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What happened in April?
The difficult month for equities began with the announcement of tariffs by Donald Trump on April 2nd. Economic theory and history, should the tariff scheme be implemented as proposed, predicts that the U.S., Canadian and the global economy will likely fall into recession.
The potential for stagflation has also increased dramatically. The tools available to central banks to simultaneously battle rising inflation, high unemployment and slow economic growth are limited. These sentiments have manifested themselves in equity values in the days and weeks following the announcement. BNN Bloomberg and JP Morgan Chase note
Further evidence of challenging times ahead is reflected in the price of gold has leapt over 25 percent in 2025 and over 44 percent over the past year. Gold has maintained its reputation as a safe-haven investment to protect against losses elsewhere, typically when uncertainty threatens equities.
Economic reports that influenced markets during April included:
- April 2nd – Trump launches global trade war
At a mid-afternoon press conference from the White House Rose Garden, Donald Trump imposed tariffs on imports from 185 countries and territories. Watch CNBC
The calculation to determine the tariff rate is the trade deficit divided by the total imports from that country, and then halved. This method is not an accepted practice used by economists and assumes that a trade deficit represents the sum of all unfair practices by the foreign counterpart. Trump stated that the calculation included currency manipulation and other barriers, but these factors are not included in the mathematical formula. A report from the Cato Institute, which is based on 2023 World Trade Organization data, calculates China’s trade-weighted average tariffs at 3%. Trump imposed a minimum tariff of 10% bypassing his own calculation, since it was applied on 115 countries that the U.S. has a trade surplus.
- April 4th – Canadian employment falls in March, rises in U.S.
Employment data was released in Canada and the U.S. for March. StatsCan determined Canadian employment fell by 33,000, the first decline since January 2022, the employment rate declined 0.2% and the unemployment rate rose 0.1% to 6.7%.
The total nonfarm payroll employment rose by 228,000 and the unemployment rate changed little according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. Job gains were made in health care, social assistance, transportation and warehousing, and retail trade. Federal government employment declined.
- April 7th – Bank of Canada releases its Business Outlook Survey
The Bank of Canada released its Business Outlook Survey (BOS) that does not include the latest tariff announcements since information was collected between February 6 and 26. One-third of businesses are including a recession in the next year as one of planning assumptions. In the previous report 45% of companies expected to add employees and now only 32% believe they will increase headcount. CBC and BOS
- April 10th – U.S. inflation falls slightly
In more encouraging news, the U.S. Bureau of Labor Statistics announced that the Consumer Price Index (CPI) rose 2.4% in March on a year-over-year basis. The same measure one month ago was 2.8%. Core CPI that excludes more volatile food and energy was also 2.8%, which is its lowest level in four years. BLS release
- April 15th – Canadian consumer inflation dips lower
StatsCan announced that the Consumer Price Index (CPI) for March was 2.3% on a year-over-year basis, down from 2.6% in February. The slowdown in price increases was driven by lower prices for travel and gasoline in March. Airfare costs fell by 12% on a year-over-year basis as fewer Canadians travelled to the U.S. last month, when many families head south for March Break. Excluding gasoline, the CPI rose 2.5% following a 2.6% increase (excluding gasoline) in February.
StatsCan CPI release CBC and CPI
- April 16th – Bank of Canada holds rates steady, and ECB drops ¼ point
The Bank of Canada maintained its target for the overnight rate at 2.75% and released its Monetary Policy Report (MPR). Tiff Macklem, Bank of Canada Governor, indicated that the “dramatic protectionist shift in US trade policy and the chaotic deliver have increased uncertainty, roiled financial markets, diminished global growth prospects and raised inflation expectations” in his opening statement to begin the press conference at 10:30 Eastern. Macklem outlined two of many scenarios; the first where the tariffs are negotiated away after an unpredictable process and households and businesses are cautious and the second scenario with a long-lasting global trade war. Neither of these, or any combination of these extremes, provides a predictable and positive path.
The European Central Bank (ECB) released its Monetary Policy Statement (MPS) lowering its key lending rates by ¼ percent or 25 basis points. According to the ECB's MPS “most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
ECB MPS explained
- April 24th – Interest rate speculation provides positivity
It appears that the U.S. Federal Reserve may be more inclined to lower interest rates sooner than previously communicated. Trump has expressed frustration with Fed Chair, Jerome Powell, and had previously hinted at terminating him. Last week Trump reversed his early opinion. Coincidentally, Chair Powell said that lower rates could arrive this summer, which pleased Trump. An independent central bank that is not beholden to election results is the accepted standard to protect markets and investors, but could still be at-risk in the U.S. CNBC on Trump and Powell
- April 25th – Canadian retail trade declines
Retail sales decreased by 0.4% to $69.3 billion in February, when four of nine subsectors and seven of ten provinces declined. The largest drops were seen at motor vehicle and parts dealers, and in Quebec and British Columbia. StatsCan and retail sales
- April 28th – Canada re-elects Liberals and Prime Minister Mark Carney
At the end of the five week campaign the Liberals won 169 seats, 3 short of number needed to obtain a majority government. The official opposition will be the Conservatives with 144 seats. Elections Canada results
Early indications are that Prime Minister Mark Carney and President Donald Trump will meet in the near future to discuss trade arrangements between the two countries.
- April 30th – Gross Domestic Product (GDP) declines
Canadian real GDP was 0.2% lower in February, following a 0.4% increase in January. Goods producing industries fell 0.6%, services-producing industries slipped 0.1% in February. Mining, oil and gas extraction, construction, real estate, rental and leasing declined while durable goods, finance and insurance rose. StatsCan and GDP
American GDP decreased at an annual rate of 0.3 percent in the first quarter of 2025 according to the advance estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent. BEA release
What’s ahead for May and beyond?
For the last five years the primary driver of markets has been the path of the pandemic, government responses to protect individuals, families and the economy, the path of inflation and central bank actions to temper its rise while avoiding recession. The concerns for economic growth, employment, inflation and rates continue, but the underlying source has changed from the pandemic to a global trade war.
Over the next weeks much of the uncertainty associated with the current scheme will be reduced or eliminated if bilateral negotiations between the U.S. and Canada, China, Taiwan, U.K., Germany, France, Japan, and many others is successful. However, new rounds of presidential actions could reignite the type of market turmoil that has been observed since tariff-talk began in earnest in February.
The Bank of Canada and Federal Reserve will deliver their next interest rate announcements on June 4th and May 6th, respectively, which could provide a steadying counterbalance to trade uncertainties.
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