From a Canadian perspective, it’s notable that our economy was arguably one of the least impacted by Trump’s announcement on April 2nd. Ahmed highlights the potential devastation that could be wreaked by 25 per cent tariffs on automobiles made outside the US, as well as tariffs on steel and aluminium. However, because no new tariffs were imposed or announced on Canada and Mexico, and because most of their goods will be exempt under the USMCA agreement, Ahmed described the overall outcome for Canada as “not good but less bad.”
Ahmed noted that many will speculate as to why Canada was relatively unscathed on ‘liberation day’ and notes that the reasons are likely myriad. He highlighted what appears to have been a tone shift since Trump spoke with Prime Minister Mark Carney in March and some speculation of a personal dislike for former Prime Minister Trudeau in Trump’s policy. Trying to understand exactly why the President has made certain announcements or policy decisions, however, seems to be a futile exercise often laced with emotion and bias.
Instead, Ahmed is talking to his clients about the facts of the situation. Taking onboard facts of both stock markets and the Canadian economy, he shows his clients that we’re coming off some relatively strong periods in terms of market returns. The market correction, too, is still within the bounds of ‘normal’ — between ten and fifteen per cent. He believes that the emotional and political nature of this particular pullback has made it feel more acute for investors than the numbers alone would imply.
Moreover, the reasons for a pullback in the market and uncertainty about the Canadian economy are largely tied to one source: US policy. While he expects volatility to continue in the short-term, he thinks that as accommodations are reached and new dynamics are normalized that we may see a degree of certainty return to the market. He describes his medium-term view as “cautiously optimistic.”
Some of that cautious optimism comes from Ahmed’s first-row seat to the US and Canada’s tariff wrangling since February. He notes that many of the hard-line stances first taken by the US administration have been walked back and watered down in subsequent days. He believes that there will be negotiations following imminently that see some of these tariffs softened for key trading partners.
