Overview of Trump’s Tariff Announcement

KEY TAKEAWAYS

• Recession Risk: The probability of a recession has increased, which will continue to weigh on markets. Expect continued market volatility, with potential downside risk.
• Short-Term Disruption, Long-Term Opportunity: While the immediate trade environment is uncertain, Canada stands to benefit from closer economic ties with the U.S. as global supply chains realign.
• Strategic Sectors for Investment: Investors should consider focusing on defensive sectors and bond proxies, while remaining cautious on growth-oriented stocks, particularly those with significant international exposure.
  

Trade tensions are rising, with new U.S. tariffs announced on April 2 triggering global market volatility. Both developed and emerging economies are feeling the impact through stock-market swings and shifting consumer prices. This report breaks down the global effects and offers key investment insights.

IMPACT ON CANADA

• No Retaliatory Tariffs: Canada avoided reciprocal tariffs.
• USMCA-Compliant Goods: About 35 % of Canada’s exports to the U.S. are shielded from tariffs because they comply with the U.S.–Mexico–Canada Agreement (USMCA).
• 25 % Tariffs on Non-Compliant Goods: The remaining 65 % of Canadian exports—such as aluminum, steel, and automobiles—face 25 % tariffs. If certain conditions (e.g., removal of fentanyl-related tariffs) are met, the burden could ease slightly.
• Significant Headwinds for the Auto Sector: The 25 % tariff on autos remains a critical challenge due to its broad, multi-industry impact.
  

IMPACT ON OTHER COUNTRIES

• Before vs. After Tariffs: The average tariff rate on U.S. imports has jumped from ≈ 2.4 % to ≈ 22.4 %.
• Emerging Markets & Asia Hit Hardest: China, Vietnam, Taiwan, and South Korea see the steepest increases (China as high as 46 %).
• Unexpected Tariffs on the European Union: The EU faces a 20 % tariff on most goods plus an extra 25 % on steel and aluminum—surprising given the U.S.’s usual trade surplus with Europe.
  

WHAT DOES THIS MEAN FOR CHINA AND EUROPE?

• Europe’s Retaliation Likely: The surprise EU tariffs may provoke strong counter-measures.
• China’s Resilience: U.S. exports equal only about 3 % of China’s GDP, and Beijing has already diversified much of its trade toward neighbouring countries.
  

THE CHANGING GLOBAL TRADE LANDSCAPE

• End of Globalization: Three distinct economic blocs are emerging—North America, Europe, and Asia.
• Canada’s Strategic Opportunity: Canada (and Mexico) could gain as the U.S. deepens trade with close neighbours. Although some market share may shift to U.S. onshoring, demand will persist for raw materials and semi-finished goods no longer sourced from Europe and Asia.

CANADA’S OUTLOOK

• Relative Strength for Canada: Canadian stocks and bonds may outperform U.S. peers, though the loonie could stay weak versus the greenback amid uncertainty.
• Sectors to Watch:
• • Defensive sectors—utilities and consumer staples—are likely to stay resilient.
• • Growth & tech stocks with heavy international exposure face headwinds from tariffs and supply-chain disruptions.
• Bond Market Outlook: Economic worries could lower bond yields (U.S. 10-year ≈ 3.5 %). The Bank of Canada may cut rates further, while the U.S. Fed waits unless labour markets weaken sharply.
  

Bottom line: Canadian assets may outperform, but a weaker loonie and global headwinds could test growth and tech stocks.

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cgf.com — Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp., Member of the Canadian Investor Protection Fund and Canadian Investment Regulatory Organization (CIRO). This document is for general information only and is not intended to provide tax, legal, or financial advice, nor should it be taken as a solicitation to act as a securities broker or dealer in any jurisdiction. All views are for broad circulation only and do not consider the specific objectives, financial situation, or needs of any individual or institution. Investors should consult a qualified advisor or tax professional before making decisions. Tax & Estate advice is offered through Canaccord Genuity Wealth and Estate Planning Services.

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