Global trade shifts, policy response and the long game for talent
RBC finds that U.S. trade policy in 2025 has been “highly unpredictable,” yet the overall economic impact has been “less negative than feared” when tariffs surged on “Liberation Day” in April 2025. Global trade excluding the United States expanded by 4.4% in 2025, nearly double the 2.3% pace in 2024, while U.S. imports rose 2.7% and the U.S. trade deficit widened slightly. The share of U.S. imports from China “fell sharply,” with demand shifting to other Asian suppliers such as Vietnam, Taiwan and Thailand.
On the Canadian side, Ottawa opted for a restrained response. The federal government’s initial retaliation in March 2025 covered “about a third of U.S. imports before being repealed by September,” except for tariffs on steel, aluminium and autos. RBC says this “kept consumer prices down, and gave the Bank of Canada flexibility to further lower its policy rate,” helping to limit wage‑price tensions.
The RBC experts caution that the episode has “underscored other economic vulnerabilities in Canada, including lagging productivity growth that makes economic shocks difficult to handle.” While exports to non‑U.S. economies rose and shipments to the U.S. declined, shifting trade “requires new supply chains, and major new infrastructure.”
In February, in a 6–3 ruling, the U.S. Supreme Court concluded it was not legal for U.S. President Donald Trump to use the International Emergency Economic Powers Act, better known as IEEPA, for his “Liberation Day” tariffs and fentanyl‑related duties on Canada, Mexico and China.