Sticker Shock Ahead: What Canadians Need to Know About Markets, Tariffs, and Inflation in 2025
A major flashpoint is the return of tariffs. In 2025, both Canada and the U.S. slapped 25% duties on a range of goods, opens new tab, from steel to everyday consumer products. While aimed at addressing trade imbalances, these tariffs have created a ripple effect that's beginning to show up where it matters most your grocery bill. According to forecasts, tariffs will impact nearly 9% of the consumer price basket tracked by Statistics Canada, with price hikes filtering through to households over the next 12 to 18 months.
Tariffs and Your Wallet: The New Inflation Driver
By mid-2025, Canada's inflation hovered around 2.3–2.5%, but that's set to change. Bank of Canada, opens new tab now predicts a temporary spike above 3% in 2026, largely driven by tariff-induced price increases. The impact will be most acute in non-energy consumer goods: groceries, household items, and apparel. For the average Canadian, that means $100 worth of groceries today could cost $103 or more within the year, small increments that add up across a family's monthly budget.
This inflationary jolt comes at a time when consumer confidence is slowly recovering, bolstered by wage growth and easing interest rates. But as AvaTrade analysts point out, shoppers should prepare for 'several choppy quarters in the aisles,' as tariffs push costs higher before supply chains fully adjust. The long-term upside? A potential reshoring of production and more 'Made in Canada' goods, though these may not come cheap, at least initially.
Market Strategy: Diversify and Stay Nimble
Despite the friction, Canada's financial markets, opens new tab remain resilient. The TSX is expected to grow, opens new tab, though more slowly than in 2024, with double-digit earnings growth led by energy, materials, and financials. Infrastructure projects like LNG terminals and high commodity prices are fueling optimism in key sectors. But volatility remains a theme, and AvaTrade suggests Canadian investors diversify, across geographies, sectors, and asset classes to weather potential shocks.
Meanwhile, export trends are likely to be erratic: a short-term surge in shipments as firms race to beat new tariffs, followed by potential declines if trade barriers persist. Canada's strategic pivot to the Indo-Pacific, however, offers hope for exporters seeking new markets beyond the U.S.
The Bigger Picture: Resilient, But Tested
The Canadian economy is not in crisis but it is at a crossroads. Tariffs, inflation, and geopolitical tensions will challenge both households and investors to adapt. For Canadians, 2025 is not the year to expect explosive growth but it is a year to plan smart, shop strategically, and watch global headlines closely. As AvaTrade's market outlook notes: Canada remains fundamentally sound, but navigating the months ahead will require patience, adaptability, and a clear-eyed view of risk.
This analysis was written by Kate Leaman, chief market analyst at AvaTrade.
About AvaTrade
AvaTrade is a globally licensed and regulated online trading broker, committed to providing traders with a secure and transparent trading environment. Nearly half of AvaTrade's activity stems from partnerships with institutional trading partners. The company prides itself on offering competitive trading conditions, including both fixed and floating spreads, as well as real-time quotes and instant trade execution.
AvaTrade supports a wide range of popular trading platforms across desktop and mobile, catering to traders of all levels. The multi-award-winning broker offers a diverse portfolio of CFD instruments, including precious metals, stocks, indices, ETFs, government bonds (from the US, Japan, and Europe), and vanilla options on Forex.
For more information, visit www.avatrade.ca, opens new tab.
Media Contact
Avatrade Supportinfo@avatrade.ca
###
SOURCE: AvaTrade
Copyright 2025 EZ Newswire
See release on EZ Newswire
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
10 minutes ago
- Reuters
Insurer AIG posts higher quarterly profit on underwriting strength
Aug 6 (Reuters) - American International Group (AIG.N), opens new tab reported a higher second-quarter profit on Wednesday, powered by strong underwriting gains and higher returns on investments. Insurers like AIG and Travelers Cos (TRV.N), opens new tab are benefiting as businesses and individuals have maintained spending on insurance against the backdrop of economic uncertainty. "We continued to make significant progress on our long-term strategic, operational and financial objectives while navigating a dynamic macroeconomic environment," CEO Peter Zaffino said in a statement. General insurance net premiums written, on a comparable basis, rose to $6.88 billion in the three months ended June 30. General insurance underwriting income soared 46% to $626 million. AIG's general insurance combined ratio came in at 89.3% on an adjusted basis, compared with 92.5% a year earlier. A ratio below 100 signifies that the insurer earned more from premiums than it paid out in claims. A rebound in the stock markets following tariffs-related volatility has also helped insurers boost their investment income. Net investment income jumped 48% to $1.47 billion in the second quarter, driven by a change in the fair value of AIG's equity in Corebridge and higher income on available for sale fixed maturity securities. The company retains a stake in Corebridge, the life and retirement insurer it spun off in 2022. AIG posted catastrophe-related charges of $170 million in the quarter, down from $330 million in the year-ago period. The company - one of the world's largest commercial insurers - reported adjusted after-tax income attributable to common shareholders of $1.04 billion, or $1.81 per share, compared with $771 million, or $1.16 per share, a year earlier. Shares of the company have gained nearly 8% in 2025, outperforming the broader Dow Jones U.S. Select Insurance Index (.DJSINS), opens new tab.
Reuters
10 minutes ago
- Reuters
Fed will likely need to cut rates in coming months, Daly says
Aug 6 (Reuters) - Citing a slowing labor market and her assessment that tariffs pose only a short-term threat to inflation, San Francisco Federal Reserve Bank President Mary Daly on Wednesday said she believes the U.S. central bank will need to cut interest rates soon. "Inflation, absent tariffs, has been gradually trending down, and with a slowing economy and ongoing restrictive monetary policy, should continue to do so," Daly said in remarks prepared for delivery to the Anchorage Economic Summit, adding that while tariffs will boost inflation in the near-term, they likely won't do so persistently. Meanwhile, she said, the labor market has softened. "I would see additional slowing as unwelcome, especially since we know that once the labor market stumbles, it tends to fall quickly and hard," Daly said. "All this means that we will likely need to adjust policy in the coming months." The Fed decided last week to keep short-term interest rates in their current 4.25%-4.50% range.
Reuters
10 minutes ago
- Reuters
Bumble beats second-quarter revenue estimates
Aug 6 (Reuters) - Bumble (BMBL.O), opens new tab on Wednesday posted second-quarter revenue above Wall Street estimates, as the dating app begins to bear early fruits from its turnaround efforts. The company posted second quarter revenue of $248 million, compared with analysts' average estimate of $245.1 million, according to data compiled by LSEG.
