Last Friday, Statistics Canada (StatsCan) estimated that economic activity in Canada stalled in February, suggesting the threat of tariffs is already weighing on consumer and business activity. Tariffs were implemented in March, but the threat persisted over February, raising concerns among households and businesses about the outlook for Canada’s economy. While there was a glimmer of hope on Friday after US President Donald Trump said he had a productive call with Canadian Prime Minister Mark Carney, more tariffs are expected to be put into place this week.

• StatsCan reported that Canada’s economy grew by 0.4% in January over the previous month. This marked the second straight expansion and topped the 0.3% increase economists had expected, based on a Bloomberg survey.
• Despite the solid start to 2025, Canada’s gross domestic product was largely unchanged in February. StatsCan estimated that the retail trade industry declined in February. This reflects households’ concerns about tariffs and uncertainty regarding the outlook for Canada’s economy.
• Tariffs on some products came into effect in early March. More tariffs are expected this week, including on automobiles. Trade disruption with Canada’s largest trade partner is expected to weigh on economic activity.
• Canadian consumer confidence remained unchanged over the week ended March 28. The Bloomberg Nanos Canadian Confidence Index held steady at 47.4. This is the lowest level in over two years. Most Canadians believe the economy will be weaker in the next six months.

Global equity markets fell yesterday as investor anxiety heightens with new tariffs scheduled for April 2. Canada’s Prime Minister and the US President have agreed to continue talks following the election. In the meantime, Canadian lawmakers will continue to negotiate with the US on more immediate issues. Canada’s economy has entered an uncertain period that could be hindered by softer consumer and business activity.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.