Monday Market Minute | Apr 07, 2025

First hard tariff data lands — trade volumes contract sharply

What Moved

StatsCan released the first trade data reflecting implemented US tariffs, and the numbers were sobering. Canadian exports to the US declined 8.3% month-over-month, with manufacturing, energy, and agricultural sectors hit hardest. The trade surplus narrowed to its smallest in three years. Business investment intentions surveys from the BoC showed a corresponding pullback in capital expenditure plans, particularly among firms with significant US supply chain integration.

Why It Matters

The data confirmed what private markets had been pricing in through hesitation: tariffs were not just a headline risk but a real drag on the Canadian economy. PE portfolio companies with US revenue exposure reported margin compression as tariff costs proved difficult to pass through. Private credit managers began flagging select borrowers in automotive parts and forestry products for enhanced monitoring. The silver lining was that domestically oriented strategies — Canadian infrastructure, residential real estate, and healthcare services — remained largely insulated.

Signal to Watch

The April 16 BoC decision would be the first since hard tariff data became available. Whether Macklem treated the trade shock as transitory or structural would shape private market positioning for the rest of the year.

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