Canadians’ economic mood is worst since 2020 after trade threats

U.S. President Donald Trump’s tariffs are rattling consumer confidence in one of the U.S.’s largest trading partners, with 65 per cent of Canadians saying they expect the economy to weaken over the next six months.

That’s the highest percentage of people with a negative economic outlook since June 2020, which was the early part of the Covid-19 pandemic. Just 9% said they believe the Canadian economy will strengthen over the next six months, according to the poll by Nanos Research for Bloomberg News.

The survey underscores how Trump’s trade policy has shaken up the northern nation. The president has made several tariff threats — including 10% levies on energy, 25% on steel and aluminum, 25% on cars and trucks, and 25% on most everything else the US buys from Canada. The administration hasn’t implemented any of those tariffs yet.

A prolonged trade war would reduce Canadian exports and total output, likely driving the country into recession. Economists have already trimmed their growth estimates for the year, forecasting an expansion of 1.6%, down from 1.8% in last month’s Bloomberg survey.

“The threat of tariffs against Canada has put a wet blanket on consumer confidence,” said Nik Nanos, the polling firm’s founder.

Hurting Canadian output

Bank of Canada Governor Tiff Macklem warned Friday that a US-Canada tariff war has the potential to hurt Canadian output by nearly 3% over two years and do lasting damage to the economy.

Trump has expressed irritation with Canada on issues such as border security, military spending and its trade deficit with the US. Last year, the US sold about $350 billion worth of goods to Canada and bought $413 billion from it, resulting in a goods trade deficit of $63 billion. In services, the US runs a trade surplus with Canada.

Canada buys more US-made products than any other country, and nearly as much as the European Union, according to data from US Department of Commerce.

The increasingly dark mood dragged the Bloomberg Nanos Canadian Confidence Index to 49.3 last week, compared with 50.8 in late January. The index is based on Canadians’ perceptions of their personal finances, job security, the real estate market and the economy. A reading under 50 indicates that negative views outweigh positive ones.

Confidence was lowest in Ontario and British Columbia, regions that are home to export-sensitive automotive and natural resource industries such as lumber. Canadians under 30 years of age are more optimistic than those 50 and older, Nanos found.