The economy of Canada faced minor regression in April, chiefly attributed to a slump in the manufacturing industry. The sector experienced its greatest contraction since April of the previous year, amidst the imposing tariffs from the U.S. Recent data from Statistics Canada suggested that the real GDP had a marginal drop by 0.1% in April, with a predicted equivalent fall for May. The fragile economic figures appear to validate the anticipated deceleration for this year, prompted by the ongoing trade conflict with the U.S.
The strain on the economy imposes further responsibilities on the central Bank of Canada to implement measures, such as interest rate reductions, to reinforce the troubled economy. In additional developments, U.S. President Donald Trump announced the termination of trade discussions with Canada, revealing his intentions to impose a universal tariff on all Canadian goods. The move is believed to be a counter-measure against Ottawa’s digital services tax that is soon to be enforced.
Canada is anticipated to initiate the enforcement of the digital services tax in the coming week. Ottawa and Washington have been engaged in fervent trade dialogues, with the aim of striking a settlement by the end of July. Meanwhile, BlackBerry Ltd encountered a considerable spike in its stock after reporting a better than anticipated revenue and operating profit in the first fiscal quarter, and the company’s first net profit after a period of three years.
The company’s recent success is due to a series of strategic changes implemented under the leadership of a veteran tech executive, who took the helm at BlackBerry in late 2023. The newly appointed CEO, who had previous experience at Nortel Networks and had led BlackBerry’s cybersecurity division, immediately embarked on a mission to revive the business. He implemented cost-cutting measures, offloaded a cybersecurity branch at a discounted price, and essentially redirected the company’s concentration towards its car software business.
Nevertheless, both analysts and the company’s leadership have issued warnings about potential instability resulting from the car software branch in the upcoming quarter, due to potential disruptions from the U.S tariffs on auto sales. President Trump initiated a tariff of 25% on most imported goods from Canada and Mexico in March, although keeping a provision for exemption for products meeting the compliance of the United States-Mexico-Canada Agreement, or USMCA.
During the previous year, only around 40% of merchandises exported from Canada to the U.S. were officially adhering to the USMCA origin rules. However, trade experts were optimistic that a significant portion of the Canadian exports could potentially meet compliance criteria, given the proper completion of required formalities. Evidently, these anticipations were realized to a certain extent, as in April, the USMCA conformity rate regarding Canadian exports rose to 60%.
Certain industries, however, have encountered more difficulty in meeting these requirements. Some sectors, such as manufacturing, maintained consistent compliance rates or even experienced a slight dip compared to the previous year. TransUnion, a credit agency, published a recent report revealing that Canadians aged 30 and below are struggling with mortgage payments at a rate that is considerably higher than the rest of the population.
Looking deeper into the figures, 29- and 30-year-old Canadians had the worst mortgage non-payment rates at 1% and 1.1% respectively, nearly ten times the average national percentage. This troubling pattern may be due to the current trend of mortgage renewals resulting from a spike in real estate purchases made five years ago when interest rates were lower.
The burden of mortgage repayments on Canadian homeowners appears to be intensifying. Credit professionals have proposed that younger Canadians are missing mortgage payments more frequently due in part to lack of substantial savings to cushion any unforeseen homeownership costs. Adding to the pressure, increased interest rates have resulted in significantly higher monthly payments.
In another facet of Canadian economic life, a seasoned personal finance columnist has decided to step back from his career after nearly three decades of generous and insightful advice. He has disseminated his profound wisdom on all elements of financial management in Canada, touching on investments, mortgages, real estate, taxes, retirement planning, and a wealth of other topics.
In his concluding column before embarking on retirement, he encapsulates 27 years’ worth of experience dealing with personal finance and investment into eight vital lessons. Reflecting on these years, he breaks down the most common financial challenges faced by Canadians and, importantly, provides workable solutions.