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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.

• Email: ylau@postmedia.com

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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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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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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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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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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.

Bonds flashing red forced Donald Trump to U-turn on reciprocal tariffs , but the sector is not out of the woods yet, analysts say.

“Most financial market participants are convinced that turmoil in government bond markets — which suffered neck-snapping volatility from (April 2) through (Wednesday) morning — and recession warnings from corporate executives — like JP Morgan’s Jamie Dimon — were critical in convincing the administration to back off,” Karl Schamotta, chief market strategist at Corpay Currency Research, said in a note.

Prior to Trump’s surprising announcement on Wednesday that he was pausing higher tariffs against many countries, interest rates on United States government bonds of all maturities were on the rise, “ with the long end leading the way higher and exhibiting unusually high volatility,” Royce Mendes, managing director and head of macro strategy at Desjardins Group, said in a note on Wednesday.

He said the yield on the 10-year Treasury rose above 4.5 per cent, while the 30-year yield hit five per cent.

“Liquidity was thin and there were risks that market functioning could begin to deteriorate more meaningfully, which could have proven catastrophic,” he said.

The danger to the financial system was quite real.

Schamotta said it appeared investors earlier in the week were seeking to raise cash by selling bonds, potentially to cover their stock market losses.

“That’s something quite typical of a financial crisis,” he said, as “liquidity gets removed from all global markets simultaneously, then we have a major downturn and other things start to seize up.”

U.S. Treasuries are the global lending market benchmark, so trouble there can spread around world bond markets.

“The risk here was that if we had a rapid rise in yields, then that would trigger distress for participants across the global economy who are reliant on that access to U.S. funding,” Schamotta said, adding that the U.S. Federal Reserve was close to stepping in to add liquidity to keep the bond market functioning.

Stock markets soared Wednesday following Trump’s announcement, recouping trillions of dollars in losses, with the S&P 500 closing up 9.5 per cent, while the S&P/TSX composite index rose 5.4 per cent.

But the euphoria didn’t last long. Markets closed down again on Thursday as investors came to terms with the 10 per cent baseline global reciprocal tariffs and the potential impact on U.S. and global economic activity.

On Thursday, long-term bond yields were on the rise again, though not as precipitously as earlier in the week, with the yield on 30-year Treasuries hitting 4.85 per cent after pulling back. Yields on shorter-term bonds came down.

Economists at National Bank of Canada said they have bond investors in their sights.

“As recent events have emphasized, overseas bond investor attitudes bear close scrutiny,” Taylor Schleich, Warren Lovely and Ethan Currie said in a note.

Schamotta agrees bonds aren’t out of the woods yet.

“The dynamics that we’ve seen even today are worrisome again; firstly, that U.S. yields are rising and the dollar is falling at the same time, indicative of a lot of stress in the financial system,” he said. “And it’s very clear … none of these financial instruments can be relied on to be stable in the coming months.”

 

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The Canadian dollar on Wednesday rose above 71 cents U.S. for the first time since early December, while its American counterpart is being severely weakened by the uncertainty and chaos that Donald Trump’s trade war has unleashed .

The loonie was up 1.4 per cent in early trading Thursday as part of a surge that started Wednesday after Trump announced a 90-day pause on higher reciprocal tariffs, reducing the levy on most countries to a baseline of 10 per cent, but hiking duties on China to 125 per cent.

Read the full story here.

 

 

• Bank of Montreal holds its annual general meeting
• Today’s Data: University of Michigan Consumer Sentiment Index
• Earnings: JPMorgan Chase & Co., Wells Fargo & Co., Morgan Stanley, Blackrock Inc., MTY Food Group Inc., Corus Entertainment Inc.

 

• The next Canadian government will have to deal with an immigration system that has ‘lost its brand’
• Canada could become LNG world leader, but government needs new roadmap, says TC Energy CEO
• Money-laundering questions continue to chase TD months after U.S. sanctions
• Many Canadians are delaying filing their taxes over confusion with recent changes
• Some taxpayers may find CRA’s online portal is missing tax slips

 

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• CIBC warns Canada will end up more tied to U.S. once the tariff dust settles
• Trump tariff chaos sets the stage for 'vicious bear market rallies'

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We have what so many nations wish for: rich, abundant natural resources. It is the one thing that sets apart those in countries suffering energy poverty and the lifestyle and health of the people in nations who enjoy energy prosperity.

A prosperous energy sector means prosperity for all Canadians. We use energy to cook our food, heat our homes, keep the lights on in schools, power our hospitals and drive our kids to activities. The revenue to governments from resource development pays for roads to be built, and health care, education and social programs to be funded.

Energy touches every corner of our lives. But energy has been viewed as a Western issue, not a Canadian one, for far too long.

We are at a crossroads where it isn’t even about energy prosperity; it is now about energy security. It is about whether we can get energy across the country to Canadians who need it. It is about jobs, economic growth and global leadership. It is about Canada stepping up to provide the world with reliable, responsible and affordable energy.

A trade war is raging that puts Canadian jobs at risk. Canada is inextricably tied to the United States, exposing us to the constant changes from Washington that are completely out of our control. Our industry is up to the task of helping Canada be less reliant on our one major trading partner. We have what Canada and the world needs: responsibly developed, abundant Canadian energy.

Since the trade war began, we have heard loud and clear that Canadians want us to build pipelines, to replace foreign energy with our own Canadian-produced energy and to export what we don’t need, prospering from other countries purchasing our products while achieving another collective Canadian goal: helping high-emitting nations decrease their carbon footprint by displacing high-carbon fuels with our cleaner-burning energy.

Developing our resources and building the infrastructure to get them to our ports for export means more Canadian jobs, more revenue to the Canadian economy , a lower global carbon footprint, more Indigenous participation in our national economy and prosperous communities from coast to coast to coast.

But to do all this, we need a federal government to listen to Canadians and prioritize building Canada. We need policies that reflect the reality of energy in this country. Policies that are affordable, sustainable and forward-looking. Policies that support Indigenous partnerships, innovation and economic opportunity. Policies that recognize the value of Canadian energy, responsibly produced, globally respected and urgently needed.

We need the federal government to be thoughtful when managing our trade relationship with the U.S. Enserva has cautioned the federal government that tariffs on inputs to energy production, such as frac sand, oilfield chemicals, steel, precision-machined parts, electronic sensors and industrial equipment, will punish Canadians more than Americans.

Much of our oil and gas production requires sand for pressure pumping. Canada imports about six million tonnes of sand annually from the U.S. because there is no viable domestic alternative at the levels that we need. The Government of Canada’s retaliatory tariff measure will add $240 million a year in additional costs on frac sand alone, significantly impacting drilling operations, creating instability in Canada’s oil and gas sector , and increasing energy costs.

Canada has challenges being competitive in a global market, and counter tariffs have weakened us further, meaning less will be invested and built here. It could result in thousands of job losses and will drive up the cost of living at a time when we are in an affordability crisis.

On behalf of our members, we call on Ottawa to put Canadians first and immediately remove tariffs on all inputs into energy production.

To lessen the detrimental impact tariffs and counter tariffs will have on Canadians, Ottawa needs to strengthen its own hand. The federal government should commit now to repealing policies that impede investment and energy development and immediately expedite approvals of major energy infrastructure that will expand our access to tidewater.

If we want a future where Canada can thrive, then energy must be part of the national conversation. Let’s make sure that when Canadians head to the ballot box, they are thinking about the energy that powers their lives.

• Carney’s plan for ‘superpower’ Canada tricks voters
• Energy might be lukewarm on Carney’s energy plan

For the prosperity of all Canadians, we need to put energy on the ballot.

Gurpreet Lail is chief executive of Enserva, the industry association that represents the energy services, supply and manufacturing sector in Canada.

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Concerns about Toronto-Dominion Bank’s failure to prevent money laundering in the United States was a key topic at its annual general meeting on Thursday, with some shareholders questioning whether the bank had done enough to address the shortcomings that led to a US$3.1-billion fine by U.S. regulators last year .

This was TD’s first AGM since it became the first bank in U.S. history to plead guilty to conspiracy to commit money laundering last October. Some shareholders wondered whether TD can prevent a similar lapse in Canada and whether further cuts should be made to senior management’s already reduced salaries.

That led TD chair Alan MacGibbon, who will be stepping down by year-end, to apologize to shareholders.

“This really was … the darkest day that we could have imagined it to be, and I apologize (to) all investors for how difficult this was,” he said. “There have been many lessons learned and many practices implemented. And I, just again, apologize for the past.”

TD chief executive Raymond Chun also acknowledged the bank’s failures in its anti-money-laundering (AML) program and said they were “unacceptable.”

Chun, who replaced Bharat Masrani in February, said the bank is undergoing a series of changes as it goes through a “comprehensive plan” it recently developed.

Despite investors’ concerns, most voted in favour of TD’s view when it came to shareholder proposals.

For example, proposals raised to dismiss Masrani as the bank’s adviser and to hire someone from outside the bank to replace Chun as president were voted against by 90 per cent and 99 per cent, respectively, of participating shareholders.

TD has made several changes to rectify its AML program and to regain customers’ trust ever since it was fined and ordered to cap the expansion of its U.S. retail banking in October by the U.S. Department of Justice and other regulators for failing to monitor money-laundering activities at its branches.

The bank has hired several AML experts, reduced the pay of its senior team and changed its CEO, and is now going through a strategic review that will look for ways to reallocate capital, optimize costs, simplify its portfolio and invest in new technology that can support organic growth. The review is expected to be completed by the second half of the year.

As part of its review, TD sold its entire ownership stake in Charles Schwab Corp. to free up about $20 billion. The bank used $8 billion of that to repurchase up to 100 million shares and plans to use some of it to “drive organic growth” and further “deepen” relationships with its 14 million Canadian customers.

The lender also beat analysts’ expectations in its first-quarter results released in February after missing them for two consecutive quarters.

Chun on Thursday said the bank’s response to the AML saga has been decisive.

“We carefully examined the root causes and identified the gaps, behaviours and deficiencies that led to these failures,” he told shareholders. “We are making consistent progress every day, with more work ahead.”

Even so, some shareholders didn’t seem to be too happy with the responses provided by TD’s executives.

One shareholder said he had sent a letter to MacGibbon right after TD was fined in the U.S., asking how the board failed to track the fraudulent activities, but did not receive a response. Chun did not respond and asked for the next question.

• TD reduces pay for top executives amidst anti-money laundering failure
• TD beats analysts expectations after two successive misses

The shareholder returned and said he felt like he had spoken to a “blank wall.” MacGibbon then apologized that no response was given and said that was a mistake.

• Email: nkarim@postmedia.com

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Donning a red-and-white jersey with “Canada Leads” printed on the front, Ontario Premier Doug Ford seemed resolute at a Toronto event on April 7 as he vowed to attract “world-leading scientists” and the “brightest minds” from the United States, many of whom are reportedly concerned about losing their jobs due to President Donald Trump ’s funding cuts.

“We are going to go on many fronts to fight these tariffs,” he said. “But one way to win big time is to get the brightest minds in the United States. I can tell you the president won’t be happy.”

Ford’s statement came days after officials from Manitoba and British Columbia talked about “ rolling out the welcome mat ” for American health-care experts.

Capitalizing on tensions linked to Trump’s policies seems like a good plan, but analysts doubt whether Canada can take advantage of them without implementing crucial changes to its immigration system , especially since some lawyers say the country doesn’t have a specialized program that can successfully attract high-skilled professionals from abroad and it’s also become harder for them to become permanent residents.

“Even if Taylor Swift wanted to immigrate to Canada, she could not,” Stephen Green, a managing partner at Toronto-based Green and Spiegel LLP, said. “We don’t have a program for people with really extraordinary ability … the fabulous artists, the outstanding businesspeople.”

These “extraordinary” foreigners can technically enter Canada with a work permit for a few years, or even get a work permit after studying here, but lawyers say the pathway to becoming a permanent resident from a temporary one has become more difficult in recent years, which would likely discourage them.

Lawyers and consultants hope that whoever forms Canada’s next government can revisit the immigration system and work on its flaws through meaningful discussions with industry, but it’s something that requires urgent attention since Canada’s reputation among economic immigrants has been hit in recent years.

“Canada has lost its brand,” Meti Basiri, co-founder of ApplyBoard Inc., a Canadian digital platform used by students to apply to universities, said. “Any administration that comes in, before getting anything out, needs to stand back and ask, ‘How do we build our reputation?’ Because we are back to where we were 10 to 15 years ago.”

This “damaged” reputation, as Vance Langford, co-president of the Canadian Immigration Lawyers Association, calls it, is a result of unusual trends and changes in the immigration space that have exposed weaknesses in the existing points system used to bring in foreign skilled workers.

Canada has several immigration programs, but most temporary residents and foreigners living outside the country try to come to the country as skilled workers. These programs are managed by an online system called Express Entry, which provides candidates with points for their education level, work experience, English and French language proficiency, age and other factors.

The higher the applicant’s score — out of a total of 1,200 — the higher their chances of becoming permanent residents, which eventually leads to citizenship. The system is designed to attract young, skilled people from around the world.

For example, applicants under 30 receive the highest possible number of points in the age category. Applicants also receive points for Canadian educational degrees and work experience.

The Express Entry system has worked well in the past and allowed a steady flow of skilled newcomers to enter Canada, which relies on immigration for its economic growth. But the number of international students and foreign workers drastically increased after Ottawa looked to fill a record number of job vacancies when the pandemic ended.

Ottawa also introduced a policy in 2023 that allowed it to bypass the points system and set lower cut-off scores for certain groups, such as tradespeople, engineers, health-care workers and French speakers, by conducting separate immigration draws for them.

These two steps meant there were far more temporary residents competing for a smaller number of spots, which vastly increased the cut-off score that general candidates needed to qualify to become permanent residents.

As a result, two million temporary residents are expected to leave the country in 2025 and 2026 as their permits expire, which is also part of the federal government’s plan to reduce Canada’s population growth by 2027 amidst rising unemployment and a housing crisis.

The mass departure could include many temporary residents who have specialized skill sets that could have helped the country’s struggling productivity levels, analysts said, because the points system isn’t always capable of differentiating between highly-skilled newcomers, who are more likely to earn high salaries and boost the economy, and those who barely meet the minimum requirements or are trying to game the system.

For example, a foreign graduate from the Massachusetts Institute of Technology or the University of Waterloo could potentially receive the same number of points as someone with an online university degree in the system’s education segment, Martin Basiri, the other co-founder of ApplyBoard, said in a podcast program called Borderlines on April 1.

He also said Canada’s recent focus on bringing French-speaking newcomers through the category-based draws introduced in 2023 creates an imbalance.

“If you speak French and you have no skills, you are better than if you have a master’s degree in computer science … or (if you) make $150,000,” he said.

Some of Basiri’s employees are currently on a break to sort out their language requirements in order to meet the cut-off scores and become permanent residents, he said.

Until March 21, about 18,500 newcomers were admitted into Canada this year through the French category, which is almost twice as much as the 9,350 admitted through the general draws, according to Steven Meurrens, an immigration lawyer at Larlee Rosenberg Barristers & Solicitors.

Simply put, CILA’s Langford said the category-based draws have made the immigration system “unworkable” for economic immigrants.

“How does Canada expect to attract and retain skilled people with a points system if a candidate in the pool with 510 points does not receive an invitation to apply?” he said. “Category-based draws need to be seriously reduced.”

The leaders of Canada’s two main political parties, Mark Carney and Pierre Poilievre, haven’t talked much about the specific changes to immigration they would make if elected. But both seem keen on keeping a cap on the number of newcomers until there’s enough housing. Immigration hasn’t dominated the campaign trail the way it generally did throughout 2024, with Trump’s tariffs taking up most of the discussion.

But due to various ongoing nuances in the immigration space, Ottawa should be cautious in “pushing too aggressively” to meet its target of bringing down the number of temporary residents to about five per cent of the population by 2027, “especially with a much shorter runway now,” Bank of Nova Scotia economist Rebekah Young said.

That would require what she called an “unrealistic” net reduction of one million people by 2027 that could compel many highly-productive people currently in the workforce to leave.

“It could actually be harmful if they try to stick to those original timelines,” she said. “There should instead be an agenda that really focuses on better integrating and maximizing the potential of those that are in the country.”

Problems, however, also remain at the other end of the spectrum, with some economists expecting many temporary residents to overstay their work permits and not leave the country by either transferring to a visitor permit, applying for asylum or becoming undocumented. This could lead to the government undercounting the population and impact overall economic measures.

CIBC World Markets Inc. economist Benjamin Tal expects Canada’s population to grow by 1.5 per cent in the next two years, which is higher than the government’s prediction of negative growth or a decline.

“Many people who are expected to leave will not leave,” he said. “That’s something that will be the No. 1 challenge facing the new government when it comes to immigration.”

Tal’s prediction already seems to be reflected in the rising number of asylum seekers, many of whom have “unjustly” applied as they have “increasingly fewer hopes to stay in Canada,” former immigration minister Marc Miller said last November.

The number of asylum seekers and related groups increased by about 26,000 in the fourth quarter last year, according to Statistics Canada, marking the 12th consecutive quarterly increase. The total number of asylum seekers was a record 457,285 people as of the end of 2024.

“No government is going to be able to escape having to deal with (rising asylum claimants), Young said. “That’s a very challenging area that is outside the realm of economics. But they’re going to need policies and discussions on how they are going to thoughtfully manage these pressures.”

Another recent change that can discourage high-skilled economic immigrants from coming to Canada is the cancellation of the extra points applicants received upon getting a job offer supported by a Labour Market Impact Assessment (LMIA).

Most employers in Canada looking to hire foreign workers need to receive an LMIA, which is a government document that states they weren’t able to find a worker for a specific position in Canada and had to look for someone abroad.

Foreign workers with LMIA job offers used to get about 50 to 200 additional points, which gave them an edge over others and encouraged them to come to Canada. That was discontinued in March.

Before then, some groups were illegally selling LMIA-approved jobs for thousands of dollars to foreigners — either outside the country or already in Canada — who were desperately looking to boost their points in the Express Entry system and become permanent residents. The more senior the job’s role, the higher the points they received.

But some immigration lawyers believe the government should have taken a more nuanced approach to resolve the problem instead of eliminating all the points in one go.

“They couldn’t deal with the fraud issue, so they didn’t know what to do,” Green said. “They just threw it all in and said, ‘Cancel it.’ There would have been a much better way of doing it.”

Green and Langford both said eliminating the 200 points that the top category of workers used to receive was a mistake since that essentially closes the door for top executives or managerial candidates looking to become permanent residents and these are the kind of people that Canada ideally wants.

“The change makes it impossible for senior executives who are 40 years old or more, working in multinational companies, to immigrate to Canada and, therefore, difficult to attract executives to come here on a work permit,” Green said.

As an example, he said a chef graduating from a Canadian school and with work experience had more chance of becoming an immigrant than a 45-year-old senior executive who runs a multinational company and is responsible for 3,000 people.

Despite these issues, Green still believes Canada has the “best immigration system in the world.” Whoever wins the election just needs to tweak some parts of the system to align them with the government’s aim to boost its economy, he said.

That could mean providing more points to people who study or already work in Canada or to people looking to enter fields where there’s a labour shortage, such as health care or construction.

It could also mean providing additional points to newcomers who earn more than the median salary, such as 25 points for people earning about $60,000 and 50 points for those earning more than $100,000, as Martin Basiri said.

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Whatever those tweaks may be, lawyers say they need to happen quickly; otherwise, Canada may struggle in the next few years to attract the kind of talent it wants, said Meti Basiri, who came to Canada as an international student in 2011 and co-founded ApplyBoard, which is reportedly now valued at $4 billion.

“It’s very important to build the brand and the reputation,” he said. “Or else, we are not going to achieve anything.”

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The Canadian dollar on Wednesday rose above 71 cents U.S. for the first time since early December, while its American counterpart is being severely weakened by the uncertainty and chaos that Donald Trump’s trade war has unleashed .

The loonie was up 1.4 per cent in early trading Thursday as part of a surge that started Wednesday after Trump announced a 90-day pause on higher reciprocal tariffs, reducing the levy on most countries to a baseline of 10 per cent, but hiking duties on China to 125 per cent.

Canada was exempt from the most recent set of tariffs, but remains subject to a 25 per cent levy on steel, aluminum and automobiles, though that levy can be reduced based on the value of U.S.-made auto parts contained within any vehicle. Canadian exports to the U.S. that are not compliant with the Canada-United States-Mexico Agreement remain subject to a 25 per cent tariff.

“The (U.S.) dollar is weakening once more as the initial optimism sparked by yesterday’s tariff reversal yields to a more measured assessment of the risks still facing the U.S. and world economies,” Karl Schamotta, chief market strategist at Corpay Currency Research, said in a note on Thursday as the dollar index, which measures the greenback’s value against a basket of major currencies including the loonie, continued to tumble.

Following Trump’s latest tariff climbdown, the U.S. dollar index dropped 1.34 per cent. However, it has been on a steady decline since mid-January as economists and analysts warned his plan to punish trading partners for perceived unfair practices could cause significant harm to U.S. businesses, consumers and the economy.

The dollar index is down 7.7 per cent since Jan. 13, the peak of a run-up that began a few months before U.S. election day, when Trump’s prospects for the winning the presidency began to improve. At that time, Wall Street expected markets to benefit from a candidate they perceived as business friendly.

With the U.S. economy looking more vulnerable, the odds of a U.S. Federal Reserve interest rate cut are rising, which helps “tilt interest differentials against the greenback,” Schamotta said in an email.

Investors pumped up the greenback in the chase for yields caused by higher U.S. interest rates as central banks around the world, including the Bank of Canada , reduced their policy rates. For example, the Fed’s policy rate stands at 4.5 per cent at the upper end compared with the Bank of Canada’s 2.75 per cent.

Still, “Canada, Europe, and Japan all stand to benefit as investment flows become more diversified,” Schamotta said.

But he said in his note that the safe-haven Japanese yen and the euro appeared to be benefiting the most from Trump’s latest reversal.

The fallout from U.S. tariffs on Canada hasn’t changed much, but “what’s important is the delay in the reciprocal tariff for the rest of world, as it implies less negative global and U.S. growth spillover to Canada,” Noah Buffam, an analyst with CIBC Capital Markets’s fixed income currency and commodity group, said in a note on Thursday.

He also said he was looking for the Canadian dollar to “underperform” other currencies against the U.S. dollar as the year progresses.

Certainly, there are more headwinds blowing Canada’s way that could pull the loonie down.

Stephen Brown, deputy chief North America economist at Capital Economics Ltd., said they’ve rescinded their call for a recession in Canada, but still think the country’s gross domestic product will “slow to a crawl” and that inflation will rise, leading to three more rate cuts by the Bank of Canada to bring the lending rate to two per cent.

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That will likely play against the loonie, he said in a note Thursday morning.

“We still expect interest rate differentials to move against the loonie as markets come around to our view that the Fed is unlikely to cut this year, which suggests the loonie will drop back below 70 cents U.S. soon, to perhaps $0.69,” Brown said in an email, noting that is an improvement from an earlier forecast for the loonie to fall to 67 cents U.S.

“The outlook has improved a bit now that we have a bit more clarity on U.S. tariff plans,” he said.

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Despite all the calls to diversify Canada’s trade, the country will end up more dependent on the United States once tariff negotiations have concluded, according to a well-known economist.

“We are in the midst of a global trade war, and in a global trade war , like in the Cold War, you have to choose sides,” Benjamin Tal, deputy chief economist at CIBC World Markets, said.

On Wednesday, U.S. President Donald Trump turned his global trade war into a faceoff with China after he announced a 90-day reprieve on higher reciprocal tariffs levied against other countries, but raised the rate on the world’s second-largest economy to 125 per cent in a tit-for-tat retaliation.

“The question is, if you have a Cold War trade war between China and the U.S. and you’re Canada, where do you go? There are many issues that (make) the choice clear,” including issues around democracy and human rights,” “but geography is definitely very important,” Tal said.

But there’s more to his forecast.

Tal said Canada has tried to diversify its trade to other countries for decades under various prime ministers, and has inked 15 trade agreements overall, but trade with the U.S. still rose during that time.

“To diversify our export machine away from the U.S., we have the 15 free trade agreements with 51 countries, and our dependence on the U.S.A. went up despite all that,” he said. “It’s very difficult to break.”

Tal believes that during negotiations for a new Canada-United States-Mexico Agreement (CUSMA), the U.S. will demand that Canada increase purchases of American defence products and natural gas, among other things and run contrary to the current national mood.

Canadians are angry with Trump’s attacks on Canada’s sovereignty and economy, with tariffs currently in effect on steel , aluminum and autos. Liberal Leader Mark Carney has tapped into that angst, arguing that Canada can no longer rely on the U.S. and will have to forge new economic ties around the globe.

“The system of global trade anchored by the United States that Canada has relied on since the end of the Second World War … is over. Our old relationship of steadily deepening integration with the United States is over,” Carney said in remarks after Trump announced his reciprocal tariff plan on April 2. “Canada must be looking elsewhere to expand our trade, to build our economy and to protect our sovereignty.”

He said Canada is actively “strengthening” trade relationships with other “reliable” countries.

But Tal thinks the sheer force of geography and the existing interconnectedness between Canada and the U.S. will ultimately override any national aspirations to even weaken existing trade ties, never mind eliminate them.

“When you talk to people in the field, you realize that it’s not so easy to do,” he said, pointing to the proximity, infrastructure and the cost of trying to break away.

He added that Canada will wind up sourcing more from the U.S., not less, after CUSMA is renegotiated.

Tal said if Canada manages to get a new deal on CUSMA, then the final tariff rate won’t be very significant, somewhere in the neighbourhood of five per cent to seven per cent, with some industries, such as energy products, exempted altogether.

“Five years from now we will wake up and realize that our dependence on the U.S. has risen, not fallen,” he said.

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Stocks soared after President Donald Trump said he’d pause some tariffs on dozens of countries for 90 days, signalling a tentative reprieve in trade hostilities that has wiped out trillions from global markets and ignited fears of a United States recession.

The euphoric reaction lifted stocks after four sessions of volatile, high-volume trading pushed the S&P 500 to the brink of a 20 per cent bear-market plunge. The benchmark measure surged as much as 8.3 per cent with almost every company gaining. While bonds eased an earlier selloff, they remained down across maturities for a third day.

“The market cares because 90 days gives you much more significant time to negotiate — that’s all the market wants,” said Art Hogan, chief market strategist at B. Riley Wealth. — Bloomberg

Read the full story here.

 

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What does it mean to be financially independent ? Simply put, it typically means you don’t have to work a regular job to maintain life’s necessities. That might sound like retirement, but it’s a little different. Financial independence offers freedom to align your time closer to your values and passions, which may still involve working. This might be more time with family, pursuing projects or hobbies, engaging in philanthropy or just punching the nine-to-five clock less often. Really, there’s no wrong answer so long as the individual feels financially free to follow their whims. Most importantly, financial independence means Canadians can minimize their most common stressor. In an ever-challenging ecosystem of geopolitics, culture and climate, any stress reduction could be more than welcome. Keep reading here to find out how to achieve it.

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The United States Department of Commerce is set to hike duties on Canadian softwood lumber to 34 per cent this fall, the latest blow in a dispute with Canada that goes back decades.

“We’re going to need some support measures put in place to help us weather this storm,” Kurt Niquidet, president of the BC Lumber Trade Council and chief economist at the BC Council of Forest Industries, said. “There’s going to be some financial liquidity issues for companies, so the federal government needs to step up and provide some loan support to help us get through this.”

Last Friday, the U.S. Department of Commerce announced its decision to more than double countervailing duties on imports of Canadian softwood lumber to 14.38 per cent from 6.74 per cent. This is in addition to its decision in early March to raise the preliminary rate on anti-dumping duties to 20.07 per cent from 7.66 per cent, bringing the total to 34.45 per cent.

“It’s obviously very concerning,” Ian Dunn, chief executive at the Ontario Forest Industries Association, said. “Even under the existing trade environment, with the duties that we’ve seen historically, we’ve seen companies curtail operations, we’ve seen companies close mills, reductions of shifts and layoffs.”

Existing U.S. duties have already had an impact on the Canadian lumber industry. Vancouver-based Canfor Corp. in September announced the closure of its sawmills in Vanderhoof and Fort St. John, British Columbia, citing an increasingly difficult regulatory environment, high operating costs and “punitive” U.S. tariffs. The decision affected 500 workers.

Dunn said the lumber dispute between Canada and the U.S. is now in its fifth iteration. The 2006 Canada-United States Softwood Lumber Agreement was in place until 2015, and the Canadian industry has been subject to duties since 2017.

The U.S. contends the Canadian lumber industry has unfair competitive advantages and is subsidized because most companies operate on land owned by the provinces and the stumpage fees — the fees companies pay to harvest trees — are too low.

Dunn said Canada continues to dispute this argument in cases and panels at the World Trade Organization (WTO) and the Canada-United States-Mexico-Agreement (CUSMA) , but the WTO’s decisions in favour of Canada are not binding and efforts under CUSMA remain unsuccessful.

“We’ve had a long and sustained legal effort contesting and appealing virtually every decision by the Department of Commerce, with little to no effect,” Dunn said. “Because the Department of Commerce’s mandate is essentially to protect the domestic industry, they will find dumping when it doesn’t exist, they will find subsidy when the Americans are doing the exact same practices.”

Mark Warner, principal counsel at MAAW Law, said the dispute with the Americans has been happening since Ronald Reagan’s administration and he sees little possibility of a resolution.

“I don’t think this dispute is capable of being resolved,” he said. “I don’t think you’re ever going to see a situation where American governments are going to accept the stumpage fees.”

U.S. President Donald Trump has launched an investigation into timber and lumber products from several countries based on national security grounds. He has also threatened further tariffs on Canadian lumber and has signed an executive order that calls for an increase of domestic timber production on U.S. federal land.

The National Association of Home Builders (NAHB), one of the largest trade organizations representing the interests of home builders in the U.S., said it is against further tariffs on Canadian lumber.

“NAHB will continue to urge the White House to roll back tariffs on lumber and other building materials and remains focused on improving building material supply chains and easing costs for our members,” it said in a statement issued on Tuesday.

Niquidet said Canadian softwood lumber makes up 24 per cent of the U.S. market share, which will be hard for that country to replace.

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“The U.S. will still need to import lumber from Canada,” he said. “There is just no way that they can replace 24 per cent of the market; it’s going to take them several years.”

Niquidet added the new duties will lead to price increases in the U.S.

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Analysts are warning investors to watch out for “dead cat bounces” as stock markets are pulled up and down by the ever-shifting tariff plans of the United States.

“Vicious bear market rallies are the order of the day. They are referred to as ‘dead cat bounces,'” David Rosenberg , founder of Rosenberg Research & Associates Inc. , said in a note on Tuesday.

Dead cat bounces occur when a market temporarily reverses course from a consistent decline or a bear market, only to continue on a downtrend — a dynamic that has been fully on display this week.

For example, markets on Wall Street and in Toronto rose on Tuesday, but those gains were completely wiped out by the end of the day, continuing the fall into correction territory on word U.S. President Donald Trump would not back down from imposing reciprocal tariffs on countries around the world.

On Wednesday, the day the tariffs came into force, Trump gave the markets a major boost when he announced a 90-day pause on higher reciprocal tariffs , while raising the levy against China to 125 per cent. Countries, excluding Canada and Mexico , would be taxed at a baseline rate of 10 per cent, he said. However by Thursday, markets sold off steeply again on the realization that a 10 per cent baseline tariff will still hurt economies around the world.

“A 10-per cent tariff still represents a major hit to the global economy and American households, and persistently-elevated uncertainty is likely to drag on growth for a prolonged period of time,” Karl Schamotta, chief market strategist at Corpay Currency Research, said in a note late Wednesday, adding that he thinks the 90-day pause “seems likely to be extended.”

Rosenberg said the trick going forward for investors will be to figure out when markets have hit a “fundamental low” with “a real catalyst behind them.”

“Markets, at the end of the day, don’t like uncertainty. There’s just so much uncertainty right now,” Rebecca Teltscher, a portfolio manager at Newhaven Asset Management Inc., said in an interview with the Financial Post’s Larysa Harapyn.

Teltscher said her company is staying conservative by buying names it already owns, but “we’re not going to try to speculate on a market that is still very uncertain.”

More broadly, J PMorgan Chase & Co. analysts warned that the market’s fate lies with one person “who can unilaterally ease or deepen this shock — the range of outcomes for risk assets globally is abnormally wide and binary.”

As of Tuesday, JPMorgan was calling for the U.S. to fall into a recession in 2025

Given the uncertainty around where tariffs are headed, its analysts laid out three tariff and market scenarios for the S&P 500.

In their bear case, they estimate full tariffs will result in the S&P 500 falling to around 4,000. Thursday, the index was trading around 5,170. Their base case of partial tariffs calls for the S&P 500 to close out the year at 5,200, while their bull case calls for 5,800.

“Looking further out, the range of outcomes remains very wide and highly dependent on trade policy direction ,” the analysts said.

 

 

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Canadian frackers and oilfield service companies are enduring a bruising spring breakup, clobbered by a one-two punch of cost inflation caused by Ottawa’s retaliatory tariffs against the United States and oil prices seemingly in free fall.

Oil prices have sharply fallen in response to U.S. President Donald Trump ‘s tariff policy and in the wake of larger-than-expected output hikes from the Organization of Petroleum Exporting Countries and its allies. — Meghan Potkins, Financial Post

Read the full story here.

 

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This Alberta-based woman has been happily retired for the last three years, but at 69, she wants to make sure her retirement savings will last and potentially fund a retirement home until her death. Keep reading here to find out if she has enough money to make her plan a reality.

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Retaliatory Canadian tariffs on U.S. auto imports will go into effect Wednesday at 12:01 a.m. ET, Ottawa has announced.

The measures slap a 25 per cent levy on all non- CUSMA compliant autos imported into Canada from the U.S., plus 25 per cent on the U.S.-made content of CUSMA-compliant vehicles.

Prime Minister Mark Carney had announced the measures on April 3, the same day 25 per cent U.S. tariffs on Canadian vehicles came into effect and a day after U.S. President Donald Trump imposed sweeping “reciprocal” tariffs on America’s trading partners.

The Canadian measures will not hit the Canadian and Mexican made components of completed vehicles, nor will they affect auto parts. A separate U.S. measure targeting Canadian auto parts is due to go into effect on May 3.

“Canada continues to respond forcefully to all unwarranted and unreasonable tariffs imposed by the U.S. on Canadian products,” Finance Minister François-Philippe Champagne said in a media release Tuesday.

“The government is firmly committed to getting these U.S. tariffs removed as soon as possible, and will protect Canada’s workers, businesses, economy and industry.”

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Details of a remission framework to direct proceeds of the tariffs to support the auto industry and affected worker would be forthcoming, the Department of Finance statement said.

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Canada breathed a sigh of relief last week when United States President Donald Trump refrained from imposing further tariffs on our country, but this respite is overshadowed by the broader, more insidious impacts of his trade policies .

The heavy tariffs imposed on the European Union, China and other countries are set to reverberate through the global economy. Canada is far from immune to these ripple effects.

Trump’s tariffs are not just a bilateral issue; they are a catalyst for a potential global economic slowdown . The retaliatory measures from China and other affected nations are likely to exacerbate this downturn, creating a vicious cycle of reduced trade and economic activity like people saw in the 1930s.

The expected economic slowdown is already manifesting itself in oil prices, which dropped well over 10 per cent last week. This decline is particularly detrimental to oil producers in Alberta, whose stock prices plummeted more than 15 per cent in response. Stock prices may well recover somewhat this week, but that doesn’t change the big picture.

One of the most troubling aspects of Trump’s tariffs is that they are arbitrary and lack a clear economic rationale. This ambiguity has sown seeds of uncertainty , as reflected in the largest spike in the VIX index, the fear gauge, since the COVID pandemic. Uncertainty is the enemy of investment. It breeds caution and delays in capital expenditure, stalling economic growth.

The erosion of consumer confidence is perhaps the most damning consequence of Trump’s tariffs. As uncertainty looms and economic indicators falter, consumers are tightening their belts, leading to further downward pressure on global economies.

Even if the tariffs on Canada were lifted tomorrow, the lingering effects of diminished consumer confidence and investment hesitancy would continue to pose significant challenges.

In light of these developments, Canada must brace itself for ongoing economic headwinds.

The indirect impacts of the tariffs underscore the interconnectedness of global trade. Canada as an open economy is not immune to a global economic slowdown. Trust in the international rules-based order has vanished for years to come. The sheer madness of the Trump turmoil will have lasting effects.

There is no easy fix for Canada. Our fundamental problems predate Trump and have been in the making for years. Decreasing reliance on the U.S. market is essential, but diversifying trade to new partners will not help in the short term if potential partners are experiencing recessions.

The best thing we can do is get rid of trade barriers within Canada . All major political parties agree on this.

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The other fixes are much more difficult. We need to reverse the dismal trend in our productivity, but that will take time. We will need to scale up our promising technology startups, but that is easier said than done. Whichever party wins on April 28 will have to be honest with Canadians. Tough times will continue.

Yrjo Koskinen is the BMO Professor of Sustainable and Transition Finance at the Haskayne School of Business, University of Calgary, and specializes in sustainable and climate finance and corporate governance issues.

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Americans are rushing to stock up on everything from soy sauce to Lululemon Athletica Inc yoga gear before the tariffs imposed by President Donald Trump start to jack up prices on the shelves, according to media reports.

The day after Trump’s so-called Liberation Day last Wednesday, billionaire businessman Mark Cuban posted a warning to Americans on social media platform Bluesky.

“It’s not a bad idea to go to the local Walmart or big box retailer and buy lots of consumables now. From toothpaste to soap, anything you can find storage space for, buy before they have to replenish inventory,” Cuban wrote.

“Even if it’s made in the USA, they will jack up the price and blame it on tariffs,” he added.

Clothing industry groups also warned that American consumers should expect to pay more for clothes and shoes, about 97 per cent of which are imported, mainly from Asia.

Most of the clothing sold at Gap Inc., Lululemon and Nike Inc. are made in Asian countries, which face the stiffest tariffs. Under the president’s plan to punish countries for trade imbalances, Vietnam was slapped with an import tax rate of 46 per cent and Bangladesh and Indonesia, 37 per cent and 32 per cent.

With U.S. companies, which use foreign factories to keep labour costs down, and their overseas suppliers unlikely to absorb new costs this high, price hikes look inevitable.

“If these tariffs are allowed to persist, ultimately it’s going to make its way to the consumer,” Steve Lamar, president and CEO of the American Apparel & Footwear Association, told The Associated Press.

Trump’s tariff announcement last Wednesday spurred Americans across the country to hit the stores or load up their “carts” online, reports the Wall Street Journal.

For many people the Rose Garden event flicked the switch from threats to reality, Peter Atwater, an adjunct economics lecturer at William & Mary, told the WSJ.

“Just like Tom Hanks getting COVID was the tipping point five years ago,” he said.

Noel Peguero of Queens told the Journal that between Wednesday night and Thursday morning, he spent about US$3,000 on electronics, car parts, gardening equipment and other household items.

“Now is the time to buy,” he said.

Others stocked up on foreign brands like Lululemon and food — everything from Guinness to soy sauce.

One Reddit user from Illinois told Business Insider that his spending would come to “a complete standstill” for things that aren’t essential. Imports like fruit, avocados, and tea, “are all a luxury now,” he said.

A poll of the Business Insider newsroom revealed that people are snapping up Apple Inc. computers, hair extensions from Asia, a trench digging shovel from China and vanilla from Madagascar. One was planting a garden to replace expensive vegetables.

Mary E. Lovely, a senior fellow at the Peterson Institute for International Economics, questions where the United States will be getting its goods now that tariff rates are “astronomical.”

“Will the new ‘Golden Age’ involve knitting our own knickers as well as snapping together our cellphones?” she told the Associated Press.

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A rush to comply with the Canada-United-States-Mexico Agreement (CUSMA) by Canadian businesses could dramatically reduce America’s effective tariff rate on Canada, said the National Bank of Canada.

According to February U.S. trade data, just 33 per cent of Canadian imports were CUSMA compliant, putting the effective tariff at 15.6 per cent. National economists, however, believe there has been a “rush to compliance” since then that will bring the rate down to 5.7 per cent.

“Sifting through the chaos, it’s clear that USMCA compliance is the name of the tariff game for two of the U.S.’s largest trading partners,” said National economists Stéfane Marion and Ethan Currie.

National expects this rate could come down further as compliance increases, trade composition shifts and special tariffs related to border grievances are potentially removed.

“With rule of trade origin and self-compliance dynamics at play, we expect certain products — such as energy — to become effectively tariff-free, if they aren’t already,” they said.

 

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• Bank of Canada outlook surveys show recession fears rising
• How much does it take to be considered wealthy in Canada?
• Stocks are plunging and that may only be the start of the pain for Canadian consumers

For many big bank mortgage borrowers, falling rates can be a double-edged sword.

That’s because they trigger break penalties that banks calculate using “interest rate differentials” (IRDs) which cost Canadians billions every year. Mortgage strategist Robert McLister at MortgageLogic.news explains why falling rates spell trouble for anyone needing to break their mortgage contract. Find out more

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 Pamela Heaven 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 .

• Investors warned against catching 'a falling knife'
• Chances of U.S. recession rise to 60%, dragging Canada along

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