One of the biggest dangers for the inflation outlook is US President-elect Donald Trump’s threat to impose 25% across-the-board tariffs on Canadian goods. These are “significant downside risks, suggesting to us that recession in 2025 is a very real possibility,” warns Nick Rees, senior market analyst at Monex Canada. “If Trump delivers a 25% day-one levy on all Canadian exports as promised, this will tip the Canadian economy into a deep recession, warranting aggressive policy easing.”
Rees continues: “A weaker loonie would help offset the impact of any tariffs, even as it makes Canadian imports more expensive. As such, while this scenario would likely be associated with a domestic recession, any downturn would be much worse if the loonie failed to depreciate.”
Learn more about the possibility of recession here
