Statistics Canada reported that foreigners were net sellers of Canadian securities over the month of February. This contrasted with Canadians, who were net purchasers of foreign securities over the month. February brought with it escalating trade tensions between the US and Canada, Mexico and China. While the initial tariffs for the beginning of February on Canada were paused, investors expected tariffs to eventually come into effect, which raised concerns about Canada’s economic activity.

• Foreign investors lowered their investment in Canadian securities by $6.46 billion in February. This was the first time in 11 months that foreigners were net sellers of Canadian securities. Foreign investors reduced their exposure to Canadian equities by $20.5 billion.
• Confidence in Canadian equities was hurt by the threat of extensive tariffs, which were expected to slow economic activity. The S&P/TSX Composite Index ticked lower in February.
• Canadian investors were net purchasers of foreign securities, with a total of $27.2 billion. The increase was driven by net purchases of $27.9 billion of foreign equity securities and investment funds. This reversed the $17.6 billion divestment in January.
• Tariffs are expected to weigh on Canada’s economic activity. Since February, tariffs have gone into effect, particularly for key items such as automobiles, aluminum and steel.
• Canadian consumer confidence continues to sink, falling to its lowest level since 2022 over the week ended April 18. The Bloomberg Nanos Canadian Confidence Index showed that Canadians have heightened concerns about the strength of Canada’s economy.

Escalating trade tensions are impacting Canada’s economic conditions and foreign investment in Canada. If tariffs are eventually removed or lowered, Canada’s economic activity could pick up, which might also raise foreign investors’ confidence in Canada. Despite some downturns, Canada’s economy has shown relative resiliency over time. The Prime Minister is expected to discuss trade and other matters with US President Trump following Canada’s federal election next Monday.

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.