Markets Plus Reciprocal Tariffs: Market & Economic Implications
6 snips
Apr 8, 2025 
Michael Gregory, Managing Director and Deputy Chief Economist at BMO Capital Markets, and Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management U.S., share insights on the economic repercussions of recent reciprocal tariffs between Canada and the U.S. They discuss the potential for recession in Canada and rising inflation in the U.S., along with the uncertainty it brings to markets. The duo emphasizes the importance of cautious investment strategies and the ongoing challenges faced by the Federal Reserve in balancing growth with inflation.
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Tariff Calculation
- The new reciprocal tariffs are calculated to eliminate the U.S. trade deficit by raising import prices.
- This approach differs from the initial aim of offsetting tariff and non-tariff barriers faced by U.S. businesses.
Market Shock
- The U.S. stock market experienced two days of declines exceeding the Lehman bankruptcy drop.
- This market shock reflects the extreme and surprising nature of the tariffs' impact.
Portfolio Positioning
- Avoid panic selling during market volatility, as it's rarely beneficial.
- Consider modest portfolio adjustments towards safer assets like bonds if your risk tolerance is exceeded.