UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Trade talk turmoil'
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Oct 24, 2025 The podcast delves into the fallout from Trump's abrupt cancellation of trade talks with Canada, ignited by Ontario's political ads quoting Reagan against tariffs. The discussion explores why this dispute might be tougher to resolve, with political dynamics complicating direct policy fixes. Market reactions are anticipated to be muted due to the limited impact on trade sectors. Additionally, insights on UK retail sales showcase unexpected strength, underpinned by resilience in consumer spending and the labor market.
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Cancellation Stemmed From Politics Not Policy
- Paul Donovan highlights that President Trump cancelled trade talks with Canada over Ontario political adverts quoting Reagan, not a reversible policy action.
- This makes a diplomatic reset harder, though the dispute centers on limited sectors like steel and aluminium.
Markets Likely Muted, But Uncertainty Returns
- Donovan says markets should be muted because most US‑Canada trade is unaffected and past disputes were resolved eventually.
- But renewed policy uncertainty could spill into expectations for talks with China.
Inflation Data Remains Critical Despite Shutdown
- The Canada spat coincides with US CPI being released despite the government shutdown, since CPI drives indexation and fiscal numbers.
- Tariffs from April show up now, but August tariffs will mainly affect prices in early next year.