TORONTO — The Canadian business community is preparing for the week of March 10, 2025, with several significant events on the horizon. First and foremost, the considerable uncertainty surrounding Canada-U.S. trade is expected to linger, particularly following President Donald Trump’s announcement of new tariffs set to take effect on March 12.
Last week, Canada and Mexico secured temporary relief from broad U.S. tariffs, with this reprieve providing some breathing room for Canadian industries. Nevertheless, President Trump is poised to implement 25-percent tariffs on imports of steel and aluminum, raising concerns among Canadian businesses already grappling with disruptions.
At the same time, the Liberal Party of Canada is set to select its new leader on Sunday night, which will trigger the transition process to replace current Prime Minister Justin Trudeau. The new leader is expected to make decisions concerning the cabinet and is likely to call for elections before Parliament reconvenes on March 24.
The Bank of Canada is anticipated to announce its latest interest rate decision on March 12, as the economic outlook remains clouded by the U.S. tariffs. Recently, the central bank cut its benchmark interest rate by one-quarter of a percentage point to 3 percent, reflecting the risks stemming from the trade tensions. Analysts and traders presently estimate around an 80 percent probability of another quarter-point cut this week.
This situation has led the financial sector and businesses to adjust their strategies accordingly. The travel company, Transat AT Inc., is expected to report its first-quarter financial results on March 13, prompting concerns among investors as travelers rethink their trip plans to the U.S. amid rising tariff threats.
Simultaneously, grocery retailer Empire Co. Ltd. is also seeing scrutiny as it prepares to announce its results on the same day. With Trump’s administration causing shoppers to reevaluate their purchasing choices, the company is striving to reduce reliance on U.S. goods.
According to reports, Governor Tiff Macklem from the Bank of Canada has acknowledged the limits of monetary policy amid such trade disruptions and tariffs. He insisted on the importance of staying focused and not reacting hastily to any inflationary pressures stemming from the tariffs. Economic forecasts remain closely tied to Trump’s decisions, with many analysts warning of potentially dire consequences if trade tensions escalate.
Macklem observed the catastrophic effects the tariffs could impose: “A prolonged trade war – with tariffs at the level Mr. Trump imposed – could lead to significant drops across various sectors, including exports and consumer spending.” With projected declines of 8.5 percent for exports and 12 percent for business investments amid these fears, the Canadian economy may see output decrease by up to 3 percent if conditions do not improve.
Recent surveys show over half of Canadian export-oriented businesses have already begun scaling back production or initiating layoffs due to the anticipated effects of the tariffs. Royce Mendes, head of macro strategy at Desjardins, commented on the shifting business environment, stating, “Many businesses are hesitant to build or expand operations in Canada.”
Adding to the turbulence, U.S. Federal Reserve Chair Jerome Powell provided insights at an economic forum where he noted the central bank's conservative approach to interest rates. Powell remarked on the delicate balance necessary to sustain economic stability amid proposed tariffs, encapsulating the collective unease permeated by Trump’s unpredictable policy shifts.
Lindsey Bell, Chief Market Strategist at Clearnomics, echoed this sentiment, saying, “Powell is giving a sense of calm to a market that's moving very erratically.” But as political tensions rise, uncertainty continues to sow seeds of doubt across North American markets.
Looking forward, various business sectors await clarity on the full impact these tariffs may have on their operations. The path forward is uncertain and will likely necessitate continued adaptations to governmental policy decisions and economic adjustments. With the stakes higher than ever, analysts and business leaders will closely monitor the changing landscapes domestically and internationally.
While many hope for resolution, the looming impacts of tariffs and the upcoming changes within Canadian political leadership will shape the business environment for months to come. The convergence of these two significant events could usher in transformative changes for how Canadian businesses operate, and the potential economic ramifications remain closely watched.