweeping the nation, but patriotism comes with a cost, say economists.

In an “elbows up” defiance of U.S. President Donald Trump’s talk of making Canada the 51st state and his tariff onslaught, many Canadians have been shunning American goods for domestic alternatives.

“The Buy Canadian movement is deepening, and recent years have taught us that behavioural forces matter in the economy,” said Robert Kavcic, a senior economist at BMO Capital Markets.

Retailers are helping by labelling Canadian products, and there has also been “an almost pandemic-like proliferation of tools to help consumers keep money in the country,” he said.

BMO estimates that the Buy Canadian movement could add about $10 billion a year to the Canadian economy , boosting growth by 0.3 percentage points.

“While that’s meaningful, there are also costs — buying Canadian can be impractical in some cases, and can come with less selection at higher prices,” he said.

It’s difficult for Canadians to avoid imports. Thirty-five per cent of household consumer goods are dependent on either direct imports or indirect, in which imported goods are used to make the final product in Canada, he said.

The biggest imports are autos, household products and consumer electronics.

“Avoiding imports altogether is almost impossible, and doing so partially could come at a higher price,” said Kavcic.

Canadians will find the best deals in grocery stores, where some Canadian products are cheaper, but selection is limited. It’s when shopping for clothes, personal items like shampoo and deodorant or household and sporting goods that Buy Canadian can get really expensive.

“The availability of close substitutes is arguably the biggest challenge and, if found, Canadians could have to pay up,” he said.

A recent survey suggests that they are willing to do that. Dalhousie University’s Agri-Food Analytics Lab found that more than 60 per cent of Canadians were open to paying 5 to 10 per cent more for Canadian-grown produce, dairy or meat over American alternatives.

Almost 50 per cent said they thought Canadian food is superior in quality and safety.

“These numbers signal a clear patriotic tilt in Canadian grocery aisles,” said Lab director Dr. Sylvain Charlebois.

“With nearly two-thirds of Canadians willing to spend more for homegrown food, the ‘Buy Canadian’ movement is not just symbolic — it’s a consumer-driven strategy in the face of geopolitical risk.”

According to Bloomberg, the Buy Canadian movement is extending to investments as well. Last week marked the biggest inflow to exchange-traded funds focused on Canadian equities in four years.

The surge came after Trump’s announcement of reciprocal tariffs on “Liberation Day.”

“There are many clients that are saying, ‘I want to sell all my U.S. positions’ because they don’t like what’s going on and they don’t want to be associated with it,” Philip Petursson, chief investment strategist at Winnipeg, Manitoba-based IG Wealth Management, told Bloomberg.

“We’re advising against that, but clients are starting to see the opportunities elsewhere around the world, and it’s not that the U.S. is the only game in town.”

Governments are also getting in on the act, and they are big buyers. Kavcic points out that according to OECD data, government procurement spending accounted for more than 13 per cent of Canada’s gross domestic product , slightly above the OECD average.

Ontario, for example, has started a Building Ontario Business Initiative that aims to direct $3 billion in contracts a year to provincial businesses, he said — and other provinces are following suit.

Any shift could be costly and governments are already big domestic buyers.

“But the raw amount of dollars spent here still points to a modestly positive economic impact should governments push this policy — and we assume they will,” said Kavcic.

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More evidence that Canadians are shunning travel to the United States in today’s chart from BMO Capital Markets. In March, there were 13.5 per cent fewer Canadians returning from the U.S. by air than the year before, and with airline bookings to the U.S. down over 70 per cent this fall, the numbers will likely get worse, said BMO senior economist Erik Johnson.

“However, the activity at the land border is flashing an even deeper reluctance to travel to America,” said Johnson.

The number of Canadians returning by vehicle fell almost 32 per cent in March. For the seven-day moving average the number was down nearly 42 per cent, compared with down 17 per cent at the end of February before tariffs took effect.

 

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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Western Canadian farmers are questioning why Ottawa would prioritize tariffs for an emerging EV industry in Ontario at the expense of one of the country’s most lucrative agricultural products.

Being of this particular age, with their particular set of life experiences, at this particular moment in history (which didn't end, as it turns out), means the generation once notorious for its cynical and detached attitude has a particular way of experiencing all that's going on.

A landmark antitrust trial that could reshape how America’s Big Tech firms operate got underway Monday, with Mark Zuckerberg‘s Meta Platform Inc. facing accusations that it adopted a “buy or bury” strategy to squash potential rivals. The case, which could result in the Facebook owner having to divest its Instagram and WhatsApp platforms, will unfold in a Washington, D.C., courtroom over the coming weeks. Here’s what’s at stake for the tech giant, and what it could mean for its business and operations in the U.S. and around the world. 

Why is Meta on trial?

In December 2020, the Federal Trade Commission and 48 state attorneys general, launched an antitrust lawsuit against Facebook — as the company was then known — accusing the company of illegal, anti-competitive behaviour.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users. We are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behaviour,” said Letitia James, New York attorney general who led the U.S. states’ investigation.

The lawsuits zeroed in on Facebook’s US$1 billion acquisition of Instagram in 2012 and US$19 billion purchase of WhatsApp two years later. The FTC accused Facebook of failing to compete with new innovators in the mobile app marketplace, alleging that instead it “illegally bought or buried them when their popularity became an existential threat.”

During the trial, the FTC will try to prove that Facebook has maintained a monopoly in the social networking space — one that has evolved with the rise of new entrants such as short video app TikTok. It will attempt to show that Facebook’s Instagram and WhatsApp purchases quashed competition and that the company subsequently leveraged its market dominance to unfairly inflate ad prices and worsen data privacy rights for users.

What does Meta say?

The FTC’s lawsuit against Meta is “misguided,” according to Meta attorney Mark Hansen. Meta’s main defence rests on trying to establish that the FTC’s definition of the social media app marketplace is too restrictive and fails to include key competitors such as Alphabet Inc.’s YouTube and ByteDance Ltd.’s TikTok. Meta also contends that the commission cannot prove that American consumers and advertisers are worse off because of its acquisitions, and argues that it has improved the startups it purchased. “Any way you look at it, consumers have been the big winners,” Hansen said.

What’s at stake for the company?

At stake for the company is its control over photo-sharing app Instagram and messaging platform WhatsApp, which each have more than 2 billion active users. Facebook must divest both businesses in order to restore marketplace competition, according to the FTC.

Meta is not only a social media company. It has invested at least over US$165 billion into artificial intelligence (AI) and immersive reality initiatives to cement its position as a serious deep-tech player.

But its lucrative ad business, of which Instagram is a key contributor, remains a major moneymaker. This year, Instagram is expected to earn US$32 billion in U.S. ad revenue for Meta — or half of the company’s ad revenue, according to numbers from market intelligence firm eMarketer. Instagram’s U.S. user base has surged 142 per cent to 148 million users in the last decade, eMarketer says.

Will other countries follow suit?

Meta in recent years has found itself in the crosshairs of U.S. and global regulators.

The EU in particular, has carved out a tough stance toward Big Tech in a bid to limit the market power and influence of U.S. tech companies. The European Commission began investigating last year whether Meta and Apple Inc. breached the EU’s digital competition rules. The EU’s Digital Markets Act (DMA) came into force in May 2023 and established guidelines for Big Tech firms in a bid to create a fairer marketplace and provide European consumers with more choice.

The EU is set to announce its verdict in coming weeks, with antitrust watchers expecting Brussels to dole out modest fines for the two companies for regulatory infractions, according to Reuters. Trump’s trade war has pushed the EU even further, with EU president Ursula von der Leyen noting that the bloc could impose fines on U.S. tech firms if trade talks break down.

Has Meta won over Trump?

Meta’s antitrust trial will be its first major test under the second Trump administration. The FTC’s case against Meta began in 2020 during U.S. President Donald Trump ’s first term.

The U.S. president previously threatened to sentence Zuckerberg to “life in prison,” alleging that the tech CEO weaponized Facebook against him during the 2016 U.S. presidential election.

Citing the changing legal and policy landscape, Meta in recent months has made a series of sweeping changes seemingly meant to assuage Trump’s criticisms of Zuckerberg and Facebook, including axing fact-checking partnerships and diversity initiatives. Last December, Meta donated US$1 million to Trump’s inauguration fund. Meta also lobbied the Trump administration in recent weeks in an effort to bring the antitrust trial to a halt and see the government and the company strike a settlement, according to a Wall Street Journal report.

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“Regulators should be supporting American innovation, rather than seeking to break up a great American company and further advantaging China on critical issues like AI,” Meta said in a statement.

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The Canadian dollar could be benefiting from both “haven” tailwinds and bets that the Bank of Canada will hold interest rates this Wednesday, say economists.

The loonie broke through 72 cents U.S. late last week and continued to hold in trading on Monday, rising to a level last seen in November 2024.

“The idea of Canada as a safe haven … is a bit of a stretch because we’re so exposed to the United States,” William Robson, president and chief executive of the C.D. Howe Institute, said. “But to some extent, somebody who’s selling United States bonds might say, ‘OK, well, maybe I’ll take a bit of a hit on the yield and buy some Canadian debt as well because they look like better creditors.'”

Karl Schamotta, chief market strategist at Corpay Currency, said a broad-based reappraisal of the U.S. economy’s exceptional status is underway and global market participants are now in a race to find alternatives. “Canada, Europe, and Japan all stand to benefit as investment flows become more diversified,” he said in an email. The haven argument holds some water for Michael Davenport, a senior economist at Oxford Economics Ltd., but he said the loonie is also gaining on the falling chances that the Bank of Canada will cut interest rates on Wednesday. The central bank’s overnight lending rate currently stands at 2.75 per cent. Chances of a rate cut this week stand at 33 per cent, down from 55 per cent last Monday, according to Bloomberg.

“Markets are starting to price in the higher likelihood of a pause by the Bank of Canada and taking out expectations of interest rate cuts this year,” Davenport said. “So, that is also at play in terms of driving the net appreciation of the dollar against the U.S. dollar.”

He said policymakers are keenly worried about landing in another inflation mess similar to the one following the pandemic.

The Canadian dollar’s current value is something of a change for the not-so-long-ago beleaguered currency.

From a low of 68.8 cents U.S. on Jan. 31 — which was less than the level reached during the pandemic — the Canadian dollar is up 4.9 per cent as it continues to recover from a plunge that began last September when polling indicated that Donald Trump’s prospects of taking the White House were increasing.

At that point, the Canadian dollar was trading around 74 cents U.S., but investors began flooding into the greenback on the belief that Trump would be good for the economy and markets with his low-tax and regulation-cutting policies.

Tariffs have upended that view, with the U.S. dollar index, which measures a basket of major currencies including the Canadian dollar, down 9.4 per cent since mid-January.

“The bigger picture is that North American currencies are down compared to the rest of the world,” Robson said. “The United States, in its position as the provider of the most secure debt securities, in its position as the provider of the currency that most of the world settles its transactions, these things were never really in question for decades and are now in question, and it’s very hard for investors to know where to go.”

The strengthening of the Canadian dollar has consequences. For example, a rising dollar is negative for Canadian oil producers since exports are priced in U.S. dollars, Nima Billou, assistant vice-president of energy, utilities and natural resources at Morningstar Inc., said.

“For producers, what happens is WTI (West Texas Intermediate) is priced in American (dollars) and then what they receive in the local Canadian benchmarks, once it’s translated over into Canadian dollars, as the Canadian dollar strengthens, they’re going to receive less,” he said in a report, adding that a one-cent rise — or decline — in the Canadian dollar represents a cash-flow gain or loss for Canadian producers of $1.5 billion.

In an earlier column in the Financial Post, when the loonie was trading much lower against the U.S. dollar, Robson said a weaker currency, which he described as ill-tasting “medicine,” would take some of the sting out of U.S. tariffs because Canadian goods would simply cost less when prices were converted into greenbacks.

 

But Davenport said the loonie’s value is a tough balancing act for Canada. On one hand, a weaker currency against the U.S. dollar makes exports cheaper, but a strong dollar will make imports more affordable for Canadians.

“Those increased imports from improved purchasing power … would weigh and drag on the Canadian economy,” he said. “It’s not necessarily going to benefit the overall level of GDP in the economy, whereas a weaker Canadian dollar will benefit exports, and that would provide a little bit of a cushion and a booster buffer to Canada’s economy.

However, the Canadian dollar is down 7.5 per cent against the euro and 7.4 per cent against the Japanese yen since mid-November.

“To some extent, there’s a bit of a silver lining in the cloud for Canada, which is that our exports are getting quite a bit more competitive against other markets,” Robson said.

He said that is a good thing, especially given that Canada is looking to diversify its trade to other markets in an effort to break its hefty reliance on the U.S.

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In February, 80 per cent of Canada’s merchandise exports were sent to the U.S., with China coming a distant second, accounting for 3.8 per cent, while Japan was fourth at 1.7 per cent and Germany, France and Spain combined took in 1.5 per cent.

“Trade diversification is part of the answer for us,” Robson said. “But the lower Canadian dollar against other currencies in Europe and Asia and elsewhere in the world is actually part of the answer for us because we are going to badly want to export more to them if we’re having trouble exporting to the United States.”

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President Donald Trump on Monday suggested that he might temporarily exempt some auto manufacturers from tariffs he previously imposed on the sector, to give carmakers time to adjust their supply chains.

The full impact of United States President Donald Trump ‘s trade war, including tariffs, reciprocal tariffs and escalating tariffs on Chinese goods, has yet to be seen.

And while there is currently a 90-day pause on his reciprocal tariffs on about 60 countries and territories, what might follow the reprieve, along with all the economic uncertainty in general, is affecting Canadian clothing retailers that make their products overseas.

Many apparel companies had already shifted production from China to other Southeast Asian countries such as Vietnam and Cambodia due to tariffs imposed during Trump’s first term.

Many people assume the tariffs will lead to higher prices on goods, but this may not be the case for some retail companies, particularly those that don’t enjoy as much brand loyalty from consumers, said a senior analyst at Bank of Montreal who specializes in retail and e-commerce.

Simeon Siegel said there are ways retailers can absorb the cost of tariffs on production without necessarily raising the price.

“Tariffs do not give companies permission to raise prices. Consumers give permission to raise prices,” he said.

Siegel, who covers Lululemon Athletica Inc. and other apparel companies such as Nike Inc. and Birkenstock Holding PLC, said retailers might ultimately try to offset the higher tariff costs with higher prices, but discounts could return just as quickly if shoppers push back.

Vancouver-based Lululemon is one of many apparel retailers that could potentially be affected by Trump’s “Liberation Day” reciprocal tariffs, which included a 46 per cent tariff on Vietnam.

The company started moving its production to Vietnam in 2016, along with other companies that have diversified manufacturing in recent years, in hopes of avoiding Trump’s previously imposed tariffs on China.

Last Wednesday, Southeast Asia was thrust into the same conversation as China, Siegel said.

“All these companies that spent a lot of time and money believing they were de-risking their manufacturing, doing what they were supposed to be doing and moving into countries like Vietnam, found out they were going to be punished just as harshly, if not more,” he said.

Those companies’ stock prices fell the day after Trump released his reciprocal tariff chart, with Aritzia Inc. taking the biggest hit on the S&P/TSX composite index, with its shares dropping more than 20 per cent, and Lululemon’s shares were down nearly 10 per cent on the Nasdaq, as reported by the Canadian Press. Gildan Activewear Inc. shares were down almost ten per cent on the S&P/TSX composite.

Siegel said he believes the uncertainty of the tariffs has been “scarier” than their actual severity since those retailers still don’t know the problem they’re trying to solve.

In a note to clients, Royal Bank of Canada analyst Irene Nattel said apparel retailers Aritzia and Groupe Dynamite Inc. , both of which source extensively in countries at the top of Trump’s tariff chart, have noted multiple tools to manage tariff-related margin headwinds.

Stephen MacLeod, an analyst specializing in retail at BMO, in early March said Aritzia currently sources about 35 per cent of its products from China, with the goal of bringing this down to 25 per cent in the fiscal year 2026.

Aritzia fulfils 65 per cent of U.S. e-commerce orders from Canada, but the company could switch to 100 per cent U.S. fulfilment in 2028 to 2029 with a new distribution centre in the U.S., he said.

Groupe Dynamite sources around 75 per cent of its products from China, with approximately 50 per cent of sales to the U.S. shipped from Canada, MacLeod said.

Apparel, unlike other goods, is largely discretionary, so it will not be as easy to pass on cost increases as it would for things people need and are not substitutable.

“There’s different ways to do all these, but the best way to offset a tariff is by raising prices. That only works if you’re allowed to raise prices,” Spiegel said.

Companies best positioned to raise prices to offset tariffs are those that have built strong connections with their customers. Not all companies have this luxury. Clothing companies that don’t have strong branding might have a harder time increasing prices.

Such companies can either cut costs elsewhere or bear the brunt of the pressure. Their next option would be cutting the cost of production, trimming fat or cutting corners — for example, lowering the quality of the product, Spiegel said.

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With events ever-changing, retailers now have to deal with the uncertainty surrounding tariffs.

“It makes less sense to try to fix the problem until they know what they need to solve for,” Siegel said.

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