Markets React to Trump’s Tariff Threats—Should Investors Worry?

Canadian firms brace for U.S. trade war escalation

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The Week in Review

Weekly Market Recap: U.S. and Canada

If you’re loaded up on growth stocks, it was probably a rough week for you. There’s no way to sugar coat it; tech stocks took a beating. The S&P 500 struggled too, while the Dow and TSX bucked the trend, managing to stay in positive territory.

Here’s how the numbers played out. The Nasdaq plunged 3.38%, dragged down by a selloff in high - growth names. The S&P 500 slipped 0.98%, while the Dow Jones held firm, gaining 0.95%. Here at home, the TSX Composite added 1.00%, proving to be one of the few bright spots. Volatility remains a key theme, and I’m suggesting investors should brace for more of the same.

Week ending February 28, 2025

Major Economic Stories

It was a week of mixed signals for the economy. Canada’s GDP came in stronger than expected, but inflation remains a lingering concern in the U.S. Meanwhile, U.S. consumer spending took a rare dip, which raises fresh questions about the strength of the American economy.

Here’s the latest in economic news.

Canada’s Economy Beats Expectations

Canada’s GDP expanded at an annualized rate of 2.6% in Q4 2024, beating forecasts.

The economy posted its fastest growth since early 2023, driven by strong consumer spending and business investment. While the pace of expansion remains healthy, questions still remain about sustainability in the face of global economic uncertainty.

  • Q4 GDP growth reached 2.6%, beating the 1.9% forecast.

  • Growth was revised upward for Q3, now at 2.2%.

  • The long - term GDP growth average remains at 3.0%.

  • Canada’s economy bounced back from past quarters of sluggish growth.

  • Read the Full Release

U.S. Core PCE Inflation Holds 

The Federal Reserve’s preferred inflation gauge, the Core PCE index, rose 0.3% in January. 

That keeps inflation above the Fed’s 2% target, but the data shows signs of cooling.

  • Core PCE inflation rose 0.3% in January, matching expectations.

  • The annual inflation rate slowed to 2.6% from 2.9% in December.

  • Food and energy prices remained volatile.

  • The Fed’s timeline for rate cuts remains uncertain.

  • Read the Full Release

U.S. Personal Income Pops 0.9%

Americans saw the sharpest rise in personal income in a year, driven by wage growth.

Higher wages and strong asset income boosted personal earnings, though rising costs continue to pressure consumers. The increase once again shows a resilient labour market, but that could complicate inflation control efforts.

  • Personal income rose 0.9%, the highest jump in 12 months.

  • Wages and salaries increased by 0.4% month - over - month.

  • Investment income climbed 1.1%, led by dividend gains.

  • Rental and proprietors' income also saw significant increases.

  • Read more here.

U.S. Consumer Spending Drops for the First Time in Nearly Two Years

Personal consumption expenditures fell 0.2% in January, missing expectations.

The decline, attributed to weak durable goods purchases and bad weather, raises concerns about slowing economic momentum despite strong income growth.

  • Consumer spending dropped 0.2%, the first decline since March 2023.

  • Durable goods spending fell 3%, led by a sharp drop in auto sales.

  • Service sector spending slowed but remained positive at 0.3%.

  • Economists expect a potential rebound in the coming months.

Key Takeaways From this Week’s Economic News

U.S. Consumer Spending Drop: A One - Off or a Warning?

January’s unexpected decline in U.S. consumer spending—down 0.2%—raises some red flags. While seasonal factors like post - holiday pullbacks and severe weather surely played a role, the magnitude of the drop was the largest in nearly four years. Durable goods purchases, particularly autos, took a major hit, and that could be a sign of growing consumer caution.

The bigger concern is whether this slowdown is temporary or the start of a broader trend. With inflation still lingering, interest rates high, and uncertainty around tariffs mounting, (see story below) households might be shifting into a more defensive financial stance. That said, with incomes rising 0.9% in the same period, the fundamentals of consumer health remain strong. If spending rebounds in the coming months, this could prove to be a short - lived blip rather than a deeper economic slowdown. But if spending remains weak, it could force the Fed to reconsider its rate policy sooner than expected. I, for one, will be watching this metric very closely.

Canada’s Strong GDP Growth Masks Future Risks

That came out of nowhere! Canada’s economy expanded at an annualized 2.6% in Q4, well above the 1.9% forecast. This acceleration is encouraging, especially given global economic uncertainties. Strong consumer spending and business investment helped drive growth, but the big question is whether this momentum can continue.

The data is positive, but there are still potential headwinds are on the horizon. The most obvious is the rising trade tensions with the U.S. We also have persistent inflation concerns, and a cooling real estate market could weigh on future growth. Also, if central banks maintain current interest rates for longer, borrowing costs could start to drag on both businesses and consumers. Canada’s economy is showing resilience, but 2025 could present new challenges if external risks materialize.

U.S. Tariff Chaos: Canadian Companies in the Crosshairs

With Trump pushing forward on tariffs—starting with a planned 25% duty on all Canadian imports—Canadian businesses are bracing for impact. A new report identified major companies that could face significant downside risks, particularly in the energy, automotive, and mining sectors. Firms like Nutrien, Enbridge, and Magna are heavily exposed to U.S. markets, with some generating over half of their revenue south of the border.

The biggest question is how Canada will respond. Ottawa has already threatened retaliatory tariffs on $155 billion worth of U.S. goods, which could quickly escalate into a full - blown trade war. The situation remains fluid, but markets hate uncertainty. If these tariffs move forward, Canadian stocks with high U.S. exposure could see increased volatility, and economic growth could take a hit. If you’re managing your own portfolio, you’ll want to watch closely for any developments in negotiations, as the stakes are high for both countries.

THIS WEEK’S POLL QUESTION
(Results in Next Week’s Newsletter)

News is that some Canadian companies are weighing the possibility of relocating to the U.S. as trade tensions and tariff threats create uncertainty. With potential cost savings and market access on one side and concerns about domestic jobs and economic strength on the other, the decision isn’t straightforward. This lead me to this week’s question: Would you still support Canadian companies making this move?

Let us know where you stand!

Would you support Canadian companies moving operations to the U.S. to avoid tariffs

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LAST WEEK’S POLL RESULTS

I hadn’t tipped my hat as to my vote this week, but I’ll share it now. I’m about 75% mad and 20% sad. I waver back and forth between those feelings. Five percent of me thinks (hopes?) it’s just political posturing, but if it is, it’s a pretty ugly way of getting things done.

Comments of the Week

🤷‍♂️ Neither

“I regard it as Trump just doing what he does to solidify his entrance of strength going into negations for trade. What makes me sad is the media fostering the negative's and the people of Montreal booing the American anthem which has no chance of anything positive coming from that. What made me happy was the class Boston fans showed by singing the Canadian anthem along with the Canadians in the stands.. Very class act.” - storierod

🤬 Mad

“I am disappointed with the lack of respect for Canada, but it just makes me angry. Trump is a crook, sexual predator and snake oil salesman, how he got re - elected is mind boggling. He is being destructive to the US and the rest of the world, not just Canada. His isolationist policies will mean Canada needs to trade elsewhere and I think it will take generations for the relationship to recover.” - syoungconsultinginc

“Let’s stop our reliance on the US, open up our provincial trade barriers, invite trade talks with other countries, and be a strong united Canada!” - eccodog

“Trump is following a fascist playbook and the US is in big trouble. the methods he’s using are careless and irresponsible. Millions are going to be hurt. Bottom line is he doesn’t care about anyone or anything unless it’s lining his wallet with money. Canada better get on the page where we shore up our defenses, start making drones in our our factories, adopt a Canadian first and new trading partners, fix heath care and maximize our natural resources to our advantage.” - davmiles03

“This poll wasn't intended for me, but I replied anyway which I hope is OK. As an American, they make me sad, but mostly mad TBH... I'm beyond "frustrated and fed up with the rhetoric." I have so much more I'd like to say, but it's probably best I keep my deepest opinions and thoughts to myself. I'm afraid the damage is only starting...” - callawayguy

“Trump is no "statesman". He's a buffoon, capable only of throwing immature insults and petty taunts at Trudeau - "loser," "governor" - and threatening Canada's sovereignty as "the 51st state". He broadcasts lies to create a false narrative and is normalizing fascism and authoritarianism, thanks to oligarchs like Musk who he's indebted to for buying him into power. What a terrible, not - funny joke the USA is.” - paulinanelega

“We must be proactive against the bully. Bullies are born cowards and at at the first sign of pushback or strength they will run. Also we must remember that just over 50% of Americans voted for the bully.......what does that tell you about 50% of their population. The USA can never be trusted again by anyone, not Canada, not Europe, not Asia, not even Putin, Xi, or the rest of the miscreant's. Am I mad, am I fed up, you bet your bottom dollar.
For many many years we have supported the USA, their lack of knowledge, their lack of worldly skills without as much as finger salute. The world has woken up it is now time for the American public to open their eyes and realise that without the rest of the world they are nothing. Long Live Canada & Mexico. Thank you.” - entender1012

😢 Sad

“Sad might not be the best descriptor. Sad, mad, and a bit anxious! While he is definitely full on with the B.S., what if he actually plans to take over Canada? Historically, political boundaries can shift in a relatively short time frame. Things can go from bad to worse pretty quick.” - mjwebstuff

“Trump is a bully and a classless boor. Canadians need to just ignore his comments.” - thestrattons

“Trump is jerking everyone's chain to get a reaction, to see how weak his opponent is. Bully mentality!” - postma.bill62

Thank you to everyone who took the time to share your thoughts. I really appreciate it.

TRADE WARS & THE ECONOMY
Trump’s Tariff Chaos: What It Means for Canada

  • The U.S. is set to impose more tariffs on Canadian imports, starting March 4.

  • Industries like energy, steel, aluminum, and autos will be hit hardest.

  • Canada has threatened retaliatory tariffs on $155 billion worth of U.S. goods.

  • Legal and political challenges could slow or derail some of these tariffs.

To state the obvious, the U.S. is entering a turbulent period of trade policy under President Trump’s latest wave of tariff threats, with Canada caught in the crossfire. Starting March 4, the administration plans to impose a 25% tariff on all Canadian imports, with a lower 10% tariff for energy products. The uncertainty surrounding these policies has left businesses scrambling, and many are unsure if Trump will follow through or use them as bargaining chips.

Escalating Trade Tensions

The new tariffs come under the guise of border security concerns, with Trump claiming they are necessary to combat drug trafficking. I call B.S. The scope of the tariffs says to me there is a broader economic play—one that could have serious consequences for Canadian exporters. If enacted, the steel and aluminum tariffs (set for March 12) could further disrupt supply chains, while planned auto tariffs would upend North American manufacturing. Canada has vowed to retaliate, setting the stage for a potential trade war.

Uncertain Outcomes and Market Impact

The tariffs could still face legal challenges in the U.S., as businesses and trade groups push back against the administration’s use of emergency powers. For investors, the situation creates a real risk, especially for Canadian companies with heavy U.S. exposure. With the March 4 deadline looming, markets will be watching closely for any last - minute negotiations or policy reversals.

Read the Full Story here.

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THE STOCK MARKET
Canadian Companies Most at Risk from U.S. Tariffs

  • A new report identifies 10 Canadian companies heavily exposed to U.S. tariffs.

  • Energy firms like Enbridge and TC Energy face significant revenue risks.

  • Auto parts giant Magna could be hit by both auto and semiconductor tariffs.

  • Tariffs on agriculture and raw materials will have widespread economic effects.

A new report from Syntax Data highlights the Canadian companies most vulnerable to Trump’s tariff plans. Unsurprisingly, firms with high U.S. revenue exposure—especially in energy, automotive, and mining—are at the greatest risk. Nutrien, a major fertilizer producer, tops the list with 61% of its revenue coming from U.S. transactions, meaning its customers could face billions in added costs.

Energy, Autos, and Agriculture in the Crosshairs

The energy sector is particularly exposed, with Enbridge and TC Energy each generating around half their revenue from U.S. operations. A 10% energy tariff, while lower than the 25% rate applied to most imports, could still disrupt pricing and supply chains. Meanwhile, auto parts manufacturer Magna faces risks from multiple angles, as both auto and semiconductor tariffs loom. Agriculture and raw materials could also take a major hit, with potential long - term impacts on Canada’s trade balance.

Navigating the Uncertainty

With Canada threatening retaliatory measures and legal challenges likely, companies must prepare for a volatile trade environment. Investors should pay close attention to how firms with high U.S. exposure navigate these policy shifts, as the financial implications could be significant.

Read the Full Story here.

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DEBT AND CONSUMER FINANCE
Household Debt Crisis: The Widening Gap in Canada’  

  • Canadian consumer debt hit $2.56 trillion in Q4 2024, up 4.6% year - over - year.

  • Missed payments in Ontario are 50% higher than pre - pandemic levels.

  • High - interest mortgages are straining homeowners, with 1 million renewals Due in 2025.

  • Debt burdens are rising, despite falling interest rates.

And here we go again. As interest rates remain elevated, the divide between financially stable Canadians and those struggling with debt is growing. A new report from Equifax shows total consumer debt hit $2.56 trillion in late 2024, with missed payments rising sharply, especially in high - cost regions like Ontario and B.C. Many homeowners who locked in low mortgage rates during the pandemic now face steep renewal costs, and this will put further strain on household budgets.

Mortgage Pressures and Rising Defaults

Homeowners in Ontario and B.C. are feeling the most pressure, as mortgage payments jump and discretionary spending tightens. Meanwhile, non - homeowners—particularly younger Canadians—are falling behind on credit card and auto loan payments. The report highlights that missed payments on consumer loans are rising across the board, a sign that financial stress is creeping into the broader economy. This fact alone, the ‘broader’ aspect, is most concerning to me.

Looking Ahead

When you add this all up, it’s clear the debt crisis is far from over. The Bank of Canada is still signalling potential rate cuts in 2025, it may not be enough to offset the financial strain many Canadians are already facing. The gap between those benefiting from rate cuts and those struggling with high debt levels is likely to widen further in the months ahead.

Read the Full Story here.

THE U.S. CONSUMER
U.S. Inflation Slows, but Consumer Spending Declines Sharply

  • Core PCE inflation slowed to 2.6% in January, nearing the Fed’s 2% target.

  • Consumer spending fell 0.2%, the largest monthly drop since early 2021.

  • Personal income surged 0.9%, but savings rates also jumped.

  • Uncertainty around tariffs and economic policy is weighing on sentiment.

The Federal Reserve’s preferred inflation gauge, the Core PCE index, showed inflation cooling in January, coming in at 2.6% annually. While this is good news for the Fed’s goal of bringing inflation back to 2%, it was overshadowed by a steep drop in consumer spending—the largest monthly decline in nearly four years.

A Cautious Consumer

Spending on goods, especially autos and other big - ticket items, saw the sharpest declines. It looks like consumers are holding off on major purchases, potentially due to uncertainty over tariffs, inflation, and broader economic conditions. If we use history as a guide, that’s not good. Meanwhile, personal income rose 0.9%, so it looks like even though people are earning more, they are choosing to save rather than spend.

Market Implications

This dynamic creates a tricky situation for the Fed. If consumer spending remains weak, it could signal an economic slowdown, prompting earlier, or more rate cuts. That said, inflation is still above target, meaning the central bank may be hesitant to act too soon.

Read the Full Story Here.

OTHER NEWS FROM THE PAST WEEK

Lost Wallets Get Returned More Often Than You Think
A new study suggests that lost wallets are more likely to be returned when they contain cash. Researchers found that honesty plays a crucial role in human behavior, with surprising trends across different cultures.

MrBeast Raises Millions for Charity with Viral Fundraiser
YouTube star MrBeast is using his massive platform to raise millions for various charities. His latest campaign, focused on providing clean drinking water, has already broken fundraising records, showcasing the power of digital philanthropy.

Dodgers’ $1 Billion in Deferred Salaries Spark MLB Salary Cap Debate
The Los Angeles Dodgers’ strategy of deferring player salaries has raised concerns about competitive balance in Major League Baseball. Analysts argue that this financial maneuvering could lead to calls for a stricter salary cap in the sport.

Developers See Opportunity in Canada’s Housing Shortage
With Canada’s housing supply struggling to keep up with demand, developers are ramping up new projects. Rising immigration and low vacancy rates are driving investor interest, but affordability concerns remain a key challenge.

Microsoft to Shut Down Skype After Years of Decline
Microsoft has announced plans to discontinue Skype, once the dominant video - calling platform. The company is shifting focus to Microsoft Teams as it integrates AI - driven features to enhance workplace communication.

Fear of Flying? Airlines Are Trying to Help
Airlines are investing in programs to help anxious flyers overcome their fears. From virtual reality exposure therapy to specialized customer service training, carriers hope to make air travel less stressful for nervous passengers.

Wayne Gretzky and Donald Trump: A Canadian Legacy at Risk?
A controversial new report questions whether Wayne Gretzky’s close association with Donald Trump could impact his legacy in Canada. While some see it as a personal friendship, others argue it could tarnish his reputation.

House Democrats Target Trump’s Crypto Meme Coin
Democrats in Congress are scrutinizing a new cryptocurrency linked to Trump’s campaign, raising concerns over financial regulations and election laws. Lawmakers warn of potential risks associated with political crypto ventures.

Behind the Brand…

Because business isn’t always just about dollars and cents…

Back in 2004, three friends in Canada—Tobias Lütke, Daniel Weinand, and Scott Lake—wanted to sell snowboarding gear online. Frustrated by the lack of suitable e-commerce platforms, Lütke, a programmer, built their own website using Ruby on Rails. This DIY solution worked so well that they pivoted from selling snowboards to offering their e-commerce platform to others, leading to the launch of Shopify in 2006. Today, Shopify powers millions of online stores worldwide, all because a few snowboard enthusiasts couldn't find the right tools for their own shop.

Market Movers

S&P 500 Returns | Week At-a-Glance

Week Ending February 28, 2025

TSX Returns | Week At-a-Glance

Week Ending February 28, 2025

Note: Thank you to everyone that voted last week. The Heat Maps are here to stay!

Top 10 Weekly Gainers

TSX, NYSE & Nasdaq Exchanges | Market Cap >$10B | Week ending February 28, 2025

Top 10 Weekly Losers

TSX, NYSE & Nasdaq Exchanges | Market Cap >$10B | Week ending February 28, 2025

10 Most Overbought Stocks

Week ending February 28, 2025 | Most Overbought Stocks, based on 14-Day RSI

10 Most Oversold Stocks

Week ending February 28, 2025 | Most Oversold Stocks, based on 14-Day RSI

The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold.
📈A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell.
📉A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

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