With President Trump’s inauguration just days away, you may be wondering how U.S. policies, particularly tariffs, could impact your finances—especially if you’re renewing your mortgage or have a variable rate. Here’s what you need to know and why it matters.
What’s Happening?
The possibility of significant U.S. tariffs on Canadian products is raising concerns. Some experts, like Fidelity Portfolio Manager Ilan Kolet, warn that such tariffs could have a major impact on the Canadian economy—potentially even triggering a recession. This would create ripple effects for inflation, the Canadian dollar, and ultimately, mortgage rates.
At the same time, the U.S. economy is showing signs of strength, with slowing inflation, a healthy job market, and strong stock market returns. If the U.S. administration continues to roll out deregulation and pro-growth policies, this momentum could keep building.
How Could U.S. Tariffs Affect You?
Here’s where it gets personal. If the U.S. imposes tariffs on Canadian goods:
- Inflation Could Rise in Canada: Tariffs increase costs for Canadian companies exporting to the U.S. These costs often get passed on to consumers, which could push prices higher across the board.
- Mortgage Rates Might Climb: The Bank of Canada closely monitors inflation. If inflation rises above its target, the Bank could raise interest rates to stabilize the economy. Higher interest rates typically mean higher mortgage payments for homeowners with variable rates or upcoming renewals.
Why This Matters for Your Mortgage
- If you have a variable-rate mortgage: Your payments could increase if the Bank of Canada raises interest rates in response to rising inflation.
- If your mortgage renewal is coming up: A shift in rates could impact your monthly budget, making it critical to explore your options now.
What Can You Do?
- Stay Proactive: Keep an eye on updates about U.S. policies and their potential effects on the economy.
- Consider Locking in a Rate: If you’re worried about rising rates, locking in a fixed-rate mortgage might offer peace of mind.
- Seek Professional Advice: A financial advisor or mortgage expert can help you understand how these changes might affect your specific situation and help you prepare.
The Bottom Line
While Canada’s inflation is currently stable and mortgage rates are favorable, significant U.S. tariffs could change that. Being informed and taking steps to protect your finances now can save you stress—and money—in the future.