Markets Plus Navigating Tariffs: Economic and Market Impacts for Canada and the U.S.
Mar 6, 2025
Douglas Porter, Managing Director and Chief Economist at BMO, and Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management U.S., delve into the complex world of U.S.-Canada tariffs. They discuss how these tariffs are influencing economic growth, inflation, and market volatility in both nations. The conversation highlights the potential shifts in consumer confidence and strategies for investing amid uncertainty. Insights on currency fluctuations, asset allocation strategies, and the impact of potential Federal Reserve rate cuts make for an engaging and informative discussion.
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Economic Impact of Tariffs
- Tariffs weaken economic growth and increase inflation, a negative combination for economies and markets.
- Weaker growth will likely dominate, influencing central bank reactions and impacting bond markets.
Market Impact and Outlook
- Markets face a rough patch due to early-stage trade wars, US government disruptions, and weakening economic data.
- Potential positives like Fed rate cuts and tax cuts are expected later, creating a timing mismatch and market volatility.
Impact of Uncertainty
- Uncertainty significantly impacts consumer and business confidence, leading to decreased spending, especially on big-ticket items.
- The housing market can stall due to uncertainty, as seen in Canada, because consumers hesitate to make large purchases.