Millions of voters have elected Donald Trump as the 47th president of the US, and it could change things drastically for Canada.
As the country’s northern neighbour, Canada could see some seriously grim impacts of this term, and soon. Inflation, the economy, and trade could all worsen, making Canadians’ lives more difficult amid an existing cost-of-living crisis.
Immediately after Trump’s win was announced, the USD surged in value against the Canadian dollar, which may be good news for wealthy investors but the opposite for everyday Canadians.
Here’s what experts believe could be in store for us.
Trade troubles and pricier groceries
The president-elect has pitched economic policies that, if imposed, could spell disaster for Canada, including a 10% to 20% tariff on Canadian goods and services.
According to a recent TD report, a 10% tariff alone would be a “hard hit” to Canadians.
ViDI Studio/Shutterstock
“Our research shows that a full-scale implementation of the tariff plan could lead to a near-5% reduction in Canadian export volumes to the US by early 2027, relative to our current baseline forecast. Retaliation by Canada would increase costs for domestic producers and push import volumes lower in the process,” shared Marc Ercolao, an economist at TD, in the report.
“Slowing import activity mitigates some of the negative net trade impacts on total GDP enough to avoid a technical recession but still produces a period of extended stagnation through 2025 and 2026. The minimal increases are well below potential GDP and translate into output levels that are 2.4% lower by the end of 2026 compared to baseline estimates.”
Penelope Graham, a mortgage expert at Ratehub.ca, shared her thoughts on the Trump presidency’s effects on Canada in an email to Daily Hive and on her blog.
Like many other experts, she believes the reality TV star’s proposed “deeply protectionist ‘America First policies’” like steeper import tariffs, widespread deportations, and challenging the independence of the Federal Reserve, will not “eradicate” inflation as he believes.
Such an event would have “deep consequences” for Canada as a trading partner.
Days before Trump’s victory, agri-foods professor Sylvain Charlebois told Retail Insider that more tariffs will mean higher food prices, a change that will begin to make itself known significantly in the next year.
“If Trump wins, we could see targeted trade measures aimed at Canada’s protected sectors,” he predicted.
Rising inflation and mortgage pressures
Post-election rising bond yields in the US, currently the highest since July, could have some devastating results.
“When yields, especially the 10-year term, rise, it can reflect growing fears of future economic risk, including recession and rising inflation,” said Graham. “As lenders take their pricing cues from the bond markets for their fixed-rate borrowing products, this could put upward pressure on Canadian fixed mortgage rates in the weeks to come.”
takasu/Shutterstock
In an interview with Canadian Mortgage Trends, expert Ryan Sims noted that while Trump’s tax cuts may boost growth, they could also balloon debt in the US. This could raise bond yields and consequentially put upward pressure on fixed mortgages.
“Overall, the implementation of protectionist US trade policies, and their inflationary effects, pose challenges for Canadians businesses, consumers, and our central bank,” concluded Graham.
“While it remains to be seen just what will be put in force (these are election promises, after all) there’s plenty of reason for mortgage and savings watchers to pay attention to where yields – and rates – are headed.”
How are you feeling about the economic effects of the second Trump win on Canada? Let us know in the comments.