Canadian GDP Growth Accelerated in Q4 to 2.6% Compared to an Upwardly Revised 2.2% in Q3

General Kimberly Coutts 28 Feb

Canada Finished 2024 on a Stronger Note, But Tariffs Remain a Concern
 

This morning, Statistics Canada released the GDP data for the final quarter of last year, showing a stronger-than-expected increase in household final consumption spending, exports, and business investment. However, drawdowns of business inventories and higher imports tempered the overall growth.

In Q4, the Canadian economy accelerated, with real GDP growth reaching a solid 2.6% annualized, which was well above consensus and the Bank of Canada’s latest forecast. The growth was broad-based, led by a 5.6% increase in consumer spending. Consumer spending climbed 3.6% annually for three of the four quarters in 2024, supported by rate cuts in the second half of the year. Year-over-year, consumer outlays rose by 3.6%, marking the best pace since 2018 (excluding the pandemic). Although the tax holiday had a positive impact, it took effect very late in the quarter, suggesting that momentum was already strong before that. The housing sector also showed solid growth, increasing by 16.7%, the best gain in nearly four years, driven by a significant rise in resale activity. Business investment also contributed positively, rising by 8% due to investment in machinery and equipment.

However, inventories were a significant drag on growth, subtracting 3.3 percentage points, while net exports added 0.6 percentage points. Final domestic demand growth was recorded at 5.6%, the best quarter since 2017, excluding the pandemic. Notably, the growth figures for Q2 and Q3 were revised upward: Q2 is now at 2.8% (previously 2.2%), and Q3 is now at 2.2% (previously 1.0%).

December’s GDP came in slightly below expectations at +0.2%. Retail sales significantly contributed to this gain, increasing by 2.6% due to the tax holiday, while utilities also experienced a notable increase of 4.7% owing to more typical winter weather. The January flash estimate showed a solid rise of +0.3%, likely reflecting activity that was front-loaded ahead of potential tariffs. Nonetheless, this indicates a promising start to Q1 and 2025.

Bottom Line

The Canadian economy demonstrated strong momentum in the latter half of 2024, driven by aggressive rate cuts from the Bank of Canada that stimulated economic activity. The growth rate significantly exceeded the central bank’s forecast, coming in at 2.6% compared to the expected 1.8%. Overall growth for 2024 was also better than anticipated, at 1.5% versus the forecasted 1.3%. However, much of this growth occurred before the escalation of tariff threats.

This data may support the central bank’s decision to pause its easing cycle at the upcoming meeting on March 12. However, looming tariff threats from U.S. President Donald Trump, including a 10% tariff on Canadian energy and a 25% tariff on all other goods set to take effect on Tuesday, could complicate the bank’s decision-making.

The threat of tariffs may also account for the muted market reaction to the positive GDP report, which coincided with a U.S. report showing that the Federal Reserve’s preferred inflation gauge rose at a mild pace while consumer spending declined. On the day, Canadian government two-year bond yields fell by less than one basis point to 2.619% as of 9:10 a.m. in Ottawa, while the Canadian dollar slipped slightly, down less than 0.1% to C$1.4426 per U.S. dollar. Traders in overnight swaps assessed the odds of a rate cut on March 12 at about 43%, compared to a near 50% chance just a day earlier.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Canadian New Listings Surged in January as Tariff Uncertainty Weighed on Sales

General Kimberly Coutts 18 Feb

Global Tariff Uncertainty Is Not Good For the Canadian Housing Market
 

Canadian MLS® Systems posted a double-digit jump in new supply in January 2025 when compared to December 2024. At the same time, sales activity fell off at the end of the month, likely reflecting uncertainty over the potential for a trade war with the United States.

Although sales were down 3.3% month-over-month in January, this was mostly the result of sales trailing off in the last week of the month.

Meanwhile, the number of newly listed homes increased with an 11% jump compared to the final month of 2024. Aside from some of the wild swings seen during the pandemic, this was the largest seasonally adjusted monthly increase in new supply on record going back to the late 1980s.

“The standout trends to begin the year were a big jump in new supply at an uncommon time of year, as well as a weakening in sales which only showed up around the last week of January,” said Shaun Cathcart, CREA’s Senior Economist. “The timing of that change in demand leaves little doubt as to the cause – uncertainty around tariffs. Together with higher supply, this means markets that had been steadily tightening up since last fall are now suddenly in a softer pricing situation again, particularly in British Columbia and Ontario.”
 

New Listings

With sales down amid a surge in new supply, the national sales-to-new listings ratio fell to 49.3% compared to readings in the mid-to-high 50s in the fourth quarter of last year. The long-term average for the national sales-to-new listings ratio is 55%, with readings between 45% and 65% generally consistent with balanced housing market conditions.

There were close to 136,000 properties listed for sale on all Canadian MLS® Systems at the end of January 2025, up 12.7% from a year earlier but still below the long-term average for that time of the year of around 160,000 listings.

“While we continue to anticipate a more active spring for the housing sector, the threat of a trade war with our largest trading partner is a major dark cloud on the horizon,” said James Mabey, CREA Chair. “While uncertainty about the economy and jobs will no doubt keep some prospective buyers on the sidelines, a softer pricing environment alongside lower interest rates will be an opportunity for others.”

There were 4.2 months of inventory on a national basis at the end of January 2025, up from readings in the high threes in October, November, and December. The long-term average is five months of inventory. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months and a buyer’s market would be above 6.5 months.
 

Home Prices

The National Composite MLS® HPI has barely budged in the last year, owing to ongoing softness in B.C. and Ontario. This has offset rising prices on the Prairies, in Quebec, and across the East Coast.

The National Composite MLS® Home Price Index (HPI) changed slightly (-0.08%) from December 2024 to January 2025.

The non-seasonally adjusted National Composite MLS® HPI was unchanged (+0.07%) compared to January 2024. That said, it was technically the first year-over-year increase since last March.
 

Bottom Line

The Bank of Canada’s aggressive rate cuts and regulatory changes aimed at making housing more affordable were offset last month by the increasing uncertainty surrounding a potential trade war with the United States. Tiff Macklem clearly recognizes from this report that significant uncertainty is detrimental to both the Canadian housing market and the broader economy. Our economy teeters on a precarious line between modest growth and recession. Before the tariff threats emerged, it seemed the housing market was poised for a strong rebound as we approached the spring selling season.

Unfortunately, the situation has only deteriorated, particularly as President Trump has repeatedly suggested that Canada could become the 51st state, further angering Canadians. While the first round effect of tariffs leads to higher prices as importers attempt to pass off the higher costs to consumers, second-round effects slow economic activity owing to layoffs and business and household belt tightening.

The Bank of Canada will no doubt come to the rescue slashing interest rates further. This is particularly important for Canada where interest-rate sensitivity is far higher than in the US.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Canadian CPI Inflation Edged Upward in January Owing To Rising Energy Prices

General Kimberly Coutts 18 Feb

Canadian Inflation Edged Upward to 1.9% Y/Y in January
 

In January, the Consumer Price Index (CPI) rose by 1.9% year over year (y/y), up from 1.8% in December. This rise was primarily due to an uptick in energy prices. Excluding gasoline, the CPI increased by 1.7% in January, down from 1.8% in December.

Higher energy prices, particularly gasoline and natural gas were the main contributors to this acceleration. However, these increases were somewhat countered by continued downward pressure on prices for items affected by the goods and services tax (GST)/harmonized sales tax (HST) break implemented in December. Notably, food prices fell by 0.6% year-over-year in January, marking the first annual decline since May 2017. This decrease was primarily driven by a significant drop in prices for food purchased from restaurants, which fell by 5.1%.

The CPI rose by 0.1% in January, compared to a 0.4% decline in December.

Energy prices rose 5.3% in January y/y, following a 1.0% increase in December. Specifically, gas prices increased 8.6% yearly in January, up from 3.5% in December. In Manitoba, gas prices rose by 25.9% due to the reintroduction of a provincial gas tax at a lower rate after its temporary suspension from January to December 2024.

Additionally, prices for new passenger vehicles increased by 2.3% year-over-year in January, compared to a 0.9% increase in December. In contrast, prices for used vehicles continued to decline in January, decreasing by 3.4%, although slower than the 4.1% decline observed in December. This marks the 13th consecutive month of year-over-year price decreases for used vehicles.
 

In January 2025, prices for food purchased from restaurants decreased by 5.1%. This decline was over three times greater than the previous record drop of 1.6% observed in December 2024.

Canadians also experienced lower prices for alcoholic beverages purchased from stores, which fell by 3.6% in January 2025 compared to January of the previous year, following a decrease of 1.3% in December.

Additionally, prices for toys, games (excluding video games), and hobby supplies dropped by 6.8% year over year in January after a decline of 7.2% in December.

Excluding indirect tax changes, inflation notably increased to 2.6% from 2.2% the prior month and a recent low of 1.5% last September. It was a similar story for core inflation—BoC’s main measures rose 0.2% m/m in adjusted terms, lifting both to 2.7% y/y (from 2.5% for trim and 2.6% for median). Over the past three months, both have risen at just over a 3% annualized pace, or just a touch above the BoC’s comfort zone. The Bank’s old CPIX measure of core, which removes eight volatile items and sales taxes, perked up to a 2.1% y/y pace but remains mild. Similarly, the breadth of prices rising above 3% is close to normal.

It’s a little less flashy, but more importantly, shelter inflation continues to grind down gradually. Rents posted their first monthly decline in more than two years (-0.1%), calming the annual increase to 6.3% (from 7.1% last month and a peak of 9% last spring). Mortgage interest costs eased to 10.2% y/y from 11.7% in December and the plus-30% pace in 2023. Offsetting those milder trends were big pick-ups in many utility charges.
 

Bottom Line

Traders in overnight swaps have reduced their expectations for a quarter-percentage point rate cut by the Bank of Canada at its next meeting on March 12, lowering the odds to just over one-third, down from a nearly even chance last week.

Bank of Canada Governor Tiff Macklem has successfully brought inflation under control. However, an impending tariff war between the U.S. and Canada poses a new threat to his efforts to maintain price stability.

Policymakers eased up on the pace of rate cuts in January after aggressively lowering borrowing costs last year, but they remain uncertain about the future direction. U.S. President Donald Trump has indicated plans to impose tariffs of up to 25% on Canadian goods in March, while Prime Minister Justin Trudeau’s government has promised to retaliate. A tariff war would likely compel the central bank to adjust its rate-cutting strategy to prepare the economy for the potential impact of tariffs on consumer prices.

The central bank will next determine the benchmark overnight rate on March 12. Economists are divided into two viewpoints: some anticipate further rate cuts, while others expect the bank to pause amid increasing uncertainties. Governor Tiff Macklem has expressed a desire to bolster economic growth and expects inflation to remain close to the 2% target in the coming months, influenced by fluctuations in global energy prices. Currently, the odds favor another 25 basis points rate cut in March.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Canada’s January Unemployment Rate Fell to 6.6% On Stronger-Than-Expected Job Growth.

General Kimberly Coutts 7 Feb

Stronger-Than-Expected Jobs Report in January
 

Today’s Labour Force Survey for January surprised on the high side as businesses expanded employment despite threats of a tariff war with the US.

According to Statistics Canada, employment increased by 76,000 last month, bringing the jobless rate down to 6.6%. Economists in a Bloomberg survey expected a smaller rise of 25,000 jobs, with the unemployment rate rising to 6.8%. This pattern of stronger-than-anticipated employment data has continued since November, with increases in both part-time and full-time work.

The employment rate—the proportion of the population aged 15 and older who are employed—increased 0.1 percentage points to 61.1% in January, marking the third consecutive monthly increase. These recent increases follow a period in which employment growth had been outpaced by population growth, resulting in the employment rate declining 1.7 percentage points from April 2023 to October 2024.

Manufacturing employment rose by 33,000 (+1.8%) in January, following an increase of 17,000 (+0.9%) in December. The increase in January was concentrated in Ontario (+11,000; +1.3%), Quebec (+9,700; +1.9%), and British Columbia (+8,700; +4.9%). Despite the gains in the past two months, overall employment in manufacturing changed little year over year in January.

Employment in professional, scientific, and technical services rose in January (+22,000; +1.1%), the second increase in the past three months. On a year-over-year basis, employment in the industry was up by 66,000 (+3.4%).

Employment gains led by manufacturing in January
 

Employment in construction increased by 19,000 (+1.2%) in January, building on a net increase of 47,000 (+2.9%) recorded from June to December 2024. On a year-over-year basis, employment in construction was up by 58,000 (+3.6%) in January.

Employment also increased in accommodation and food services (+15,000; +1.3%), transportation and warehousing (+13,000; +1.2%) and agriculture (+10,000; +4.4%) in January. At the same time, there were fewer people employed in “other services” (which includes personal and repair services) (-14,000; -1.8%).
 

The unemployment rate declined 0.1 percentage points to 6.6% in January, marking the second consecutive monthly decline from a peak of 6.9% in November 2024. The unemployment rate had previously increased 1.9 percentage points from March 2023 to November 2024, as labour market conditions cooled after a period of low unemployment rates and high job vacancies following the COVID-19 pandemic.

Many unemployed people are facing continued difficulties finding employment despite recent employment growth.
 

Wage inflation slowed markedly in the past three months, which is welcome news for the Bank of Canada. While the strength of this report has led some to speculate that the central bank will ease less aggressively, we agree that jumbo rate cuts are a thing of the past. However, monetary policy is still overly restrictive, especially if the Trump tariff threats come to fruition.

We expect the BoC to reduce the overnight rate from 3.00% today to 2.5% in quarter-point increments by the spring season. This should significantly boost Canadian housing market activity, particularly given the recent decline in mortgage rates.
 

Bottom Line

Employment in manufacturing may be particularly susceptible to changes in tariffs and foreign demand. The sector has the most jobs dependent on US demand for Canadian exports,

According to the Labour Force Survey, there were 1.9 million people employed in manufacturing in January, comprising 8.9% of total employment—the fourth largest sector in Canada. As a total share of jobs, manufacturing employment has decreased over the years, particularly in the 2000s, but has been more stable since 2010.

Automotive manufacturing industries are highly integrated with US supply chains; an estimated 68.3% of jobs in these industries depend on US demand for Canadian exports. People working in automotive manufacturing (which includes motor vehicle manufacturing, motor vehicle parts manufacturing and motor vehicle body and trailer manufacturing) were concentrated in Southern Ontario, particularly in the economic regions of Toronto (which accounted for 27.7% of all auto workers), Kitchener–Waterloo–Barrie (19.8%) and Windsor-Sarnia (14.8%) in January. In Windsor-Sarnia, automotive manufacturing industries accounted for 38.3% of manufacturing employment and 7.3% of total employment (three-month moving averages, not seasonally adjusted).

In January 2025, a collective bargaining agreement covered over one-quarter (26.5%) of automotive manufacturing employees. In comparison, the union coverage rate in the automotive industry was nearly twice as high in January 2002 (49.9%).

In January, food manufacturing was the most significant manufacturing subsector overall, accounting for 16.4% of all manufacturing employment. It was also the largest subsector across all provinces except Ontario. This subsector relies less on foreign demand, with 28.8% of jobs dependent on US demand for Canadian exports.

The recent acceleration in job growth may not prevent the Bank of Canada from cutting interest rates further this year. The recent wave of hiring likely won’t be enough to placate concerns that a potential Canada-US trade war could plunge the economy into a recession. Still, overnight swap traders eased expectations for a cut at the March 12 meeting to about 60% from close to 80% previously. We expect another 25 bp rate cut at the March and June BoC meetings.

The data were released simultaneously with US nonfarm payrolls, which increased by 143,000 in January as the unemployment rate was 4%. The loonie reversed the day’s loss against the US dollar, trading at C$1.4300 as of 8:34 a.m. in Ottawa. Canada’s two-year yield rose some seven basis points to the session’s high of 2.65%, with Canadian debt underperforming the US and developed markets.

Heightened trade uncertainty will continue to plague Canadian business hiring and spending decisions. Consumers, as well, will likely moderate spending in response to the uncertainty.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Understanding Second Mortgages: Are They Right for You?

General Kimberly Coutts 5 Feb

One of the biggest benefits to purchasing your own home is the ability to build equity in your property. This equity can come in handy down the line for refinancing, renovations, or taking out additional loans – such as a second mortgage.

A second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. Some advantages include the ability to access a large loan sum, better interest rates than a credit card and the ability to use the funds how you see fit. However, keep in mind interest rates are typically higher on a second mortgage versus refinancing and can add additional cash flow tension to your monthly bills. Talk to a mortgage professional today to determine if this is the best option for you!

What is a second mortgage?

First things first, a second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. This is not the same as purchasing a second home or property and taking out a separate mortgage for that. A second mortgage is a very different product from a traditional mortgage as you are using your existing home equity to qualify for the loan and put up in case of default. Similar to a traditional mortgage, a second mortgage will also come with its own interest rate, monthly payments, set terms, closing costs and more.

Second mortgages versus refinancing

As both refinancing your existing mortgage and taking out a second mortgage can take advantage of existing home equity, it is a good idea to look at the differences between them.

Firstly, a refinance is typically only done when you’re at the end of your current mortgage term so as to avoid any penalties with refinancing the mortgage. The purpose of refinancing is often to take advantage of a lower interest rate, change your mortgage terms or, in some cases, borrow against your home equity.

When you get a second mortgage, you are able to borrow a lump sum against the equity in your current home and can use that money for whatever purpose you see fit. You can even choose to borrow in installments through a credit line and refinance your second mortgage in the future.

Some key things to note when looking at a second mortgage or refinancing:

  • If you have a favorable interest rate on your first mortgage, a second mortgage allows you to keep the lower rate on your primary loan, resulting in a lower blended rate.
  • Refinancing resets the amortization schedule, which could extend the loan term. A second mortgage leaves the existing term intact, helping you stay on track with your overall financial goals.
  • Second mortgages often come with more flexible terms, such as interest-only payments, fully open, or shorter term, which can suit your immediate needs.

What are the advantages of a second mortgage?

There are several advantages when it comes to taking out a second mortgage, including:

  • Homeowners can access a significant portion of their home equity (typically 80%-85% LTV).
  • Better interest rate than a credit card as they are a ‘secured’ form of debt.
  • You can use the money however you see fit without any caveats.
  • Allows you to access your home equity without breaking your existing mortgage and incurring penalty fees.

What are the disadvantages of a second mortgage?

As always, when it comes to taking out an additional loan, there are a few things to consider:

  • Interest rates tend to be higher on a second mortgage than refinancing your mortgage.
  • Additional financial pressure from carrying a second loan and another set of monthly bills.

Before looking into any additional loans, such as a secondary mortgage (or even refinancing), be sure to reach out to me! Regardless of why you are considering a second mortgage, it is a good idea to get a review of your current financial situation and determine if this is the best solution before proceeding.

No One Benefits from Tariffs

General Kimberly Coutts 3 Feb

Always grateful for DLC’s Dr. Sherry Cooper for sharing her analysis on all things that can effect mortgages and the economy.  See her article below:

Despite having negotiated the current trade agreement among the U.S., Mexico, and Canada during his first administration, Donald Trump broke the terms of that treaty on Saturday. He triggered a global stock market selloff after fulfilling his threat to impose tariffs on Canada, Mexico, and China. These levies are set to take effect Tuesday unless a last-minute deal is reached during Trump’s phone calls with the leaders of Canada and Mexico today. The European Union is next on Trump’s list for potential tariffs, and the EU has promised to “respond firmly” if this occurs.

Trump slapped tariffs of 25% on goods from Mexico and Canada, 10% on Canadian energy, and 10% on goods from China. He said he was doing so to force Mexico and Canada to do more about undocumented migration and drug trafficking. Still, while precursor chemicals to make fentanyl come from China and undocumented migrants come over the southern border with Mexico, Canada accounts for only about 1% of both.

The countries affected by the tariffs are also preparing their defences. Canada has launched a crisis response that parallels the COVID pandemic, while Mexican President Claudia Sheinbaum has developed a “Plan B” to protect her country. China’s reaction was more subdued. They pledged to implement “corresponding countermeasures,” though they did not provide further details.

The Wall Street Journal, hardly a bastion of progressive thought, lambasted Trump, saying this is the “dumbest trade war in history.” The Journal said, “Mr. Trump sometimes sounds as if the U.S. shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home. This is called autarky, and it isn’t the world we live in or one that we should want to live in, as Mr. Trump may soon find out.”

Trump inherited the best economy in the world from his predecessor, President Joe Biden. However, on Friday, as soon as White House press secretary Karoline Leavitt confirmed that Trump would levy the tariffs, the stock market plunged. Trump, who during his campaign insisted that tariffs would boost the economy, said that Americans could feel “SOME PAIN” from them. He added, “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

Trump loves tariffs and lauds President McKinley for his massive tariff imposition. After 450 amendments, the Tariff Act of 1890 increased average duties across all imports from 38% to 49.5%. McKinley was known as the “Napoleon of Protection,” and rates were raised on some goods and lowered on others, always trying to protect American manufacturing interests. McKinley’s presidency saw rapid economic growth. He promoted the 1897 Dingley Tariff to protect manufacturers and factory workers from foreign competition, and in 1900, secured the passage of the Gold Standard Act.

President Trump has said the McKinley tariffs made the US a global economic leader, but much else was responsible. Over the late 19th century, US immigration increased sharply. American entrepreneurs put a great store in the best practices of Britain, then the global leader in technological development.

The U.S. auto industry is  North American because supply chains in the three countries are highly integrated. In 2024, Canada supplied almost 13% of U.S. auto parts imports, and Mexico provided nearly 42%. Industry experts say a vehicle made on the continent crosses borders a half-dozen times or more as companies source components and add value in the most cost-effective ways.

Everyone benefits. The Office of the U.S. Trade Representative says that 2023 the industry added more than $809 billion to the U.S. economy, or about 11.2% of total U.S. manufacturing output, supporting “9.7 million direct and indirect U.S. jobs.” In 2022, the U.S. exported $75.4 billion in vehicles and parts to Canada and Mexico. According to the American Automotive Policy Council, that number jumped 14% in 2023 to $86.2 billion.

American car makers would be much less competitive without this trade. Regional integration is now an industry-wide manufacturing strategy employed in Japan, Korea, and Europe that aims to source components, software, and assembly from various high-skilled and low-cost labour markets.

The result has been that U.S. industrial capacity in autos has grown alongside an increase in imported motor vehicles, engines, and parts. From 1995 to 2019, imports of automobiles, engines, and parts rose 169%, while U.S. industrial capacity in cars, engines, and parts rose 71%. Thousands of good-paying auto jobs in Texas, Ohio, Illinois, and Michigan owe their competitiveness to this ecosystem, which relies heavily on suppliers in Mexico and Canada.

Tariffs will also cause mayhem in the cross-border trade of farm goods. In fiscal 2024, Mexican food exports comprised about 23% of U.S. agricultural imports, while Canada supplied some 20%. Many top U.S. growers have moved to Mexico because limits on legal immigration have made it hard to find workers in the U.S. Mexico now supplies 90% of avocados sold in the U.S.

Canadian Prime Minister Justin Trudeau has promised to respond to U.S. tariffs on a dollar-for-dollar basis. Since Canada’s economy is so small, this could result in a larger GDP hit, but American consumers will feel the bite of higher costs for some goods.

None of this is supposed to happen under the U.S.-Mexico-Canada trade agreement that Mr. Trump negotiated and signed in his first term. The U.S. willingness to ignore its treaty obligations, even with friends, won’t make other countries eager to do deals. Maybe Mr. Trump will claim victory and pull back if he wins some token concessions. But if a North American trade war persists, it will qualify as one of the dumbest in history.

Bottom Line

This is a lose-lose situation. Prices will rise in all three continental countries if the tariffs persist. While inflation is the first effect, we will quickly see layoffs in the auto sector and elsewhere. Ultimately, the Bank of Canada would be confronted with a recession and will ease monetary policy in response. Interest rates would fall considerably. The Canada 5-year government bond yield has fallen precipitously, down to 2.59%. In this regard, housing activity would pick up, similar to what we saw in 2021, with weak economic activity but booming housing in response to low mortgage rates.

I am still hopeful that an all-out trade war can be averted. There is room to negotiate. As stated by Rob McLister, “Trump underestimates the global revolt against this move, and that’s another reason why these tariffs may be measured in months, not years.” This will not be good for the US. Trump promised to reduce prices, yet sustained tariffs will undoubtedly cause prices to rise. Some of that increase will be absorbed by American importers and some by Canadian exporters anxious to maintain market share. Still, much of the tariff will be passed on to the American consumer in time. This, combined with a North American economic slowdown, will no doubt damage Mr. Trumps approval rating.