nAVIGATING TRUMP’S TARIFFS Experts help us plot course through choppy waters
S ince Donald Trump returned to the White House in January, his “America First” agenda has spooked markets and raised fears around the globe of a major downturn. Most unsettling of all, however, is Trump’s belief in tariffs as a cure-all for his own country’s economic ills. The on again, off again nature of Trump’s tariff announcements has left countries around the world scrambling and there are signs that investment decisions by companies are being put on hold because of the mounting economic uncertainty. As the leader of an organization with substantial investments that help fund our members’ pensions, any serious disruption in global markets demands my attention. Fortunately, an analysis of the effects of the tariffs by the Union’s global investment management experts has provided some welcome clarity and reassurance. Their latest guidance states that the world economy remains on a solid footing and predictions of a global recession are premature – with global real GDP expected to expand by about 3% this year. In fact, the International Monetary Fund (IMF) recently stated that it expects the economy of the United States to be among the hardest hit in a tariff war, forecasting GDP to hit 1.8% for the year, down from the 2.7% that had been
As our closest trading partner, American tariffs could reduce our growth by up to 2.5% in the first year if fully implemented. However, it’s worth noting that Canada is in a relatively strong position as inflation is back under control – it was at 1.7% in April – and the Bank of Canada can lower interest rates from the current 2.75% if required. Also in our favour is that Canada runs the lowest deficit-to-GDP ratio in the G7, giving Mark Carney’s new government plenty of scope to provide financial stimulus if required. The Prime Minister has already stated that he intends to build new international trading partnerships and work to remove interprovincial trade barriers. Achieving both would do much to offset the worst effects of Trump’s tariffs. Periods of heightened volatility such as the one we are now in only reinforce the correctness of the Local 793 pension plan trustees’ decision to diversify our portfolio of investments across sectors and geographies, matching the guidance provided by our partners across 15 investment management companies. Rest assured that we remain laser focused on providing long-term, stable returns that will ensure our members continue to receive the good pensions they have worked so hard to earn - long after the current US President exits the White House for the last time.
Mike Gallagher Business Manager
anticipated in January. This tallies with the latest figures from the US showing that its economy shrank by 0.3% in the first quarter of 2025. Who Pays? • The importer is responsible for paying the tariff to the government when goods enter the country • The increased cost of a product due to tariffs can either be absorbed by the importer, resulting in lower profits, or passed on to the consumer in the form of a higher retail price • Tariffs can be used for raising government revenue, protecting domestic industries from foreign competition, or as a tool in trade negotiations • Tariffs act as trade barriers, potentially reducing the availability of imported goods and services
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