Tariff discussion and what you need to know!

WHAT IS A TARIFF?

• A tax imposed by a country on either imports or exports

• Trump has imposed 25% tariffs on Canadian imports (except energy which he’s placing a 10% tariff) to come into effect Tuesday February 4th 2025 Trump is also imposing 25% on imports from Mexico (this may be a month delayed) and 10% tariffs on China imports

WHY TRUMP IS IMPOSING THESE TARIFFS?

• The US president said tariffs are needed to "protect" Americans from the "major threat of illegal aliens and deadly drugs", including fentanyl.

• Canada has been proven to not be a major player of bringing fentanyl into America (according to Bloomberg, New York Times and other sources)

IMPACT

• The market selloff we’re seeing today was expected by experts

• More volatility expected to come and potential for downside risk in coming sessions with equities (possibly as much as 5% for the S&P 500 and the TSX)

• Loonie falls to lowest level (trading for 68.13 cents US) since 2003

• More retaliation potentially to come

INTEREST RATES

• BoC calling for the Bank to cut rates further from here and to take policy into stimulative territory

• Tariffs offer an additional reason for the Fed to remain on hold for a bit longer, which could push easing further out.

CANADA’S MAIN EXPORTS TO THE U.S.

• Oil and gas makes up roughly 26% of US imports from Canada

• Transportation equipment (including autos) make up 16-17%

• Chemicals + Primary metal manufacturing are around 14-15%

• The above tells us that consumer discretionary, energy and materials are the most vulnerable GICS sectors

EMOTIONAL INVESTING

IT'S VITAL TO AVOID EMOTIONAL INVESTING AND REACTIONS

This is where the value of an advisor comes in, to help guide you through these markets Contact us today to see how we can add value and assist you with your financial journey!

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Information provided from BMO Global Asset Management, New York Times and Bloomberg

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This blog was prepared by Alison Cannell, for the benefit of Alison Cannell, Financial Advisor with Cannell Wealth Management Inc., a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this blog comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.

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