In its most recent five-year outlook, the Conference Board of Canada (Conference Board) said it expects the Canadian economy to be dragged down by tariffs. The Conference Board expects Canada’s gross domestic product to contract this year, while job losses could be plentiful. However, the business organization is expecting the tariffs on Canada to be relatively short-lived, calling for a swift recovery once tariffs are removed or scaled back. US President Donald Trump announced details of his retaliatory tariffs yesterday.

• The Conference Board projects Canada’s economy to contract at an annualized pace of 5.4% in the second quarter of 2025. It projects tariffs will result in exports dropping by a third. Automotive exports could fall by even more. The automobile industry is an important one for the Canadian economy.
• The significant decline in economic activity could lead to job losses, according to the Conference Board. Projections show the Canadian economy could lose 160,000 jobs in response to the tariffs.
• The Conference Board believes there will be a swift recovery once tariffs are removed. The outlook projects tariffs will end by July 1. The US economy will be hurt by the drop in trade activity. Lawmakers from both countries might be able to come to an agreement by then.
• President Trump announced his retaliatory tariffs yesterday. The tariffs are extensive and are likely to have a negative impact on global economic growth. Inflationary pressures could also pick up in response to the tariffs.

Projections show tariffs hurting Canada’s economy. However, there’s hope that US tariffs placed on Canada will eventually be halted after the leaders of both countries agreed to speak following Canada’s federal election. If the Conference Board is correct, the negative impact from tariffs could be brief, which might allow Canada to begin its recovery by the third quarter of this year.

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.