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.
29:15
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Quick takeaways
- Tariffs are expected to reduce Canadian GDP growth forecasts significantly while simultaneously increasing inflation, creating economic challenges.
- The uncertainty around tariffs is declining consumer confidence, which may further hinder spending on major purchases like homes and vehicles.
Deep dives
Impact of Tariffs on Economic Growth
Tariffs and trade wars significantly weaken economic growth while simultaneously raising inflation, creating a challenging environment for both Canada and the U.S. The consensus is that weak growth will have a more considerable impact than rising inflation, leading to lowered GDP growth predictions, particularly in Canada. For instance, the growth outlook for Canada has been revised down by approximately 1.5 percentage points, shifting from nearly 2% to a range between 0% and 0.5% for the coming years. This is coupled with an expected uptick in inflation, which is projected to increase by half a point in Canada due to these tariffs.
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