This Week in Canada/US Relations and the Buy Canadian Movement
May 25, 2025
It seems that each week brings new drama to the broad geopolitical stage, and this week is certainly no different. Below, we discuss the Banff G7 talks, chatter re recession warnings and increasing grocery prices, Trump’s 50% tariff threat on the EU, and the feel-good return of Mountain Equipment Co-op to Canada, and other stories hitting the headlines this week.
🛒 Grocery Price Pressures: Tariffs Hit Consumers
A May 14, 2025 Financial Post article reports on Loblaws' warnings of imminent price hikes on thousands of goods due to Canada’s retaliatory tariffs on U.S. imports. Indeed, On March 4, 2025, Canada imposed 25% tariffs on $30 billion of U.S. imports, targeting items like orange juice, coffee, pork, and apparel. A second wave, effective March 13, 2025, added 25% tariffs on $29.8 billion in U.S. goods, including steel ($12.6 billion), aluminum ($3 billion), and other products like nuts and beverages, as detailed by the Department of Finance. To explain why the tariffs are likely to begin hitting consumers now: smart supply-chain management led corporations to initially front-load a lot of product, so as to avoid the tariff charges; but Walmart’s and Loblaw’s warnings indicate that most of this product has now been sold.
Our take: This is what tariffs do: they raise the price of goods in the country imposing the tariff, to discourage consumers from purchasing those products (and in turn encourage the purchase of local options). Thus, to some extent, we’re in favour of these tariffs, which can help to add further fuel to the Buy Canadian movement. That said, the reality is that Canada is heavily reliant on foreign goods in many sectors, and if local options don’t exist then the tariffs only raise prices for Canadians. It might be a necessary evil in the current geopolitical landscape – but we’d like to see corporations like Loblaws and Walmart and/or federal government policies to find ways to buffer these price increases for everyday Canadians.
For anyone interested in seeing exactly which products are being tariffed, the Department of Finance makes this public HERE.
💲 Recession Warnings: Canada on the Brink?
On May 20, 2025, TD Bank’s Chief Economist Beata Caranci warned that Canada is “very likely” entering a formal recession in the second and third quarters of the year. Citing the effects of persistent U.S. tariffs, weak consumer sentiment, and a sluggish housing market that isn’t responding to lower interest rates, Caranci projected the loss of an additional 100,000 private-sector jobs. While the stock market has shown resilience, Caranci emphasized that financial optimism is masking underlying economic deterioration—especially in job markets and household spending. She also downgraded TD’s GDP forecast to just 0.8% growth for 2025, with real risk of deeper contraction if trade uncertainties persist. Despite modest interest rate cuts, Caranci noted that the Bank of Canada’s policy tools are limited when the economy faces supply-side shocks like tariffs, rather than typical demand-driven slowdowns.
Our Take: The tariffs are likely accelerating cracks that were already forming across key sectors. If we want to come out of this stronger, we need more than just interest rate cuts and hopeful trade talks — we need targeted, sector-specific strategies. That could mean investing in domestic auto manufacturing beyond final assembly, safeguarding refineries and critical energy assets from foreign takeover (hint: Parkland?), and creating real incentives for Canadian-made consumer goods. The Buy Canadian movement can play a vital role — but only if it's paired with bold, coordinated leadership that actually builds the kind of economy we want to buy into.
🗣️ G7 Finance Talks in Banff: Global Trade Tensions Take Center Stage
On May 21, 2025, top finance officials from G7 nations, including Canada’s Finance Minister François-Philippe Champagne, convened in Banff, Alberta, to address global economic challenges driven by U.S. tariffs. The talks, held over two days, aim to find consensus amid fears of a global downturn, with Canada pushing for tariff exemptions on critical exports like energy (27% of U.S. imports) and potash (80% of U.S. supply). However, U.S. Treasury Secretary Scott Bessent had already previously signaled an inflexibility on tariffs, and it seems as though the US tried to shift discussions to other interests like G7 action against China’s non-market practices. The end result of the talks was a joint communiqué that – believe it or not - mentioned “trade” just once, and instead focused on issues like financial crime and Ukraine.
Our take: The G7 summit in Banff offered more choreography than confrontation—lots of diplomatic pirouettes, but little concrete movement on the issues that matter. Ultimately, it wrapped without any firm commitments on the issues Canadians care most about—like tariffs, trade stability, and tech regulation. Leaders avoided directly addressing the growing global trade tensions, opting instead for vague promises of cooperation. For now, everyday Canadians are left waiting to see whether these high-level talks will lead to real relief at home.
💝 Home-grown Nostalgia
Two major Canadian retail names are making headlines this month with moves that signal a return to domestic ownership. On May 16, 2025, Mountain Equipment Company (MEC) was acquired by a Canadian-led investor group headed by Tim Gu, chair of Unisync. The deal ends five years of U.S. ownership under Kingswood Capital Management. Gu has pledged to reinvest in domestic manufacturing, aiming to restore MEC’s legacy as a Canadian-founded brand rooted in sustainability and outdoor culture.
Meanwhile, Canadian Tire has submitted a C$30-million bid for the intellectual property of Hudson’s Bay. While the deal is still pending approval as of May 21, it would keep the iconic brand’s legacy and trademarks under Canadian control following the company's bankruptcy. Though the acquisition will not revive The Bay’s 90 closed stores or its 4,000 lost jobs, it reflects a broader push to preserve national retail heritage amid growing concerns about foreign ownership and trade pressures.
Our Take: Truthfully, this isn’t likely to move the needle much from a purely economic perspective. The fact that Hudson’s Bay’s intellectual property was valued at just $30 million says a lot about the state of the brand, and MEC’s footprint—while meaningful—is still just a small blip in the broader economy. But not all wins are measured in GDP points or tariff exemptions. Some victories strike deeper—tapping into identity, legacy, and the stories we tell ourselves about who we are as a country. MEC and The Bay aren’t just retail names; they’re institutions that helped shape Canadian consumer culture, and it’s good to see them staying in Canadian hands.
🏓 Trump’s Chaotic Ping-pong Style Continues
On May 23, 2025, President Donald Trump announced plans to impose a 50% tariff on all European Union imports starting June 1, citing stalled trade negotiations. He also threatened a 25% tariff on iPhones manufactured outside the U.S., urging Apple to relocate production domestically. These proposed tariffs have unsettled global markets, with major indices experiencing declines and Apple shares dropping nearly 3%.
Our Take: This pattern of abrupt tariff announcements clearly reflects Trump’s continued, intentional strategy of unpredictability in trade policy: shake up the global trade landscape with bold, often extreme tariff threats, then let everyone guess about whether they’ll actually be imposed. By targeting allies like the EU and giants like Apple, the message is clear—no one is off limits. The approach keeps everyone guessing, which is how Trump likes it. But it’s also a high-risk game that’s leading to strained alliances, market volatility, and a global business environment that’s increasingly hard to navigate. For countries like Canada that are caught in the crossfire, staying agile—and building up domestic resilience—is likely to become even more important.
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