Tariff commentary: Banks, energy and the market outlook

WEBVTT

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Hello, I am Joe Overdevest, portfolio manager at Fidelity Investments Canada.

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With the recent tariff news, we thought to give you an update.

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What does it exactly mean? Number of years ago, our tariff or effective rate to

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the U.S. Would have been almost zero.

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More recently, it was about 5%. With the recently news, we're now potentially

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moving to high single digits.

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Why this is important is that it affects many industries and

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sadly, it's probably more small and medium-sized businesses than even some

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of the larger companies. For the audience, keep in mind the Toronto Stock

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Exchange is usually the bigger companies and many of the bigger company's also

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include banks or resources and resources are excluded from

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this. Most of our goods still going to U.S.

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Is USMCA compliant and do not have a tariff.

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But this will affect jobs in some smaller medium-sized businesses and

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will of course affect just business sentiment in general or

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confidence in investing in Canada.

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So where we stand with that, what do we expect going forward?

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You know, the first of all, the negatives are it's very uncertain time.

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You could have tariffs actually go up even further from the U.S.

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Administration, for which I've already talked about.

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You also, you know, as we're hearing, is retaliatory tariffs.

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And of course our Canadian government will have to watch.

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You want to have maybe retaliatory tariffs against the U S, but you don't want

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to hurt us Canadians. Example would be we could put tariffs on

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machinery for farming or construction.

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That may hurt our farmers here paying higher prices or construction workers,

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which would not be good. So that is the potential negative.

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The positive I would take away though, is that we were very close to a deal.

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I know it doesn't feel very good right now, but we were close.

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And so often with these times of uncertainty, you have to understand there

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could be threats both ways. And then very quickly a deal could be done of some

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sort. And that's just the nature of the recent negotiations with the US and

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Canada and other nations.

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We talked about the banks.

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What's their effect? Right now, they've reserved actually a very high amount

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for tariffs already. We'll hear this week of what they actually say.

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I'm sure there'll be a little more cautious uncertainties because of the

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different variables that could happen, but a large amount of the reserves

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already were for a very negative case for tariffs.

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Now, when we look further out in terms of resources, it's very interesting

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the US government has not touched resources in this recent

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move. So that's uranium, potash, nitrogen.

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Oil and gas are not been touched copper in particular and

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why that's important. Is that that's a big part of our economy So that's the

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big positive that is not being touched by these tariffs and those commodities

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and these kind in this country We have a bunch of our growth has

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built off that and that's when the last things I'll say this Canadian country

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probably will not stand still our administration our people will move

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forward and one of the ways we could do That is with public policy driving

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money into certain investments to help the economy in this time of need.

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So I wouldn't just say this is a status quo.

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We will of course respond and respond by hopefully helping out Canadians.

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I hope you have a great day. Thank you.