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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 growing 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 Capital 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.

• Email: dpaglinawan@postmedia.com

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There’s been no clear path for Canada on how best to manage relations with the United States, but there are emerging signals of a possible path to avoid the worst of what is still to come, particularly a review or full renegotiation next year, if not sooner, of the Canada-United States-Mexico Agreement (CUSMA).

The critical question for Canada — and others — is how does a country offer potentially irreversible concessions on deeply important issues in exchange for promises that are, at best, uncertain to be kept and may not last as long as it takes the ink on the agreement to dry? All in exchange for a deal worse than no deal at all, accompanied by public humiliation and concomitant domestic political blowback.

There is no simple solution.

As bad as this is, walking away or diversifying to other markets is an option Canada has tried and failed at.

Fifty years ago, the last time across-the-board tariffs from the U.S. blindsided the country, Canada embarked on a continuous, well-financed and well-resourced effort to diversify to other markets. That we are, once again, in the same dilemma but with an even greater trade dependence speaks volumes about the lack of success of this strategy. Other strategies, such as increasing trade within Canada, will also, at best, provide marginal help.

Signing a trade deal with the U.S. turns out to have been akin to checking into the Hotel California: You can check out anytime, but never leave.

Canada has to find a better path to survive a U.S. it cannot leave. This requires a return of confidence, which in turn requires a version of Ronald Reagan’s doctrine for dealing with an untrustworthy partner: “Trust, but verify.”

This is not impossible. It requires two changes in the U.S. and there are early signs that both may be in process.

First, the American public must fully absorb the object lesson on the cost of bad economic and trade policy. This began after Donald Trump’s election , when Google searches for “what is a tariff” surged 1,650 per cent.

Since then, the textbook definition has played out in real time, reinforced by media saturation and lived experience. At some point, the daily beatdown of the MAGA trade worldview on television and in retail stores becomes impossible to spin as winning.

That point hasn’t yet come. The pain hasn’t been sharp enough, widespread enough or personal enough to shift hardened beliefs. MAGA partisans are too invested in the movement — and the man — for an easy or graceful reversal. This is a “no retreat, no surrender” movement. It can hold two or three contradictory ideas at once, but it can’t admit it was wrong.

It will also take more than a stock market crash or sagging 401(k)s to change minds. Only half of U.S. millennials and less than 10 per cent of gen-Zers have retirement savings. It’s hard to feel the sting of the loss of money you never had or hoped to have. Watching the wealthy take a hit might even be a schadenfreude selling point.

Second, the pain of learning the object lesson of bad economic policy must go beyond electoral change; it must be institutionalized. Congress must rein in the root of the problem, the almost blank-cheque authority it has ceded to the executive, which includes the power to impose tariffs during a “national emergency.”

In 1976-1977, the U.S. Congress, realizing that the country had been in a state of emergency for more than 40 years, passed two acts to reform a president’s use of emergency power. The ineffectiveness of those reforms is on full display today and in the fact that the number and length of national emergencies have increased since the acts to reform presidential emergency powers were passed.

Proposals such as those from the Cato Institute in Washington, D.C., which require Congress to confirm a president’s national emergency by a two-thirds majority within a short period of it being declared, would have prevented the current mess.

Instead of requiring a two-thirds vote to rescind an emergency declaration, having an emergency automatically end if it does not receive a two-thirds confirmation from both houses of Congress would mean that last week’s vote in the Senate to end Trump’s tariffs would have succeeded. There weren’t the votes to rescind the tariffs, but neither were there the votes to confirm it.

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A change in administration will not return the certainty needed to engage the U.S. in trade talks, nor will ending the current emergency. Canada has already tried appeasing the Americans, and here we are.

Until the law that got us all into this mess is changed, the only deal on the table from the Americans will be the certainty of humiliation in exchange for an illusion.

Carlo Dade is a senior fellow with the Canada West Foundation

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Last week, United States President Donald Trump pushed pause on the sweeping “Liberation Day” tariffs he had placed on more than 50 countries earlier in the month. Stocks had plunged in response to the original plan, spooking investors and Wall Street. But it was activity in the bond market, which threatened to drive borrowing rates higher, that market watchers say prompted the stunning about-face from the White House. Here, the Financial Post explains the bond market and why it sent Trump running.

What happened in the bond market?

Immediately after Trump’s April 2 announcement of sweeping “reciprocal” tariffs on U.S. trading partners, bond yields fell along with stocks, but then yields began to steadily rise, the opposite of what is expected. It was “not normal behaviour,” Douglas Porter, chief economist at Bank of Montreal , said.

The yield on 10-year U.S. Treasuries rose to 4.5 per cent from 3.9 per cent, while the yield on even longer-term bonds — 30-year — briefly traded above five per cent. Bond prices and yields move in opposite directions, and rising yields (lower prices) are an indication that the underlying instrument is considered riskier.

Activity in the bond market after Trump’s tariff announcements suggested investors believed there was a greater risk of both recession and inflation in the U.S. as a result. JPMorgan Chase & Co. chief executive Jamie Dimon warned of both, telling a conference of institutional investors in New York that stagflation was the worst possible outcome and he wouldn’t rule it out.

Who were the sellers?

Some of the selling was understood to be related to investors covering stock market losses and obligations such as margin calls. There have also been reports that some governments may have sold U.S. Treasuries in an effort to put pressure on the government to reverse course on tariffs, which were contributing to concerns about a global economic slowdown.

A term coined in the 1980s, “bond vigilantes,” refers to investors who sell bonds as a form of pushback against fiscal policies they consider inflationary or otherwise irresponsible in an attempt to force a policy reversal.

“It could be a bit of all, but the most common explanation is it’s hedge funds getting out of leveraged Treasury trades,” Porter said.

Did bond sales influence Trump?

Administration officials sought to claim victory with promises that the tariff threat alone was bringing countries to the table to pursue new trade negotiations with the U.S., but Trump acknowledged that he was watching the bond market. He said it was “tricky” and that it appeared “people were getting a little queasy.”

U.S. Treasury Secretary Scott Bessent said their goal was to get long-term rates down, which made the fact that yields were rising “a real problem,” Porter said.

Why is the bond market so important?

U.S. Treasuries are the global lending market benchmark, used by banks around the world to price other instruments, so unusual activity in that bond market can have ripple effects on a host of other markets. With bond yields used to price everything from mortgages to complex derivatives, risk was rising that a broader financial crisis could develop and trigger defaults by financial institutions.

“There is no more important long-term rate than a 10-year U.S. Treasury bond,” Porter said. “Long-term yields also drive mortgage rates, so the backup is a problem for the housing market.”

Moreover, the bond yield represents the interest cost on U.S. government debt, so the higher it goes, the more it eventually costs Washington to service its debt.

Has this happened before?

Yes and no. Many are drawing comparisons to the United Kingdom under the short mandate of British prime minister Liz Truss. In 2022, she announced a mini-budget with large tax cuts, spooking bond markets because the cuts were to be paid for using borrowed money.

The news sent the country’s bond yields soaring and the pound plunging, raising concerns about a widening financial crisis. Pensions were particularly hard hit and left Truss with little choice but to resign, leaving a legacy as Britain’s shortest-serving prime minister.

Porter said there are some comparisons, but Truss’ moment was caused by an expansionary budget that the market viewed as unsustainable. He sees a closer parallel to 2020, when long-term yields on U.S. Treasuries shot up in March at the start of the COVID-19 pandemic as markets were very volatile and mostly weak.

This prompted the Fed to step in, and it has indicated it will do so again “if things get disorderly,” he said. “The difference this time from COVID is that there is a sense that U.S. assets are being shunned, or could be shunned, by foreign investors.”

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What is the bond market saying now?

Yields pulled back some after Trump agreed to pause the most extreme tariffs for 90 days. But a baseline tariff of 10 per cent remains in place, so yields remain elevated.

“There is clearly still a lot of concern over this highly unusual rise in Treasury yields at a time of equity market weakness and global concern over recession,” Porter said. “Notably, the backup in yields was mostly driven by rising real yields and not higher inflation premiums … indicating a more fundamental drop in demand.”

Avery Shenfeld, chief economist at CIBC Capital Markets, said the backup in bond yields will keep U.S. mortgage rates at elevated levels.

“Housing had been one of the exceptions to an otherwise strong U.S. recovery in the past two years,” he said. “Unless the recent sell-off in bonds reverses, expect these headwinds in the housing sector to remain in place.”

• Email: bshecter@postmedia.com

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The U.S. Federal Trade Commission claims that by acquiring WhatsApp and Instagram, Meta aimed to eliminate competitors who could threaten Facebook's status as the go-to social media platform.

Just two days before the Bank of Canada decides on interest rates and forecasters are split on which way it will go.

The uncertainty is understandable, considering the volatility U.S. President Donald Trump’s tariff war has unleashed on economies, stock markets and central bank policy makers.

According to a Reuters poll taken last week, just over 60 per cent of economists expect the Bank of Canada to hold its overnight rate at 2.75 per cent this Wednesday. Eleven out of 29 expect a cut of 25 basis points.

Markets are also tilted towards a pause with bets on a rate cut now at 32 per cent, down from 40 per cent since Trump’s latest tariff pullback last week.

“The door is certainly open for the bank to trim the policy rate by another 25 bps as a precautionary measure, a view we are leaning toward,” said Marc Ercolao, an economist with Toronto Dominion Bank . “That said, taking a pause is still a potential option.”

Canada’s central bank confirmed in its summary of deliberations recently that the threat of Trump’s tariffs on the economy prompted policy makers to cut the interest rate in March. But since then that threat has eased.

On the president’s so-called Liberation Day April 2, Canada dodged further reciprocal tariffs. Then the countries that were hit with hefty duties, except China, were given a 90-day reprieve after stock markets went into a nose dive last week.

There are two positives for Canada out of this reprieve, said Thomas Ryan, North America economist for Capital Economics. It reduces the likelihood of a U.S. recession, which would have spilled over into Canada and it helped stabilize global stock and bond markets.

However, risks to the Canadian economy remain. Economists now expect it will grow just 1.2 per cent this year and 1.1 per cent the next, down significantly from forecasts made just a month ago, according to the Reuters poll.

Despite the 90-day pause on reciprocal tariffs, the threat still hangs over businesses and households, points out CIBC Capital Markets chief economist Avery Shenfeld.

“How soon will anyone step up to build a plant in Canada to produce exports to the U.S., given that the U.S. has blatantly abrogated its existing free-trade USMCA deal, one that Trump himself negotiated?,” he wrote in a note Friday.

Prime Minister Mark Carney too warned on Friday there were signs the tariff war was impacting global and Canadian economies.

“In the last week there have been a lot of developments in terms of U.S. tariffs policy, reactions from others including China. It really marked tightening in financial conditions … the initial signs of slowing in the global economy,” Carney said.

“Impacts that we are starting to see … unfortunately in the Canadian economy, particularly in the Canadian labour market.”

Making matters even more complicated is inflation data that comes out the day before the Bank of Canada makes its decision.

The consensus forecast is for a March reading of 2.6 per cent, unchanged from the month before, but BMO Capital Market chief economist Douglas Porter thinks it could hit 2.7 per cent, pushing Canada’s inflation rate above the United States’ for one of the few times in the past five years.

“Balancing the opposing forces of inflation and growth will keep the BoC on their toes in the coming months,” said TD’s Ercolao.

One thing economists do agree on is there will be more cuts to come, even if the Bank of Canada does not trim its rate this Wednesday.

More than half the economists polled by Reuters predict two more rate cuts by the end of the third quarter, taking the rate to 2.25 per cent.

Others like Capital Economics and BMO see the rate falling even lower to 2 per cent.

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The trade war has not shown up in hard data, but it appears to be doing a number on the soft. The University of Michigan Consumer Sentiment Index for April fell to the second lowest since data began in 1978, and the percentage of respondents expecting unemployment to climb over the next 12 months hit its highest since the Great Recession in 2008-09, said Jocelyn Paquet, an economist with National Bank of Canada.

Rising inflation expectations are likely to grab the attention of policy makers. The median consumer see prices rising 6.7 per cent over the next 12 months, the most since October 1981.

At the same time U.S. households expect the worst deterioration in their real income in the history of the survey, said Paquet.

 

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Allison is single, 38, and considers herself a “forever renter.” She has maxed out her tax-free savings account and wonders if she should open a registered retirement savings plan (RRSP) or invest in a non-registered investment account? If RRSP is her route, what is the best investment strategy. FP Answers goes over the options.

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Just north of downtown Flint, Mich., is building known for its rich history here of the American automobile industry. The factory, the birthplace of General Motors, still stands as a beacon of innovation. 

Growing recession risks to Canada from the U.S.-led trade war will push the Bank of Canada to cut interest rates at least twice more this year, although a majority of economists said policymakers will leave them unchanged on Wednesday.

The Trump administration now says it will exclude electronics like smartphones and laptops from "reciprocal" tariffs, a move that could help keep the prices down for popular consumer electronics that aren't usually made in the U.S.

As market volatility reigns following the continued chaos of United States President Donald Trump’s ever-changing tariff strategies , FP Video talked to two investment specialists who  offer their thoughts on where investors looking to capitalize on the uncertainty should put their money.

FP Video also spoke with Linamar Corp. executive chair Linda Hasenfratz about the long-term effects that existing levies will have on the Canadian automotive sector . Plus, three ways Canada can cash in on the Arctic .

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Marketplace analyzed price data from one downtown Toronto Loblaws store from the start of the year to find out if products that are ‘Prepared in Canada’ have increased in price

As tariff pressures force some sellers in China to hike their prices for U.S. markets, some retail experts say Canadians shopping online could potentially feel the ripple effects on everything from electronics to socks.

Duty-free shops across the country, still recovering from pandemic travel restrictions, are reporting massive drops in business in recent months as Canadians increasingly avoid travelling to the U.S.  

Stock markets spiked on Wednesday following U.S. President Donald Trump's announcement of a 90-day pause in "reciprocal" tariffs. Six Democrats say that timing raises questions.

The General Motors CAMI Assembly plant in Ingersoll, Ont., will shut down next month with plans to reopen in the fall at half capacity.

By Kara Lilly and Michael Kosmalski

It started, as these things often do, with a shift too small to notice. One moment, the gilts market was stable. The next, it wasn’t.

A few months ago, a troubling development unfolded in the United Kingdom that spooked Brits, rattled bond desks globally and was largely ignored by everyone else. While United States President Donald Trump commanded the spotlight with a flurry of policy proposals, the yield on 30-year U.K. government bonds (gilts) surged past five per cent.

Now, by nature, bonds are tedious. Studying them tends to make your eyes glaze over. But these were serious moves: yields climbing to their highest levels since 1998, while the pound sterling fell.

Together, these swings raised a pointed question: were bond vigilantes back?

What are bond vigilantes? The term refers to investors who sell off bonds in response to fiscal policies they see as reckless, driving up yields and borrowing costs to enforce discipline. Economist Ed Yardeni coined the term in the 1980s.

A famous episode followed from late 1993 to 1994, when 10-year U.S. Treasury yields rose to more than eight per cent from 5.2 per cent, spooking the administration and prompting deficit-reducing measures. By 1998, yields had fallen to around four per cent.

Bond markets wield power because they’re a country’s credit lifeline. Without affordable credit, governments struggle to function and economies can’t grow. Few forces have shaped history more than the bond market.

For example, in the 19th century, Italy’s unification was partly enabled by Count Camillo di Cavour, prime minister of Piedmont-Sardinia, who secured funding through international bond markets.

More recently, Argentina’s economy collapsed after years of borrowing and a failed currency peg. Investor confidence evaporated, yields spiked, the country defaulted on US$100 billion, and the president fled amid riots.

And you likely know the story of 18th-century France, if not the bond market’s role in it. France, drowning in debt from decades of war, including its costly American Revolution involvement, tried issuing more bonds. Investors balked. Yields soared. The monarchy couldn’t raise funds.

King Louis XVI was forced to convene the Estates-General in 1789, triggering events that ended in revolution, the infamous phrase “Let them eat cake” and the monarchy literally losing its head.

“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter,” James Carville, a political adviser to president Bill Clinton, once quipped. “But now I would like to come back as the bond market. You can intimidate everybody.”

Bond vigilantes bring a loaded weapon when they show up to the duel.

In the first quarter this year, it looked like they were back, protesting what many saw as fiscal carelessness in the U.K. Yields spiked. The pound fell. Within days, Finance Minister Rachel Reeves was reaffirming fiscal discipline and markets calmed.

But a few weeks later, a more muted version played out in Germany after Chancellor Merz proposed big defence and infrastructure spending beyond typical debt limits. Yields ticked up.

Three observations are appropriate to make now.

First, bond vigilantes appear to have finally arisen from their long nap.

Second, despite the profligate manner in which governments worldwide have spent and accrued debt over the last few decades, there remains some upper limit on how much fiscal mess bond investors are willing to bankroll.

Third, it may be time to ponder the question many investors have actively avoided because it is such a headache to consider.

What if bond vigilantes come for the U.S.?

Many investors avoid this question. America, they argue, is America, the world’s strongest economy and issuer of the reserve currency. It won’t be easily dislodged. Besides, if the dollar fell and yields soared, the fallout would be too incomprehensible to imagine.

But low odds aren’t the same as an impossibility, and scenarios being potentially painful is the best reason to confront them. Today, there are three reasons this one deserves attention.

First, America’s fiscal position has long been poor and it’s gotten worse.

Second, many of Trump’s policies — including sweeping tariffs , floating a debt restructuring, and the proposed tax legislation advancing through Congress, which could add US$1 trillion to US$2 trillion to the federal deficit over the next decade — look likely to worsen the fiscal outlook and/or rattle bond investors.

Third, bond markets have been acting odd lately. With all the uncertainty and volatility in stocks, this should be a clear “safe haven” moment. Instead, U.S. Treasuries are selling off.

All this is raising the odds of something unwanted: a bond vigilante showdown.

An American standoff with vigilantes could be either performative or nasty. The consequences — to Americans, to markets, to the world — would depend heavily on which one unfolds.

A nasty clash would resemble the British experience, but with U.S. leadership refusing to back down. This would be the “let them eat cake” moment: yields would spike, the administration would inadequately respond, bondholders would lose even more confidence, yields would spike further, the dollar would fall, thereby spooking everyone now actively paying attention and a full-blown crisis would eventually be on everyone’s hands.

This scenario is a bit like the asteroid that National Aeronautics and Space Administration (NASA) recently detected as being on a low-probability collision course with Earth (for a while there, they were giving this a three per cent chance). Those are low odds, but seriously destructive should it occur.

More likely is a performative standoff, echoing the 1990s’ Clinton era. Vigilantes call the administration’s bluff. The administration, unwilling to play chicken, would back down and implement the fiscal changes needed to restore confidence.

Yes, even Trump would be forced to yield.

Markets would reel — bonds and equities alike — but ultimately stabilize. The world would move on, bruised but intact.

Of course, a standoff could be avoided altogether if politicians prioritized long-term national interests over short-term personal gain. Your guess is as good as anyone’s on how likely this is.

For investors, recent events are a warning that market forces can, and do, exert control when governments push too far with excess. Bond vigilantes appear to be back, or at least, circling on the sidelines.

• Imperiled bond markets forced Trump to back down. Could they do it again?
• Why U.S. bonds are falling as investors question their haven status

As Trump and his administration walk the fiscal tightrope, it may be bond vigilantes — quiet, often overlooked — who decide America’s financial fate. People obsess over stocks. History shows, however, the bond market is the ultimate check on power.

It is the real kingmaker.

Kara Lilly, CFA, is a senior investment strategist at Focus Wealth Management and Michael Kosmalski, CFA, is a managing director and portfolio manager there.

By Kara Lilly and Michael Kosmalski

It started, as these things often do, with a shift too small to notice. One moment, the gilts market was stable. The next, it wasn’t.

A few months ago, a troubling development unfolded in the United Kingdom that spooked Brits, rattled bond desks globally and was largely ignored by everyone else. While United States President Donald Trump commanded the spotlight with a flurry of policy proposals, the yield on 30-year U.K. government bonds (gilts) surged past five per cent.

Now, by nature, bonds are tedious. Studying them tends to make your eyes glaze over. But these were serious moves: yields climbing to their highest levels since 1998, while the pound sterling fell.

Together, these swings raised a pointed question: were bond vigilantes back?

What are bond vigilantes? The term refers to investors who sell off bonds in response to fiscal policies they see as reckless, driving up yields and borrowing costs to enforce discipline. Economist Ed Yardeni coined the term in the 1980s.

A famous episode followed from late 1993 to 1994, when 10-year U.S. Treasury yields rose to more than eight per cent from 5.2 per cent, spooking the administration and prompting deficit-reducing measures. By 1998, yields had fallen to around four per cent.

Bond markets wield power because they’re a country’s credit lifeline. Without affordable credit, governments struggle to function and economies can’t grow. Few forces have shaped history more than the bond market.

For example, in the 19th century, Italy’s unification was partly enabled by Count Camillo di Cavour, prime minister of Piedmont-Sardinia, who secured funding through international bond markets.

More recently, Argentina’s economy collapsed after years of borrowing and a failed currency peg. Investor confidence evaporated, yields spiked, the country defaulted on US$100 billion, and the president fled amid riots.

And you likely know the story of 18th-century France, if not the bond market’s role in it. France, drowning in debt from decades of war, including its costly American Revolution involvement, tried issuing more bonds. Investors balked. Yields soared. The monarchy couldn’t raise funds.

King Louis XVI was forced to convene the Estates-General in 1789, triggering events that ended in revolution, the infamous phrase “Let them eat cake” and the monarchy literally losing its head.

“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter,” James Carville, a political adviser to president Bill Clinton, once quipped. “But now I would like to come back as the bond market. You can intimidate everybody.”

Bond vigilantes bring a loaded weapon when they show up to the duel.

In the first quarter this year, it looked like they were back, protesting what many saw as fiscal carelessness in the U.K. Yields spiked. The pound fell. Within days, Finance Minister Rachel Reeves was reaffirming fiscal discipline and markets calmed.

But a few weeks later, a more muted version played out in Germany after Chancellor Merz proposed big defence and infrastructure spending beyond typical debt limits. Yields ticked up.

Three observations are appropriate to make now.

First, bond vigilantes appear to have finally arisen from their long nap.

Second, despite the profligate manner in which governments worldwide have spent and accrued debt over the last few decades, there remains some upper limit on how much fiscal mess bond investors are willing to bankroll.

Third, it may be time to ponder the question many investors have actively avoided because it is such a headache to consider.

What if bond vigilantes come for the U.S.?

Many investors avoid this question. America, they argue, is America, the world’s strongest economy and issuer of the reserve currency. It won’t be easily dislodged. Besides, if the dollar fell and yields soared, the fallout would be too incomprehensible to imagine.

But low odds aren’t the same as an impossibility, and scenarios being potentially painful is the best reason to confront them. Today, there are three reasons this one deserves attention.

First, America’s fiscal position has long been poor and it’s gotten worse.

Second, many of Trump’s policies — including sweeping tariffs , floating a debt restructuring, and the proposed tax legislation advancing through Congress, which could add US$1 trillion to US$2 trillion to the federal deficit over the next decade — look likely to worsen the fiscal outlook and/or rattle bond investors.

Third, bond markets have been acting odd lately. With all the uncertainty and volatility in stocks, this should be a clear “safe haven” moment. Instead, U.S. Treasuries are selling off.

All this is raising the odds of something unwanted: a bond vigilante showdown.

An American standoff with vigilantes could be either performative or nasty. The consequences — to Americans, to markets, to the world — would depend heavily on which one unfolds.

A nasty clash would resemble the British experience, but with U.S. leadership refusing to back down. This would be the “let them eat cake” moment: yields would spike, the administration would inadequately respond, bondholders would lose even more confidence, yields would spike further, the dollar would fall, thereby spooking everyone now actively paying attention and a full-blown crisis would eventually be on everyone’s hands.

This scenario is a bit like the asteroid that National Aeronautics and Space Administration (NASA) recently detected as being on a low-probability collision course with Earth (for a while there, they were giving this a three per cent chance). Those are low odds, but seriously destructive should it occur.

More likely is a performative standoff, echoing the 1990s’ Clinton era. Vigilantes call the administration’s bluff. The administration, unwilling to play chicken, would back down and implement the fiscal changes needed to restore confidence.

Yes, even Trump would be forced to yield.

Markets would reel — bonds and equities alike — but ultimately stabilize. The world would move on, bruised but intact.

Of course, a standoff could be avoided altogether if politicians prioritized long-term national interests over short-term personal gain. Your guess is as good as anyone’s on how likely this is.

For investors, recent events are a warning that market forces can, and do, exert control when governments push too far with excess. Bond vigilantes appear to be back, or at least, circling on the sidelines.

• Imperiled bond markets forced Trump to back down. Could they do it again?
• Why U.S. bonds are falling as investors question their haven status

As Trump and his administration walk the fiscal tightrope, it may be bond vigilantes — quiet, often overlooked — who decide America’s financial fate. People obsess over stocks. History shows, however, the bond market is the ultimate check on power.

It is the real kingmaker.

Kara Lilly, CFA, is a senior investment strategist at Focus Wealth Management and Michael Kosmalski, CFA, is a managing director and portfolio manager there.

Stock markets including the Dow Jones Industrial Average, S&P 500 and Nasdaq were all up Friday after a week of massive fluctuations in response to tariff news.