Canadian Economic News, March 2025 Edition

Tariffs

• United States announcements
  • On March 3rd, the White House announced that President Donald J. Trump was proceeding with implementing tariffs on Canada and Mexico.
  • On March 6th, President Donald J. Trump announced adjustments to tariffs imposed on imports from Canada and Mexico, including (i) no tariffs on those goods from Canada and Mexico that claim and qualify for U.S.-Mexico-Canada Agreement (USMCA) preference; (ii) 25% tariffs on goods that do not satisfy USMCA rules of origin; (iii) a lower 10% tariff on those energy products imported from Canada that fall outside the USMCA preference; and (iv) a lower 10% tariff on any potash imported from Canada and Mexico that falls outside the USMCA preference.
  • On March 26th, the White house announced that President Donald J. Trump signed a proclamation to impose a 25% tariff on imports of automobiles and certain automobile parts, effective April 3, 2025.

• Canada's response
  • On March 4th, the Government of Canada announced it was moving forward with 25% tariffs on $155 billion worth of imported goods from the United States. The Government said the first phase of its response included tariffs on $30 billion in goods, effective March 4, 2025, and that it intended to impose additional countermeasures on $125 billion in imports, drawing from a list of goods open for a 21-day comment period.
  • On March 7th, the Government announced new measures to protect Canadian businesses and workers, including (i) launching the Trade Impact Program through Export Development Canada to help exporters reach new markets; (ii) making $500 million in favourably priced loans available through the Business Development Bank of Canada to support impacted businesses in sectors directly targeted by tariffs; and (iii) providing $1 billion in new financing through Farm Credit Canada to reduce financial barriers for the Canadian agriculture and food industry. The Government also said it had updated the Investment Canada Act Guidelines to protect Canadian businesses from harmful takeover.
  • On March 12th, the Government announced it was imposing, effective March 13th, 25% reciprocal tariffs on a list of steel products worth $12.6 billion and aluminum products worth $3 billion, as well as additional imported U.S. goods worth $14.2 billion, for a total of $29.8 billion, in response to the 25% tariffs the U.S. imposed on all Canadian steel and aluminum products. The Government said these tariffs were in addition to Canada's 25% counter tariffs on $30 billion of imports from the U.S., in response to U.S. International Emergency Economic Powers Act (IEEPA) tariffs put in place on March 4th.
  • On March 22nd, the Government of Canada announced supports for the agricultural sector through AgriStability, including increasing the compensation rate from 80% to 90% and doubling the current payment cap to $6 million for the 2025 program year, after China imposed 100% tariffs on canola oil, canola meal and peas, as well as 25% tariffs on certain pork, fish and seafood products from Canada. Separately, the Government announced its intention to introduce new temporary employment insurance (EI) measures to support Canadian workers whose jobs are impacted by the current economic uncertainty caused by tariffs from the U.S. and other trading partners.
  • The Government of Alberta announced on March 5th that it was altering its procurement practices to ensure that it purchases goods and services from Alberta companies, Canadian companies, or countries with which Canada has a free trade agreement that is being honoured. The Government also said that it had directed Alberta Gaming, Liquor and Cannabis to suspend the purchase of U.S. alcohol and video lottery terminals from American companies until further notice.
  • The Government of British Columbia announced on March 4th that it would be pulling all red-state liquor products off the shelf and would not be ordering any more. The Government also said that it would be buying Canadian first, then non-U.S. products.
  • On March 6th, the Government of B.C. announced that it intended to introduce tariff-response legislation in the coming days that would give the Province new tools to defend B.C. jobs and businesses and respond to emerging challenges, including the ability to remove interprovincial trade barriers, mandating that low-carbon fuels added to gasoline and diesel be produced in Canada, and allowing B.C. to apply tolls/fees to U.S. commercial vehicles using B.C. infrastructure to travel to Alaska.
  • On March 10th, the Government announced it was ordering the removal of all American beer, wine, spirits and refreshment beverages from the shelves at BCLIQUOR stores and that it was expanding the list of targeted American products.
  • The Government of New Brunswick announced on March 4th that it had developed a four-pillar response plan, which included (i) support for affected New Brunswickers; (ii) relief for New Brunswick businesses; (iii) movement on interprovincial trade; and (iv) an "NB Made" campaign to make it easier for people to choose New Brunswick-based goods and services. The Government said these actions were in addition to measures that were previously announced, including removing U.S. alcohol from the shelves at NB Liquor, signing no new contracts with American companies, reviewing internal trade barriers, and working with the other Atlantic provinces to find new markets for items traditionally exported to the United States, such as seafood and lumber.
  • The Government of Newfoundland and Labrador announced on March 4th that it would be removing U.S. products from Newfoundland and Labrador Liquor Corporation shelves; reviewing and stopping immediately, where possible, procurement from the U.S.; and identifying new export markets for Newfoundland and Labrador products.
  • The Government of Nova Scotia announced on March 4th that it would immediately limit access to provincial procurement for American businesses; double the cost of tolls at the Cobequid Pass for commercial vehicles from the United States; and direct the Nova Scotia Liquor Corp. to once again remove all alcohol from the United States from their shelves. The Government also said that as part of Budget 2025-26, it had added a contingency fund to respond to U.S. tariffs.
  • The Government of Nunavut announced on March 4th that the Nunavut Liquor and Cannabis Commission would no longer sell alcohol products made in the U.S.
  • The Government of the Northwest Territories announced on March 4th that it was reviewing procurement policies to reduce or eliminate purchases from U.S. companies where possible; halting the Northwest Territories Liquor and Cannabis Commission's purchase of American goods; and keeping in close communication with Indigenous governments, community leaders, and the business sector to ensure a coordinated response that reflects the needs of all Northerners.
  • The Government of Ontario announced on March 4th that it would rip up its contract with Starlink, take U.S. alcohol off Liquor Control Board of Ontario's (LCBO) shelves, and ban U.S. companies from government procurements.
  • On March 10th, the Government announced it had applied a 25% surcharge on all electricity exports to the United States as part of the province's initial suite of retaliatory measures to U.S. tariffs on Canada.
  • On March 11th, the Government of Ontario announced it had agreed to suspend its 25% surcharge on exports of electricity to Michigan, New York and Minnesota after U.S. representatives had agree to meet to discuss a renewed USMCA ahead of the April 2nd reciprocal tariff deadline.
  • The Government of Prince Edward Island announced on March 4th it was removing U.S. products from Liquor Control Commission catalogue and removing U.S. products from the shelves; reviewing all existing and future contracts with U.S. businesses and organizations, and limiting procurement for U.S. based companies in the future; reducing and eliminating internal trade barriers including starting immediate consultation on legislative changes required to improve internal trade and increase labor mobility within Canada; and exploring new markets for PEI exports.
  • On March 5th, the Government announced new initiatives to support island businesses, including the Export Enhancement and Diversification Assistance Program and the Tariff Working Capital Assistance Program.
  • The Government of Quebec announced on March 4th support measures for Quebec businesses to protect the economy, in addition to penalties for American companies that would like to bid on public calls for tenders launched by Quebec. The Government also said 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.
  • On March 6th, the Government said that it, and the municipalities, would impose of a penalty of up to 25% on bids from American companies that participate in public calls for tenders from municipal bodies, if they do not have an establishment in Quebec or in a territory covered by an applicable intergovernmental agreement.
  • The Government of Saskatchewan announced it had directed Saskatchewan Liquor and Gaming Authority (SLGA) to stop purchasing U.S.-produced alcohol and that it had directed that goods and services procured by the Government of Saskatchewan prioritize Canadian suppliers, with the goal of reducing or eliminating U.S. procurement.
  • The Government of Yukon announced on March 4th that it would direct the Yukon Liquor Corporation to stop placing orders of U.S.-made alcohol and to remove U.S.-made products from all Government of Yukon liquor stores; limit U.S. business' access to government procurement; mitigate impacts on Yukon businesses by allocating $1 million to develop an assistance program; support "Buy Yukon" campaigns; and break down interprovincial and international trade barriers.

Provincial budgets

• On March 4th, the Government of British Columbia released Budget 2025, which included investments in health care, education, social services, infrastructure, and jobs. The Government projects a $10.9 billion deficit in 2025-26 and real GDP growth of 1.8% in 2025.
• On March 6th, the government of Yukon tabled it's 2025-26 Budget, which included investments in education, health care, infrastructure, affordability, and environmental protection. The Government forecasts an $82 million surplus for 2025-26 and a contraction in real GDP of 0.3%.
• On March 18th, the Government of New Brunswick tabled its 2025-26 budget, with a focus on investments in health care, education, housing, and economic resilience. The Government forecasts a $549 million deficit for 2025-26 and real GDP growth of 1.1% for 2025.
• On March 19th, the Government of Saskatchewan tabled its 2025-26 Provincial Budget, which included measures to improve affordability as well as investments in health care, education, and community safety. The Government forecasts a $12 million surplus for 2025-26 and real GDP growth of 1.8% in 2025.
• On March 20th, the Government of Manitoba delivered Budget 2025, which included investments in education, health care, and infrastructure. The Government forecasts a $794 million deficit for 2025-26 and real GDP growth of 1.7% in 2025.
• On March 25th, the Government of Quebec tabled Budget 2025-2026, which included investments in infrastructure, health and social services, education, climate change adaptation, and culture. The Government forecasts a $13.6 billion deficit and real GDP growth of 1.1% in 2025.

Other news

• The Government of Canada announced it had made regulations that cease the application of the federal fuel charge, effective April 1, 2025, and that it was also removing requirements for provinces and territories to have a consumer-facing carbon price as of that date. The Government said these actions refocus federal carbon pollution pricing standards on ensuring carbon pricing systems are in place across Canada on a broad range of greenhouse gas emissions from industry.
• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 2.75%. The last change in the target for the overnight rate was a 25 basis points cut in January 2025.
• TD Canada Trust, RBC Royal Bank of Canada (RBC), BMO Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), Scotiabank, and Laurentian Bank of Canada announced they were decreasing their Canadian dollar prime lending rates by 25 basis points from 5.20% to 4.95%, effective March 13th.
• Calgary-based Whitecap Resources Inc. and Veren Inc. announced they had entered into a definitive business combination agreement to combine in an all-share transaction valued at approximately $15 billion, inclusive of net debt. The companies said the transaction is expected to close before May 30, 2025, subject to shareholder and Court of King's Bench of Alberta approval as well as other customary closing conditions, including the receipt of customary regulatory and Toronto Stock Exchange approvals.
• The United Steelworkers (USW) announced that Alubar Métaux Inc of Bécancour, Quebec, an aluminum rod manufacturer, had shut down its operations citing the imposition of U.S. tariffs as the direct cause.
• Toronto-based Hudson's Bay Company ULC announced on March 14th it had filed documents with the Ontario Superior Court of Justice indicating that, despite efforts to secure sufficient financing to pursue a restructuring transaction under the Companies' Creditors Arrangement Act (CCAA), it had only secured limited debtor-in-possession financing that would require the full liquidation of the entire business. The company said a store-by-store liquidation process would begin the following week. The company also said that Hudson's Bay employs approximately 9,364 people.
• Vancouver-based Telus Communications Inc., in collaboration with NVIDIA Corporation of California, announced it plans to build an AI Factory and provide the supercomputers and software needed to train AI while keeping data safe within Canada. Telus said it plans to deploy NVIDIA's latest-generation graphics processing units (GPUs) at its data centre in Quebec by summer 2025, with expansion planned at its facility in British Columbia.

United States and other international news

• The U.S. Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate at 4.25% to 4.50%. The last change in the target range was a 25 basis points cut in December 2024. The Committee also said that beginning in April, it will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from USD $25 billion to USD $5 billion while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at USD $35 billion.
• The European Central Bank (ECB) lowered its three key interest rates by 25 basis points to 2.50% (deposit facility), 2.65% (main refinancing operations), and 2.90% (marginal lending facility). The last change in these rates was a 25 basis points reduction in January 2025.
• The Bank of Japan announced it will encourage the uncollateralized overnight call rate to remain at around 0.50%. The last change in the uncollateralized overnight call rate was a 25 basis points increase in January 2025.
• The Bank of England's Monetary Policy Committee (MPC) voted to maintain the Bank Rate at 4.50%. The last change in the Bank Rate was a 25 basis points cut in February 2025.
• The Executive Board of Sweden's Riksbank left the repo rate unchanged at 2.25%. The last change in the repo rate was a 25 basis points reduction in January 2025.
• The Monetary Policy and Financial Stability Committee of Norway's Norges Bank left the policy rate unchanged at 4.5%. The last change in the policy rate was a 25 basis points increase in December 2023.
• The eight OPEC+ countries - Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman - which had previously announced additional voluntary adjustments in April and November 2023, announced they had re-affirmed their decision to proceed with a gradual and flexible return of the 2.2 million barrels per day (mbd) voluntary adjustments starting on April 1, 2025.
• New York-based BlackRock Inc. and Global Infrastructure Partners, as well as Terminal Investment Limited of Switzerland (BlackRock-TiL Consortium) and CK Hutchison of Hong Kong announced they had reached an agreement whereby the BlackRock-TiL Consortium would acquire Hutchison Port Holdings (HPH's) 90% interests in Panama Ports Company, which owns and operates the ports of Balboa and Cristobal in Panama, for USD $22.8 billion. The transaction definitive documentation is expected to be signed on or before April 2, 2025, on confirmation by the Government of Panama of the proposed terms of the purchase and sale.
• California-based Google LLC announced it had signed a definitive agreement to acquire Wiz, Inc., a cloud security platform headquartered in New York, for USD $32 billion. Google said the deal is subject to customary closing conditions including regulatory approvals.

Financial market news

• West Texas Intermediate crude oil closed at USD $71.48 per barrel on March 31st, up from a closing value of USD $69.76 at the end of February. Western Canadian Select crude oil traded in the USD $53 to $60 per barrel range throughout March. The Canadian dollar closed at 69.56 cents U.S. on March 31st, up from 69.26 cents U.S. at the end of February. The S&P/TSX composite index closed at 24,917.50 on March 31st, down from 25,393.45 at the end of February.