Canadian Economic News, February 2025 Edition

Tariffs

• United States tariff announcements
  • On February 1st, U.S. President Donald Trump announced he was implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China. The President added that energy resources from Canada would have a lower 10% tariff.
  • On February 10th, the White house announced that President Donald Trump had signed proclamations to restore a 25% tariff on steel and elevate the tariff to 25% on aluminum imports from Argentina, Australia, Brazil, Canada, Japan, the European Union, Mexico, South Korea, Ukraine and the United Kingdom, as of March 12th.
  • On February 13th, the White House announced that President Donald Trump had signed a Presidential Memorandum ordering the development of the "Fair and Reciprocal Plan" for restoring fairness in U.S. trade relationships and countering non-reciprocal trading arrangements by seeking to correct longstanding imbalances in international trade and ensuring fairness across the board.
• Canada's response
  • On February 1st, the Government of Canada announced it was moving forward with 25% tariffs on $155 billion worth of goods in response to the tariffs imposed by the United States on Canadian goods. On February 3rd, the Government announced that it and the United States had agreed to delay the imposition of their respective tariffs on imported goods.
  • The Government of Alberta announced on February 1st that it would work collaboratively with the federal government and other provinces on a proportionate response to the imposed U.S. tariffs through the strategic use of Canadian import tariffs on U.S. goods that are more easily purchased from Canada and non-U.S. suppliers. The Government said that it would, however, continue to oppose any effort to ban exports to the U.S. or to tax our own people and businesses on goods leaving Canada for the United States.
  • The Government of British Columbia announced on February 1st immediate counter-measures after the United States announced incoming 25% tariffs on Canadian goods and 10% tariffs on energy. The Government said these immediate measures included directing the BC Liquor Distribution Branch to immediately stop buying American liquor from "red states" and remove the top-selling "red-state" brands from the shelves of public liquor stores; and directing the B.C. government and Crown corporations to buy Canadian goods and services first.
  • The Government of Manitoba announced on February 2nd that it was issuing a directive to Manitoba Liquor and Lotteries (MBLL) to stop the sale of American products in the province and that effective February 4th, MBLL would be directed to pull American products off the shelves of liquor marts and would stop ordering American alcohol.
  • The Government of New Brunswick announced on February 3rd that it had directed NB Liquor to cease purchasing U.S. alcohol and to remove their products from the shelves. The Government also said it had directed the public service to immediately review the government's procurement and stop the signing of deals with United States companies, except for critical services that cannot be immediately replaced; have Opportunities NB and the Department of Post-Secondary Education, Training and Labour finalize programs to support workers and entrepreneurs; review internal trade barriers to strengthen the Canadian economy in collaboration with federal, provincial and territorial governments; and to continue seeking other measures New Brunswick can take to protect its workers and economy. On February 4th, the Government said U.S. products would remain on NB Liquor shelves, but it would not be purchasing new product until the issue around tariffs is resolved. The Government also said it would sign no new contracts with U.S. companies in the next 30 days; review procurement protocols to determine if replacements can be found for U.S. companies currently being used by the provincial government; and work with other Atlantic provinces to find new markets for items that are traditionally exported to the U.S., including seafood and lumber.
  • The Government of the Northwest Territories announced on February 1st that it was reviewing its procurement policies to eliminate purchases from U.S. companies where possible and halting the Northwest Territories Liquor and Cannabis Commission's purchase of American goods.
  • The Government of Nova Scotia announced on February 1st it would limit access to provincial procurement for American businesses; look for opportunities to cancel existing contracts; and maintain the option to reject bids outright because of the tariffs. The Government also said it would double the cost of tolls at the Cobequid Pass for commercial vehicles from the United States, effective February 3rd, and that it would direct the Nova Scotia Liquor Corporation to remove all alcohol from the United States from their shelves effective February 4th. The Government announced on February 3rd that because of the pause in the implementation of the previously announced tariffs, its retaliatory measures would not take effect.
  • The Government of Prince Edward Island announced on February 2nd that it would take immediate steps to remove U.S. based products from liquor stores and limiting procurement with U.S. based companies. The Government said that, in addition, current procurement with U.S. companies was being reviewed and wherever possible, the provincial government would be limiting commerce with U.S. companies and entities moving forward, including canceling existing contracts and limiting the ability for U.S. companies to bid or compete for provincial government contracts. The Government announced on February 4th that following the announcement that the proposed tariffs were being paused, it would also pause the planned removal of liquor products from its shelves.
  • The Government of Quebec announced on February 2nd that it was asking the Société des alcools du Québec (SAQ) to remove all American products from its shelves and to stop supplying American alcoholic beverages to grocery stores, agencies, bars and restaurants.
  • The Government of Yukon announced on February 2nd that it would direct the Yukon Liquor Corporation to stop purchasing beer, wine, and spirits from the U.S. and that, moving forward, the Yukon Liquor Corporation would stop placing new orders of U.S.-made alcohol. The Government also said that it would begin reviewing territorial government procurement policies to exclude U.S. companies and minimize the purchase of U.S. goods and services, wherever possible. On February 3rd, the Government said it would pause its retaliatory measures.

Provincial Budgets

• On February 6th, the Government of the Northwest Territories presented the 2025-26 Budget, which included investments in resource development and economic diversification, health care, housing, and community safety. The Government projects a $170 million operating surplus after adjustment in 2025-26 and a contraction in real GDP of 4.7% in 2025.
• On February 18th, the Government of Nova Scotia tabled Budget 2025-26, which included more than $500 million in tax cuts as well as funding that will help stimulate the economy. The Government forecasts a $697.5 million deficit in 2025-26 and real GDP growth of 2.0% in 2025.
• On February 27th, the Government of Alberta tabled Budget 2025, which included tax cuts as well as investment in health care, education, and public safety and emergency services. The Government forecasts a $5.2 billion deficit for 2025-26 and real GDP growth of 1.8% in 2025.

Other news

• The Government of Canada announced that Canada is developing a high-speed rail network in the Toronto-Quebec City corridor. The Government said high-speed rail will boost GDP by up to $35 billion annually and create over 51,000 jobs during construction.
• The Government of Canada announced the successful conclusion of free trade agreement negotiations between Canada and Ecuador.
• The Government of Alberta announced that starting February 13th, Albertans would be charged a $200 tax when they register their electric vehicles and that this amount is in line with what drivers of a typical internal combustion engine vehicle would be expected to pay each year in fuel tax. The Government said the tax will be collected when the vehicles are registered and each year when the owners renew their registrations.
• Brampton, Ontario-based Loblaw Companies Limited announced it will invest $2.2 billion into the Canadian economy in 2025 and that it anticipates similar levels of investment over the next five years. Loblaw said its 2025 planned investments include 80 new stores; the renovation of more than 300 grocery and pharmacy locations; and the continued development of the Company's modernized supply chain.
• Toronto-based Canadian Tire Corporation, Limited announced it had signed a definitive agreement to sell its Helly Hansen business to Kontoor Brands, Inc. of North Carolina for total gross proceeds of $1.276 billion. The Company said it expects the transaction to close in the second quarter of 2025, subject to receiving all regulatory approvals and other customary closing conditions.
• Montreal-based Innergex Renewable Energy Inc. and the Caisse de dépôt et placement du Québec (CDPQ) announced they had entered into a definitive agreement pursuant to which CDPQ will acquire all the issued and outstanding common shares of Innergex representing a total enterprise value of $10.0 billion. Innergex said the transaction is expected to close by the fourth quarter of 2025, subject to shareholder and certain regulatory approvals, as well as the satisfaction of other customary closing conditions.

United States and other international news

• The Bank of England's Monetary Policy Committee (MPC) voted to reduce the Bank Rate by 25 basis points to 4.50%. The last change in the Bank Rate was a 25 basis points cut in November 2024.
• The Reserve Bank of Australia (RBA) lowered the cash rate target by 25 basis points to 4.10%. The last change in the cash rate target was a 25 basis points increase in November 2023.
• The Reserve Bank of New Zealand (RBNZ) lowered the Official Cash Rate (OCR), its main policy rate, by 50 basis points to 3.75%. The last change in the OCR was a 50 basis points cut in November 2024.
• New York-based The Estée Lauder Companies announced it estimates a net reduction in positions of 5,800 to 7,000 as part of its Profit Recovery and Growth plan. The company said that approvals for specific initiatives under this restructuring program, in total, are expected to be completed by the end of fiscal year 2026.
• Texas-based Southwest Airlines Co. announced a reduction in its workforce that will affect approximately 1,750 employee roles, or 15% of corporate positions. Southwest said the separations will begin in late April.
• New York-based Brookfield Asset Management announced a €20 billion infrastructure investment program to support the deployment of artificial intelligence infrastructure in France. Brookfield said the investment will be targeted across data centers and associated infrastructure sectors.
• Arizona-based Nikola Corporation, which specializes in zero-emissions transportation and energy supply and infrastructure solutions, announced it and certain of its subsidiaries had filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States. Nikola said it intends to market and sell all, substantially all, or a portion of its assets and effectuate an orderly wind down of its businesses.
• California-based Apple Inc. announced it plans to spend and invest more than $500 billion in the U.S. over the next four years to support initiatives that focus on artificial intelligence, silicon engineering, and skills development for students and workers across the country. Apple also said it plans to hire around 20,000 people in the next four years, with a vast majority focused on R&D, silicon engineering, software development, and AI and machine learning.
• Japan-based Honda Motor Co., Ltd. announced that it, Nissan Motor Co., Ltd., and Mitsubishi Motors Corporation had agreed to terminate their Memorandum of Understanding (MOU) regarding the consideration of the structure for a tripartite collaboration, in light of the termination of the MOU signed on December 23rd last year regarding the consideration of a business integration between Nissan and Honda.

Financial market news

• West Texas Intermediate crude oil closed at USD $69.76 per barrel on February 28th, down from a closing value of USD $72.52 at the end of January. Western Canadian Select crude oil traded in the USD $56 to $61 per barrel range throughout February. The Canadian dollar closed at 69.26 cents U.S. on February 28th, up from 69.04 cents U.S. at the end of January. The S&P/TSX composite index closed at 25,393.45 on February 28th, down from 25,533.10 at the end of January.