President Trump has proposed sweeping tariffs for America’s top three trading partners—Mexico, Canada, and China. These countries account for $1.4 trillion of imports into the US, equating to 45% of all US imports. The US is placing a 25% tariff on all imports from Canada, except energy commodities at 10%. For imports from Mexico, the rate will be 25%, and for imports from China, it will be 10%. These measures were set to go into place on February 4th—however, the tariff on Mexico has been delayed by one month as Mexico agreed to reinforce the border against drug trafficking with 10,000 National Guard members. Uncertainty remains on the tariffs on Canada and China. President Trump is expected to speak with Canada’s Prime Minister Trudeau today at 3 PM.

For 2024, we are expressing our outlook as two parts as we see the first and second halves of the year progressing differently. In the first half of the year, we are expecting central banks in both Canada and the U.S. to maintain their policy interest rates at current levels. As the previously aggressive hiking cycles put increasing pressure on consumer and business spending, we see both countries entering mild recessions, with contracting GDPs, slightly increasing unemployment rates, and pressure on corporate earnings.