Trade uncertainty is here to stay, RBC says

What’s the latest on Donald Trump’s tariffs? You might want to check your watch, not your calendar say economists at RBC.

On April 2, 2025, President Donald Trump announced a new tariff policy imposing a universal 10% tariff on all imports, effective April 5th, with higher rates for specific countries. China faces a 34% tariff, the European Union 20%, and Japan 24%. The administration aims to address trade deficits and promote domestic manufacturing. Global markets reacted negatively, with significant declines in major indices and concerns about potential trade wars.

In an April 2nd update, RBC economists Nathan Janzen and Claire Fan addressed the implications for Canada.

Tariffs on imports from Canada are still set to rise on Thursday. Auto tariffs announced last week will still push the average U.S. tariff rate on imports from Canada to about 3.5% from 2.5% by our count. That increase will still matter, but looks small now compared to dramatically higher tariffs set to be imposed on other countries.

“The long-awaited U.S. reciprocal tariffs announced have been large and broad-based, but critically exempt Canada and Mexico (at least for now) through CUSMA/USMCA compliant trade,” the pair wrote. “Tariffs on imports from Canada are still set to rise on Thursday. Auto tariffs announced last week will still push the average U.S. tariff rate on imports from Canada to about 3.5% from 2.5% by our count. That increase will still matter, but looks small now compared to dramatically higher tariffs set to be imposed on other countries.”

The economists say far from being written in stone, these tariffs could change at the drop of a hat.

“Prior tariff announcements have been significantly altered or rolled back days (or even hours) after, and there is a big possibility that tariffs announced today will look different a week from now. But, if the measures today are implemented, it would push the average U.S. import tariff rate to over 20%— according to our estimates—the highest rate in more than a century. Today’s announcement will not be the last on trade from the U.S. administration,” they added.

Janzen and Fan say the average American is likely to start feeling the pinch from tariffs.

“Broadly speaking, we have argued before that U.S. buyers will have difficulty finding domestically produced alternatives to imports. A wave of retirements and immigration cutbacks limit the amount that American production can increase in the near-term, and capital investments to “reshore” manufacturing production will take years and billions,” they wrote.