Posthaste: Economic chaos has Canadians changing spending habits

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Canadians are altering their spending habits due to the economic uncertainty swirling around as United States President Donald Trump levies sweeping tariffs against Canada.

More than 80 per cent of Canadians have changed their financial strategies due to the economic climate, according to a new survey by CPA Canada and BDO Canada Ltd.

David-Alexandre Brassard, CPA Canada’s chief economist, said trade tensions, particularly between Canada and the U.S., have forged “weaponized uncertainty” for Canadians, leaving many feeling worse off than they previously were.

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“Personal finance doesn’t exist in a vacuum,” he said in a news release. “As consumer confidence drops and spending weakens, Canada could face slower economic growth.”

Trump has now imposed 25 per cent tariffs on most Canadian and Mexican products and 10 per cent on energy, effectively starting a trade war against both nations, which is largely expected to trigger a recession in Canada.

On Tuesday, Prime Minister Justin Trudeau responded with $30 billion in tariffs against certain U.S. imports, with another $125 billion in tariffs to come in 21 days.

The provinces are also fighting back, with some pledging to take U.S. alcohol off store shelves and cutting up contracts with U.S. companies.

Ontario Premier Doug Ford vowed to take it a step further by cutting off power to the U.S., which imported around 33 terawatt hours of electricity from Canadian generating stations in 2023.

The economic situation is also harming Canadians’ financial standing, with 76 per cent saying the economic situation is affecting their financial well-being, according to the survey, and 34 per cent saying they are already worse off financially than a year ago.

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And tariffs are far from the only concern Canadians have with the economy, with 40 per cent viewing the cost of living and inflation as their top concern.

Inflation has been relatively tame in recent months as the Bank of Canada brought its core metric back to its target range of two per cent, but there are concerns tariffs may result in price hikes once again.

“The financial caution we’re seeing isn’t just about inflation; it’s about uncertainty,” Li Zhang, financial literacy leader at CPA Canada, said in the release. “Many Canadians are bracing for worst-case scenarios, adjusting their financial plans to safeguard against potential downturns.”

As Canadians brace for rising costs, 66 per cent of respondents plan to reduce their expenses.

For the latest news on the tariff war, go here for live updates

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Almost 80 per cent of Canadians have a negative view of Trump and three quarters perceive the United States “unfavourably,” says an Angus Reid Institute poll from Tuesday.

More than half of Canadians think government should view the U.S. as a “threat to national interests.”

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There’s also growing support for Canada fighting back with tariffs of their own.

The poll taken Feb. 27 to March 3, just before tariffs were imposed, found support for in-kind retaliatory tariffs rose from 60 per cent in January to 66 per cent.

Meanwhile, support for tariffs on key U.S. exports to Canada rose to 77 per cent.

Read more.

• Today’s data: Labour productivity for the fourth quarter, U.S. ADP national employment report for February
• Earnings: Veeva Systems Inc., Marvell Technology Inc., The Descartes Systems Group Inc., Abercrombie & Fitch Co., South Bow Corp., Victorias Secret & Co., Foot Locker Inc., Vermilion Energy Inc., Athabasca Oil Corp., Minto Apartment Real Estate Investment Trust, Parkland Corp.

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Many Canadians who moved for work in 2024 may be entitled to claim moving expenses, though not all moves qualify as an “eligible relocation,” writes Jamie Golombek, managing director of Tax & Estate Planning with CIBC Private Wealth. First off, a move must be at least 40 kilometres closer to your new job and the relocation must not be primarily for personal reasons, as one tax payer recently found out in tax court. Read more here.

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Calling Canadian families with younger kids or teens: Whether it’s budgeting, spending, investing, paying off debt, or just paying the bills, does your family have any financial resolutions for the coming year? Let us know at wealth@postmedia.com.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Ben Cousins, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.

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