“It’s hard to find a good place to hide in an environment this, especially when there’s some pressure on inflation from tariffs,” he said. “As much as I’d like to say this really shows the benefit of being well diversified, unfortunately, even being diversified wouldn’t necessarily have helped a whole lot, at least not on a geographic or sector by sector basis. But I do think in general bonds will do a bit better in this environment.”
Porter says that if a recession does indeed hit Canada, it will happen relatively quickly. However, he also points out that Trump’s trade policies could turn on a dime at any given time, meaning a recession could be reversed as quickly as it arrives.
“We think there’s still a possibility that we could pull out of it [a recession] relatively quickly if the US does back down on their very aggressive trade policies – that is possible,” he said. “Nothing is baked in the cake here, but at this point, we are assuming at least a mild recession in Canada.”
Trump’s tariffs on the automobile industry along with aluminium and steel have already taken a massive toll on Canadian manufacturing, causing mass layoffs and plummets in the industry’s stocks. But while Canada’s manufacturing sector took the biggest hit from Trump’s damaging trade policies, Porter also points to commodities as a space that is facing a challenging outlook due to last week’s “Liberation Day” announcements. According to Porter, this could severely disrupt employment in Canada’s energy and mining sectors.
“What’s also happened in recent days is we’ve seen a very notable decline in all kinds of different commodity prices,” he said. “So mining, even energy, are potentially at some risk here because of this relates more to the broader US trade policy that’s now threatening the global economy, not just Canada.”
