The uncertainty surrounding Donald Trump’s tariff threats has taken a toll on Canadian optimism, with the country’s economy facing an uncertain future. The latest numbers from the Bloomberg Nanos Canadian Confidence Index reveal that Canadians are less optimistic about their economy than they have been in over a year.
Bloomberg Nanos Canadian Confidence Index at Lowest Level Since November 2023
The index, which is based on weekly polling and measures sentiment, has extended its decline to reach 49.08, the lowest level since November 2023. A reading below 50 indicates net negative views, suggesting that Canadians are increasingly pessimistic about their economy.
Tariff Threats Create Uncertainty for Canadian Economy
The prospect of Trump’s tariffs on Canadian products is a major contributor to the growing pessimism. Exporters rely heavily on the ability to ship energy, cars, minerals, and other goods to the world’s largest economy, while Canada’s consumers and businesses also rely heavily on American-made products.
Economists Warn of Potential Consequences
Some economists expect tariffs would shave an estimated two to four percent from Canadian gross domestic product (GDP), depending on how they are implemented and how Canada responds. This could have significant implications for the country’s economy, particularly in industries that rely heavily on trade with the United States.
Canada’s Dependence on U.S. Market
Canada is by far the largest external supplier of crude oil to the U.S., making it vulnerable to any changes in U.S. trade policies. The U.S. president-elect has threatened to impose 25% levies on all goods coming into the U.S. from Mexico and Canada, unless those countries make changes to curb the flow across borders of migrants and fentanyl.
Concerns About Fentanyl Flow Across Border
While Canada is a relatively small source of both migrants and fentanyl, U.S. agents seized about 50 pounds of fentanyl at the northern border in the 12-month period ended November, compared with 20,800 pounds at the Mexico-U.S. border.
Top Canadian Federal Ministers and Provincial Premiers Announce Plans to Boost Policing
To address these concerns, top Canadian federal ministers and provincial premiers have announced plans to boost policing and monitoring near the border.
Bloomberg Nanos Poll Reveals Growing Pessimism
The latest poll from Bloomberg Nanos reveals that about 60% of respondents think the Canadian economy will be weaker in the next six months. This is the biggest share of negative sentiment on this question in more than two years and a rapid rise from 34% eight weeks ago.
Bond Market Sees Weaker Canadian Outlook
The bond market also sees a weaker Canadian outlook, with the spread between U.S. and Canadian 10-year benchmark yields now ballooning to nearly the widest point since at least the global financial crisis. This spread is a proxy for how investors see the relative long-term growth potential and inflation pressures of the two economies.
Nanos Research Surveys Canadians Every Week
Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security, the economy, and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 responses.
Conclusion
The uncertainty surrounding Trump’s tariff threats has taken a toll on Canadian optimism, with the country’s economy facing an uncertain future. The latest numbers from the Bloomberg Nanos Canadian Confidence Index reveal that Canadians are less optimistic about their economy than they have been in over a year. Economists warn of potential consequences, including a two to four percent reduction in GDP.
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