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Yahoo
09-07-2025
- Business
- Yahoo
What are AI agents and which jobs are they coming for first?
For months, Silicon Valley has raved about the potential for AI agents to transform the way we work and live. While much of the public's attention has been glued to generative AI programs such as ChatGPT, major AI companies are locked in a tight race to refine large language models to the point that they have the capability to execute tasks on their own. In a January 2025 blog entry, OpenAI chief executive Sam Altman predicted that this will be the year when 'the first AI agents 'join the workforce' and materially change the output of companies.' But what exactly is an AI agent and how likely is it that they will not just assist but replace human workers? The Financial Post's Yvonne Lau explains. An AI agent is an application of a sub-category of artificial intelligence technology known as 'agentic AI,' which refers to AI systems that are autonomous. Like other AI systems, agentic AI collects and processes data to perform a function. Current generative AI programs — the likes of ChatGPT and Midjourney — create new content ranging from text to images and strings of software code using predictive modelling. Agentic AI's key difference lies in its agency (hence its name): it can manage complex tasks and make decisions on its own, based on pre-set user goals. These are tasks that involve the ability to reason, solve problems and be adaptable in response to changing situations. Gary Filan, a partner and head of AI at KPMG Canada, said the definition of AI Agent is rapidly evolving, but that a common way to think of it is as a 'virtual assistant or coworker.' AI agents can be deployed across a wide spectrum of industries and job functions. Some early successes have come in the fields of customer service, human resources, market analysis, and fraud detection and prevention, to name a few. 'Financial services firms are the leading group in that list,' Filan said. These businesses have used AI agents, for example, to streamline insurance claims processing, generate risk assessments, to help answer customer queries, among more, according to KPMG Canada. For example, a run-of-the-mill AI assistant could help a bank send fraud alerts to its customers. But an AI agent could take it one step further: it can oversee real-time transactions, flag suspicious activity and work with the bank's fraud detection system to prevent malicious activity. Manufacturing firms have leveraged AI agents to monitor equipment performance, predict failures, and dispatch maintenance teams before downtime can occur, while retailers have used them to predict demand trends, adjust stock levels, and fine-tune pricing, said Shannon Katschilo, the Canada country manager for Snowflake Inc., an AI and data cloud platform. Rote job functions, like those in the areas of customer support, analytics, engineering and field operations, are likely to be among the most affected, Katschilo said. But both Katschilo and Filan argue that AI agents won't necessarily replace jobs or workers. 'It's the nature of the work (that) will change,' Filan said. 'Workers may switch from a rote processing type of role to one that involves more judgment, monitoring, and management — and ability to work with these AI systems.' Most Canadian organizations have now heard of agentic AI: almost three-quarters said they were 'very familiar' with the concept, according to an April 2025 KPMG Canada survey of 252 business leaders. Still, uptake remains limited in Canada even while the majority of participants — 88 per cent — said that adopting agentic AI will help their organization become more competitive. Only 27 per cent of respondents in the same survey said that their organizations have adopted or deployed agentic AI and have active use cases in their organization, while 57 per cent plan to invest in, or adopt, agentic AI in the next six months. A second quarter 2025 Statistics Canada report on AI use by businesses in Canada found that only 12 per cent of them reported using AI to produce goods or deliver services, though that figure increased from six per cent during the same time last year. 'Canadian firms are on the laggard side with regards to adoption of agentic frameworks. The primary reason is Canadian corporations' aversion to risk,' Filan said. But Canada is now experiencing a shift with the Carney government's focus on so-called 'light and tight' AI and technology regulation, he said. At their core, AI agents are built on large language models (LLMs) that sometimes 'hallucinate' — meaning that they can generate outputs that range from nonsensical to simply false. The autonomy of AI agents, alongside the growing sophistication of the technology, magnifies its risk factors. Agentic AI systems that operate independent of human oversight could carry out unintended and potentially harmful actions, from leaking confidential data, to impersonating people or manipulating files. The risk also depends on how, and where, it is applied. Agentic AI applications for 'healthcare or human resources — to decide who gets a raise or who gets laid off, for example — are much more critical than agentic AI for a food delivery app,' said Mélissa M'Raidi-Kechichian, research and advocacy fellow at the Center for AI and Digital Policy, a Washington-based non-profit focused on AI best practices. 'What remains across contexts though, is the accountability component: without human oversight, who will be held accountable when an AI system inevitably fails, does harm, or does not perform the way it was intended to?' Some in the industry are already working toward establishing guardrails to advance the development of safe and ethical AI. Canadian-French computer scientist Yoshua Bengio, considered one of the 'godfathers of AI,' recently launched a Montreal-based non-profit called LawZero focused on AI systems that will filter out certain traits like dishonesty. He aims to create a tool to de-risk AI agents and keep them in line. 'I'm deeply concerned by the behaviours that unrestrained agentic AI systems are already beginning to exhibit — especially tendencies toward self-preservation and deception,' Bengio wrote in a June 2025 blog post. Agentic AI technology is nascent, but developing rapidly, Filan said. 'I'm not even thinking about what it would look like 10 years from now. Most of the conversations occurring now are between a two-to-five-year period,' he said. A growing number of startups are now developing AI agents customized for different professional and personal needs. Partners at Silicon Valley's fabled startup accelerator Y Combinator LLC, recently said that they have been bombarded with a wide range of AI agent proposals in fields ranging from marketing to recruitment and debt collection. Silicon Valley leaders have warned that job displacement is coming rapidly. Anthropic PBC chief executive Dario Amodei told Axios in May 2025 that he thought AI could eliminate half of entry-level white-collar jobs and push unemployment to 10 to 20 per cent in the next one to five years. Others say agentic AI technology has a ways to go. Competition Bureau to probe whether Amazon's rules are unfair to sellers and consumers Canadian AI darling Cohere to open Montreal office in rapid scale-up A May 2025 Carnegie Mellon paper showed that Google LLC's Gemini 2.5 Pro, the top-performing AI agent, was unsuccessful 70 per cent of the time in completing real-world office tasks. Other rival agents created by tech giants like OpenAI and Meta Platforms Inc. had failure rates of over 90 per cent. 'Right now, we're seeing early glimpses: AI agents can already analyze data, predict trends, and automate workflows to some extent. But building AI agents that can autonomously handle complex decision-making will take more than just better algorithms. We'll need big leaps in contextual reasoning and testing for edge cases,' according to a March 2025 International Business Machines Corp. report titled AI Agents in 2025: Expectations vs. Reality. • Email: ylau@
Calgary Herald
27-06-2025
- Business
- Calgary Herald
What is Canada's digital services tax and why is it infuriating Trump?
Article content U.S. President Donald Trump abruptly cut off all trade negotiations with Canada on Friday, citing Ottawa's Digital Services Tax (DST) for the decision. The tax, enacted last June, targets U.S. technology companies that operate in Canada but pay little tax here. Under the new tax regime, the first payments are set to be collected on Monday, June 30. The Financial Post breaks down what you need to know about the DST and why it is infuriating Trump and Americans. Article content Article content Article content Former Prime Minister Justin Trudeau's government enacted Canada's Digital Services Tax Act in June 2024, with the rules coming into effect the same month. The federal tax is applicable to large businesses — both foreign and domestic — that meet two specific criteria: a total global revenue of €750 million and up, and over $20 million of profits earned in Canada annually. The legislation levies a three per cent tax on digital services revenue over $20 million, and is retroactive to Jan. 1, 2022, meaning Ottawa could stand to gain billions in DST revenue, according to some estimates. Taxable revenue includes those of online marketplaces, digital advertising, social media, and user data — which will primarily affect American Big Tech giants such as Inc., Apple Inc., and Meta Platforms, Inc. Article content Article content Under the DST, companies were required to register with the Canada Revenue Agency (CRA) by Jan. 31, 2025 and are obligated to file their first DST returns on June 30, 2025. The CRA has said that more than 500 companies have already applied to register for DST purposes, and expects more than 100 companies to pay the tax. If applicable companies fail to register with the agency, they could be fined $20,000 per year. If they fail to file a DST return, Canada could dole out a penalty equal to five per cent of the unpaid tax for the year, plus one per cent of the unpaid tax for the year for each month, not exceeding 12 months, in which the return hasn't been filed. Article content According to the government, the goal of the DST is to ensure that major technology firms are taxed appropriately in the country. The legislation however, has come under fire from business groups on both sides of the border, with critics warning that the rules could further inflame Canada-U.S. ties. The Canadian Chamber of Commerce has argued that the tax could increase costs for consumers and risks 'damaging our beneficial and lucrative trade relationship with the U.S.' The U.S. meanwhile, has long denounced Canada's proposed rules, claiming that they unfairly discriminate against American firms. Last August, under the former Biden administration, the Office of the U.S. Trade Representative (USTR) launched dispute settlement consultations with Ottawa under the Canada-United States-Mexico Agreement over the DST. The U.S. has said that American companies are on the hook to pay Ottawa US$2 billion under the DST. 'Only America should be allowed to tax American firms,' Trump said in a February statement. Tech giant Google LLC responded to Canada's digital services tax rules by introducing an additional 2.5 per cent fee for ads shown in Canada starting in October 2024. Called the 'Canada DST Fee,' Google said the surcharges will 'cover part of the costs of complying with DST legislation in Canada.'
Yahoo
06-06-2025
- Business
- Yahoo
What is the bond market and why is everybody so worried about it?
The bond market doesn't make headlines nearly as often as its more exciting cousin, the stock market, but when it does, look out. At least twice in 2025, bond investors have reacted negatively to U.S. President Donald Trump's policies, spooked first by his trade war and more recently by the growing U.S. government debt. Those join a list of other recent bond market tantrums that suggest investors have growing concerns about the state of government finances around the world. But just what is the bond market, how does it work and why is it such a problem when investors get jittery about it? The Financial Post explains. The bond market is a financial market where governments, companies and investors can issue, buy and sell debt in the form of — you guessed it — bonds. For governments, selling a new bond raises the funds needed to finance public spending, while a business might use the proceeds for corporate operations or an acquisition. In return, bonds provide investors with periodic interest payments, usually at a fixed interest rate, and guarantee the repayment of the principal at maturity. Government bonds can come in a range of durations from months all the way up to decades. For example, U.S. government debt ranges from one-month Treasury bills to 30-year Treasury bonds. Investors are especially focused on the U.S. bond market because it is the largest in the world, worth about US$47 trillion. This accounts for about 40 per cent of the US$142 trillion global bond market as of 2025, according to the Securities Industry and Financial Markets Association, a U.S. industry trade group. As of the fourth quarter of 2024, investors held US$28 trillion of government debt in Treasuries. Investors buy government bonds because they are seen as safe, especially in contrast to stocks, which can carry more risk, especially during economic turbulence. Bonds pay out steady interest, and there is little risk the government of a major economy such as the U.S. will not repay the principal at maturity — or at least that's the theory. In reality, investors increasingly appear to be questioning whether government bonds, in particular those issued by the U.S., are such a safe bet. Carl Gomez, chief economist and head of market analytics for CoStar Group, said the bond market, like any other market for financial assets, depends on buyers and sellers making trades based on their expectations regarding market conditions. And some recent decisions by the U.S. government have investors feeling like they are taking on more risk with bonds, he said. When Trump unveiled his plan for massive tariffs on other countries on 'Liberation Day' in April, it sent shockwaves through the stock market. Although normally investors would buy bonds as a counterweight to equity risk, something unexpected happened. There was a selloff in the bond market as well, signalling that buyers were losing confidence in the U.S. as a safe place to store their money. The 10-year Treasury yield spiked from less than four per cent on April 4 to 4.5 per cent on April 8, while the 30-year yield topped five per cent. 'People are worried the independence of the Fed could be eroded to some extent, people are worried that the U.S. administration's policies have not been friendly to the allies or to the providers of capital for the U.S. market,' said Jason Daw, the head of North American rates strategy at Royal Bank of Canada (RBC) Capital Markets. 'This has led the market to believe that (foreign) investors are going to be investing less in the U.S and maybe more in their domestic markets.' And with the U.S.'s massive debt, investors question the government's fiscal prudence, weakening demand for U.S. bonds. Trump's 'big, beautiful' tax bill lead to the second big spike in yields this year. Introduced in May, the bill included extended tax cuts and an increase to the national debt ceiling, and would add nearly US$4 trillion to America's US$36 trillion in debt if passed. In the immediate aftermath of the tax bill announcement on May 22, the 10-year yield closed at 4.58 per cent, its highest level since 2023. To make matters worse, credit rating agency Moody's Corp. downgraded America's credit rating due to the country's inability to manage its ballooning debt. Following that up, there was tepid demand at a US$16 billion 20-year Treasury bond auction, another key indicator of the bond market's woes, pushing yields to 5.1 per cent. 'When the government goes to borrow, they auction up the bonds, and get the money from the Treasury,' Gomez said. 'If there are fewer buyers, then that price is going to come down, and the yields will need to go up on those bonds to make them sellable.' When people talk about trouble in the bond market, they often talk about yields spiking. The yield on a bond is how much you would expect to earn on your money per year if you held the bond through to maturity, including both interest payments and price return. While the interest payment on a bond is usually fixed, yields adjust to prevailing expectations about where interest rates are heading. For example, if investors think they will be able to buy a new bond at an interest rate of five per cent, they aren't likely to want an existing bond with an interest rate of only four per cent. So the price of that older bond falls. The big thing to remember is that yields and prices are inversely related: If yields go up or spike, it means the value of the bonds people are holding goes down. 'Similar to how the value of a stock or the equity market could change, the value of bonds changes depending on people's expectations of future interest rates and depending on when you purchase the bond (which could be) at a value that is above or below its maturity level,' said Daw. If bond buyers are concerned that the U.S. fiscal position is deteriorating, they are likely going to want a higher return to offset the risk of lending to Uncle Sam. So, yields go up, and prices go down. Bond yields have been rising across the globe — a striking reversal in a long-term trend of declining yields that persisted over the past 20 to 30 years thanks to modest inflation and economic stability. With inflation higher post-COVID and due to economic jitters from the U.S.-initiated trade war, there is less demand for especially long-term government bonds globally, making it more expensive for governments to borrow. If the U.S. has trouble selling its bonds at rates that allow it to service its debt, it could be forced to raise interest rates to higher and higher levels to placate investors seeking compensation for taking on the greater risk. Increasing interest rates could create a vicious cycle of higher rates making it more expensive for the government to service its debt, leading to bigger deficits and more debt, producing greater risk that buyers will want to be compensated for with higher interest rates. Most importantly, the U.S. relies on the sale of its Treasury bonds to fund its operations. If buyers don't want to buy bonds, the government could struggle to pay its bills, especially if there aren't sufficient tax revenues, Gomez said. 'Ultimately, it can lead to a financial crisis,' he said. 'It circles down across the whole financial system into the real economy.' Gomez pointed to Greece as an example. The country toppled into a government debt crisis in 2007, exacerbated by the global financial crisis, and struggled to recover. Major financial rating agencies flagged Greek bonds with 'junk' status in 2010. The country's unemployment rate hit a record 28 per cent in 2014, and poverty and homelessness snowballed. 'This doesn't usually happen to a well-developed country like the United States, given its position in the world,' Gomez said, noting the Fed could step in and be 'the buyer of last resort.' Still, this could lead to major inflation risks caused by 'printing money' and potentially call into question America's long-term debt sustainability, which would result in higher interest rates over the long run, he said. Although Canada's bond market typically follows the same direction as its southern neighbour, Gomez said it has hit a resistance point due to the Bank of Canada cutting interest rates out of step with the U.S. Federal Reserve. Canadian bond yields are getting tugged upward, influenced by what is occurring in the U.S., but they are also being pulled down by the central bank. 'Everybody probably expected at the end of last year that we'd see lower interest rates, lower mortgages,' Gomez said. 'But what's really happening is that the bond market and bond yields in Canada are just going sideways.' If the Fed starts cutting rates more than the Bank of Canada, Daw said it is likely the Canadian bond market will underperform the U.S. Treasury market over the next six to 12 months. Canada's central bank is in a tight spot, as it weighs the upside risks to inflation against the downside risks to growth brought on by U.S. tariffs. The other factor weighing on Canadian market sentiment is the expectation that the federal government and provinces will be issuing plenty of bonds this year to increase spending to support the economy through the trade war. When the supply of bonds goes up, this puts downward pressure on bond prices and upward pressure on bond yields. Canada's debt position doesn't look as grim as the U.S., but it is growing. The U.S. debt to gross domestic product (GDP) ratio was 123 per cent in 2024, while Canada's amounted to 110.8 per cent — but Canada's debt to GDP ratio has been on an upward path since 2022 and is markedly higher than its pre-pandemic levels (where it hovered around the 90 per cent range). Why everyone is worried about the bond market — especially Donald Trump Bond market volatility spells trouble for investors Gomez predicted that the Canadian bond market will outperform the U.S. but added that inflation and global factors will still influence yields. 'The thing about the U.S. is that it is still the centre of the capital markets across the world,' said Gomez. 'So, what happens in the U.S. invariably starts impacting the rest of the world.' • Email: slouis@ Sign in to access your portfolio
Yahoo
15-05-2025
- Business
- Yahoo
Canadian households were worth more than $1.025 million on average in 2024: How do you stack up?
Canadian household wealth surged to a new collective high of $17.49 trillion in the fourth quarter of 2024, after gradually increasing over the past six quarters, according to data from Statistics Canada. Canadian households saw their net worth climb 5.77 per cent over the year to reach $1,026,205 on average by the fourth quarter, fuelled by strong financial asset gains. However, economists aren't sure whether this momentum will be sustained, especially with the U.S.-Canada trade war and recession forecasts looming overhead. The Financial Post's Serah Louis breaks down the current state household wealth — and what a period of massive uncertainty means going forward. Canadian households saw their net worth climb 5.77 per cent over the course of 2024, crossing the $1 million mark for the second time in the fourth quarter to reach $1,026,205 on average per household. The gains mark a 30 per cent jump since 2019, when the average household net worth was $788,619. Average household net worth briefly eclipsed the seven-figure mark during the COVID-19 pandemic at the end of 2021 but slipped below $1 million in the second half of 2022. The first quarter of 2024 saw household net worth inch forward to cross $1 million on average again and it sustained this level over the next three quarters. Overall, Canadian household wealth reached a record high of $17.49 trillion in the fourth quarter of 2024, after gradually increasing over the past six quarters. James Gauthier, a senior economic analyst for the national economic accounts division at Statistics Canada, said household wealth gradually increased over the past year as inflationary pressures and interest rates declined. Average wealth can be skewed by the wealthiest households, but even when looking at the middle quintile — the middle 20 per cent — which is more representative of the typical Canadian household, wealth still rose over the course of the year. That third quintile ended the year with $518,415 in wealth on average, up 5.3 per cent year-over-year. 'It's (still) fairly impressive,' said Jim Davies, professor emeritus at the University of Western's economics department. 'The average household having half a million dollars in net worth is definitely a good sign.' The wealthiest (top 20 per cent) accounted for nearly two-thirds of Canada's total net worth in the fourth quarter, averaging $3.3 million per household. In comparison, the bottom 40 per cent of the wealth distribution made up just 3.3 per cent, averaging $84,600 per household. Millennials and generation X grew their wealth by more than 10 per cent, significantly more than baby boomers (2.6 per cent) and the pre-1946 generation (four per cent). Toronto-Dominion economist Maria Solovieva said millennials saw major increases from their financial assets (this includes currency and deposits, bonds, mortgages and equities), which grew by about 15 per cent, with smaller increases in real estate (3.6 per cent). Between 2023 and 2024, millennials built up their savings as well, a 59 per cent boost from $14,894 to $23,716 per household. 'I think the major factor is their wage growth, and we've been seeing it year (over) year for several quarters now,' Solovieva said, but noted the impact of the U.S.-Canada trade war could put a stopper on this growth, potentially even reversing in the third quarter of 2025. 'That probably will have an effect on all generations, (but) especially on the millennials, because they're … in their major years of earnings currently.' Gauthier said younger generations are also more focused on building wealth, compared with the baby boomer and pre-1946 generations, who are more likely to withdraw from their pensions and retirement accounts. Baby boomers still boast the most wealth on average ($1.4 million), compared with millennials ($633,467), thanks to significant real estate and financial assets. An October poll from Scotiabank found homeownership rates have plunged among younger Canadians aged 18 to 34, from 47 per cent in 2021 to 26 per cent in 2024. In comparison, homeownership remains a key driver of wealth for older Canadians. The youngest age cohort, those under 35 years, were the only age group to continually decrease their mortgage debt since the end of 2022. Statistics Canada attributed this decline partly due to higher interest rates and housing costs making homeownership less affordable for young buyers. The lion's share of household wealth is coming from stock market gains, with financial assets ballooning by nearly 10 per cent, over any sizable gains in real estate, which inched up by just under one per cent, year-over-year. The S&P 500 index returned more than 23 per cent in 2024, marking a second straight year of 20 per cent or better returns. The S&P TSX also hit record highs, gaining more than 18 per cent the same year. That said, Gauthier added that while real estate values declined and fluctuated over 2022 and 2023, they began to stabilize and increase moderately over the past year. Home prices picked up 2.5 per cent in December (compared with the same month the previous year) and were up one per cent overall in 2024 compared with 2023, according to the Canadian Real Estate Association (CREA). Thomas Lemieux, an economist and professor at the Vancouver School of Economics at the University of British Columbia, said household wealth can depend on who already owns a home. While older generations are more likely to be homeowners and probably purchased these homes at relatively lower prices, reaping the benefits of real estate growth over many years, younger Canadians entered the housing market at a time fraught with sky-high prices and experienced little growth in real estate values in the aftermath. Generation X currently boasts the greatest average real estate wealth, at $666,146 per household, followed by baby boomers at $550,994 per household. Millennials' average real estate wealth is $433,793 per household, although they saw the biggest year-over-year change in these assets (3.64 per cent). Households across all provinces saw their net worth increase over the past year. But wealth in Quebec households swelled the most, by more than seven per cent, and the Prairies weren't far behind in gains. These regions saw the greatest growth in their provincial gross domestic product over the past year, a Royal Bank of Canada report earlier this month said. Here is how the provinces fared over the past year with average 2024 household wealth in the fourth quarter compared with Q4 in 2023 the following: Newfoundland and Labrador: $687,919, 6.14 per cent higher; Prince Edward Island: $708,797, 3.95 per cent higher; Nova Scotia: $692,422, 4.32 per cent higher; New Brunswick: $512,270, 4.93 per cent higher; Quebec: $783,484, 7.14 per cent higher; Ontario: $1,218,746, 5.65 per cent higher; Manitoba: $781,353, 6.28 per cent higher; Saskatchewan: $881,092, 7.21 per cent higher; Alberta: $973,210, 6.74 per cent higher; British Columbia: $1259758, 3.42 per cent higher. The wealthiest provinces are still Ontario and British Columbia with more than $1.2 million in average household net worth, though this is largely the result of elevated real estate values in parts of those provinces. The Canada Mortgage and Housing Corporation (CMHC) released a housing supply report in September noting that buyers in more affordable markets, such as Calgary and Edmonton, have been more resilient in the face of housing cost increases, with homeownership costs relative to incomes in those metro areas remaining about half of those in Toronto and Vancouver. 'Alberta has also seen stronger economic growth, with real gross domestic product (GDP) per capita outpacing Quebec, Ontario and British Columbia by about 30 per cent in recent years,' the report said. 'This, along with growing remote work opportunities and a more affordable housing system, has led to significantly higher migration to Alberta from other provinces since 2022.' While growth in financial assets was evenly spread across the country, Gauthier said more people have been moving from Ontario and British Columbia to the Prairies for job opportunities in the oil and gas sector, lifting the average disposable income as well as average net worth in that region. Although historical trends suggest household wealth will continue to climb over time, economists have concerns about a potential recession this year. 'It's unlikely that we're going to see much growth in wealth just because (it looks like) it is not going to be a great year for either the stock market or the real estate market,' said Lemieux. Davies said the U.S.-Canada trade war will create a drag on the economy, affecting Canadians across the board, either through layoffs or losses in business income. This could cause Canadians to increase their debts or reduce their financial assets. 'That's especially true for the lower wealth groups or for the younger people,' Davies said. Lemieux noted Canada's rising unemployment rate, which hit 6.9 per cent in April, and said typically during an economic downturn, the unemployment rate goes up. He was concerned younger Canadians just entering the labour market could be most affected. '(People) build wealth (through) investing in the stock market and housing,' Lemieux said. 'But first you need some income to be able to buy these things and grow your wealth.' Real estate assets make up a larger portion of household wealth for Canadians in the third and fourth wealth quintiles, Davies said, and housing values could remain steadier over 2025 compared with the stock market, which has been experiencing wild swings in response to tariff and other policy announcements by U.S. President Donald Trump. Can you invest your time and money in a mid-career gap and still be financially secure? More millionaires are considering exiting Canada now than during last election cycle, survey finds Financial assets account for a much larger percentage of net worth for the wealthiest Canadian households, which means they are more susceptible to volatility in the stock market, affecting their wealth figures and therefore overall household wealth figures as well. 'If the stock market (does) poorly this year, by the end of 2025 this average (net worth) may well (go) back below a million dollars,' Davies said. • Email: slouis@
Yahoo
05-05-2025
- Business
- Yahoo
When Carney meets Trump: Here's what to expect from Tuesday's high stakes White House encounter
Prime Minister Mark Carney will meet with U.S. President Donald Trump in Washington Tuesday for the first time since winning the April 28 federal election. Both leaders have indicated that trade and security will be the key issues on the agenda, with Trump declaring that he also intends to raise the potential annexation of Canada, one of his favourite talking points. So how should Carney approach his first big test on the international stage and how should Canadians expect it to play out? The Financial Post's Barbara Shecter spoke to trade experts and officials who have been in the room with Trump and Carney to get a sense of what might play out. What is it like to be in the room with Donald Trump? That's something Brian Clow got to see first-hand while working in the PMO under Justin Trudeau from 2017 until March of this year, most recently as deputy chief of staff. Clow said the Tuesday meeting presents an opportunity to reset the relationship with U.S. president, but a key factor will be 'what version of Donald Trump will show up.' 'Often he is relaxed, charming, even funny — which usually means the meeting will go well,' Clow said. 'Other times he'll get very serious and direct, and he won't hesitate to bluntly reject an assertion. It's rare, but he can also get quite angry if he feels talked down to or believes the U.S. is being taken advantage of. Some of that is his art-of-the-deal negotiating style but a lot of it is genuine too.' Clow described meetings with Trump as varyingly intense, wide-ranging and prone to going in unexpected directions. 'One minute you'll be talking about an actual war and the next he'll tell a story from the '80s about Studio 54,' he said. 'You've got to be on your toes and go in with a clear plan and a small number of key points. And you've got to be prepared to steer the conversation back to the issues you want to be talking about. This President doesn't just sit there and allow someone to go on at length to build a case or make long arguments — you need to be succinct, clear, and simple. He interjects a lot.' Clow said Canada's team will almost certainly come armed with a proposal of some kind, perhaps involving national security and defence issues, critical minerals, or energy — with the intent of securing a quick end to tariffs. 'There can't be further cooperation with the U.S. on anything if the tariffs aren't removed. So tariff removal will be a key Canadian demand in the discussions,' he said. Gord Nixon, who as Royal Bank of Canada's CEO worked directly with Carney to navigate liquidity issues and other shocks during the great financial crisis in 2008, said he expects to see Carney's steady hand, respectful and pragmatic approach, and knowledge of financial markets and the global economy to come to the fore as he meets with Trump. 'In my view, the prime minister should focus on changing the conversation from one of aggression to opportunity while acknowledging we need to do more in terms of defence and military spending. Establishing a respectful and non-combative relationship will be important in the long run,' Nixon said. This is necessary for both countries, he said, because the trading relationship between Canada and the U.S. is binary — either a win/win or a lose/lose. 'The United States will pay a heavy price if they sell less to Canada and have diminished access to our resources and critical imports like potash, uranium, aluminum and lumber,' he said. Nixon said Carney's approach to managing difficult issues was a key benefit for Canada during the financial crisis and should serve the country well in managing the challenging U.S. relationship and transforming Canada's economy and trading relationships. 'Notwithstanding our relative strength, we faced a number of existential crises that could have brought our financial markets to their knees and Mark was critical to solving our issues,' Nixon said. Though former prime minister Stephen Harper credited then finance minister Jim Flaherty for navigating Canada through the 2008 crisis during the campaign, Nixon suggested Carney played a vital role, at least as far as the banks were concerned. 'Jim Flaherty may have owned the bus but Mark was driving it and his understanding of financial markets and the levers that need to be pulled was a significant differentiator for Canada,' Nixon said. He described sitting in rooms with players with many different perspectives — from bankers and regulators to economic policymakers — 'a lot of A type personalities,' as he put it. Carney was chair. 'I never saw him get mad and he was very effective at managing what were at times divergent opinions,' Nixon recalled, adding that Carney was able to listen and move the conversation forward towards decisions he believed were in Canada's best interest. On Tuesday, Carney's challenge will be to manage Trump's rhetoric despite possessing much greater knowledge base on the U.S.-Canada relationship, Nixon said. And he will have to establish a positive working relationship not just with Trump but with his team. Playing your cards tight is key in any negotiation and Canadian officials will not want to be quick to offer up concessions to Trump in the early stages of talks, said William Pellerin, a partner in the international trade group at McMillan LLP. Rather, Carney and his team are likely to go in with the hope of defusing the trade war through 'mutual de-escalation.' The aim of taking down the temperature would be to get rid of the new wave of tariffs imposed by Trump, including 25 per cent tariffs on steel, aluminum and other products — as well as those still threatened by the United States. 'There would be (a) major downside in offering concessions to resolve the existing steel and aluminum or auto tariffs, only to have new tariffs imposed on lumber, critical minerals or other products right after those concessions are made,' he said. 'Canada could (instead) offer certain concessions as part of a broad-based renegotiation of the CUSMA.' These could include giving up ground on Canada's digital services tax or defence and NATO spending. 'Concessions could also be offered in respect of dairy access, though Canada has stated that this would be off the table,' Pellerin said. Carney himself has provided a number of direct clues as to how he plans to approach the talks with Trump. At a news conference Friday, his first following the election, he said Tuesday's conversation was bound to be 'difficult,' but that he also expects it to be constructive. Since March, Carney has made it clear that he would plan to negotiate but also to attempt to reduce its reliance on the United States and has laid out plans to improve Canada's position by reducing internal trade barriers and pivoting trade relationships to other continents. Scrutiny of Mark Carney's Brookfield ties isn't going away Carney promises 'transformation' of economy His message has been consistent, calling Trump's tariffs unjust and acknowledging that the old relationship between the two countries based on trust and mutual benefit has been broken. 'We don't have to do a deal in the short term,' he told reporters on April 24 during a stop in British Columbia. 'My government will do the right deal.' • Email: bshecter@
