Author: Consultant

U.S. producer prices were unchanged in February for the first time in seven months, while fewer Americans filed claims for unemployment benefits last week, pointing to a stable economy that should allow the Federal Reserve to keep interest rates steady next week.

But the calm painted by the reports from the Labor Department on Thursday could be upended by radical government spending cuts, which have pushed thousands of federal employees out of work, and an escalating trade war stemming from broad import tariffs.

The aggressive policies being pursued by President Donald Trump’s administration have sent business and consumer confidence plummeting, and raised the chances of a recession. U.S. airlines have cut their earnings estimates noting that corporations and consumers were scaling back spending because of mounting economic uncertainty.

“No factory inflation and no worrisome job layoffs either, so there is nothing to slow the economy’s advance for now,” said Christopher Rupkey, chief economist at FWDBONDS.

“Nevertheless, the radical, buzz-saw cuts in spending and personnel down in Washington could eventually spread to the rest of the private economy in the months to come and it has already created enough uncertainty for company CEOs to potentially halt the economy’s forward progress starting in the second quarter.”

The unchanged reading in the producer price index for final demand last month, the first since July, followed an upwardly revised 0.6 per cent increase in January, the Labor Department’s Bureau of Labor Statistics said.

Economists polled by Reuters had forecast the PPI rising 0.3 per cent after a previously reported 0.4 per cent increase in January. In the 12 months through February, the PPI climbed 3.2 per cent after rising 3.7 per cent in January.

But there were unfavourable details in the components that go into the calculation of the Personal Consumption Expenditures (PCE) price indexes, which are tracked by the U.S. central bank for its 2 per cent inflation target. That was similar to the consumer price data on Wednesday.

Goods prices rose 0.3 per cent, with a 53.6 per cent surge in wholesale egg prices accounting for two-thirds of the increase. Goods prices rose 0.6 per cent in January. A raging bird flu outbreak is driving egg prices higher, boosting the cost of food. Wholesale food prices shot up 1.7 per cent after increasing 1.0 per cent in January.

Energy prices fell 1.2 per cent. Excluding the volatile food and energy components, goods prices jumped 0.4 per cent after gaining 0.2 per cent in the prior month. Further gains are likely amid an escalation in trade tensions. President Donald Trump has ignited a trade war, increasing tariffs on goods from China to 20 per cent, with Beijing retaliating with duties of its own.

Trump imposed a new 25 per cent duty on Canadian and Mexican imports, before providing a one-month exemption for goods that meet the rules of origin under the U.S.-Mexico-Canada Agreement on trade. Enhanced steel and aluminum tariffs drew swift retaliation from Europe and Canada.

Economists expect the effects of the slew of tariffs by the Trump administration to show in the months ahead.

The cost of services fell 0.2 per cent amid a 1.4 per cent decline in margins for machinery and vehicle wholesaling, after rising 0.6 per cent in January. There were also decreases in the margins for food and alcohol, automobiles and automobile parts as well as apparel, footwear, and accessories retailing.

But prices for hospital inpatient care increased 0.8 per cent. Portfolio management fees rose 0.5 per cent, while airline fares were unchanged. Hotel and motel accommodation prices dipped 0.1 per cent.

Portfolio management fees, health care, hotel and motel accommodation and airline fares are among the components that go into the calculation of the core PCE price index.

With the two reports in hand, economists estimated that the PCE price index excluding the volatile food and energy components rose by 0.3 per cent in February, with high odds for a 0.4 per cent increase. Core PCE inflation gained 0.3 per cent in January.

It was forecast rising 2.7 per cent year-on-year after advancing 2.6 per cent in January. The Fed is expected to keep its benchmark overnight interest rate in the 4.25 per cent-4.50 per cent range next Wednesday, having reduced it by 100 basis points since September.

U.S. stocks opened lower. The dollar advanced against a basket of currencies. U.S. Treasury yields rose.

Financial markets expect the Fed to resume cutting borrowing costs in June after it paused its easing cycle in January, as the escalation in trade tensions threatens the economic expansion. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.

A separate report from the Labor Department showed initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 220,000 for the week ended March 8. Economists had forecast 225,000 claims for the latest week.

Risks for the labour market are, however, tilted to the downside. Thousands of federal government workers, mostly on probation, have been fired by tech billionaire Elon Musk’s Department of Government Efficiency, or DOGE, an entity created by Trump to drastically shrink the government.

Unions representing some of the civil servants have challenged the layoffs, resulting in reinstatements. Agencies have a Thursday deadline to submit plans for large-scale layoffs. The federal government upheaval has not yet significantly filtered through to official labour market data.

A separate unemployment compensation for federal employees (UCFE) program, which is reported with a one-week lag, showed applications little changed.

“With all the gyrations between DOGE, agency cuts, and the courts, the number of federal employees already going without a paycheque is unclear,” said Andrew Stettner, a senior fellow at the Century Foundation. “What we know … is that the cruel way in which Trump is cutting government payrolls is making it hard for laid-off federal employees to get benefits.”

Spending cuts have, however, impacted contractors, accounting for the elevation in Washington D.C. claims.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 27,000 to a seasonally adjusted 1.870 million during the week ending March 1, the claims report showed.

The European Union has announced retaliation plans in response to President Donald Trump’s 25% steel and aluminum tariffs. 

A European Commission press release declares that EU retaliatory actions could apply to American exports worth up to €26 billion.

European Commission President Ursula von der Leyen spoke against tariffs, but said that the move was a “proportionate” response to the U.S.

“Tariffs are taxes. They are bad for business, and worse for consumers,” she said. “The European Union must act to protect consumers and business. The countermeasures we take today are strong but proportionate. As the United States are applying tariffs worth $28 billion dollars, we are responding with countermeasures worth $26 billion Euros.”

The EU’s retaliation is slated to come in two parts.

“First, the Commission will allow the suspension of existing 2018 and 2020 countermeasures against the US to lapse on 1 April. These countermeasures target a range of US products that respond to the economic harm done on €8 billion of EU steel and aluminium exports,” the European Commission press release notes

Trump’s new 25% tariffs on Canadian steel and aluminum went into effect Wednesday

Canada announced $21 billion in additional tariffs against the U.S. Wednesday after President Donald Trump’s new 25% tariffs on steel and aluminum went into effect.

Canada is the biggest foreign supplier of steel and aluminum to the U.S.

“Today, I am announcing that the government of Canada, following a dollar-for-dollar approach, will be imposing, as of 12:01 a.m. tomorrow, March 13, 2025, 25% reciprocal tariffs on an additional $29.8 billion of imports from the United States,” Canadian Finance Minister Dominic LeBlanc said. “This includes steel products worth $12.6 billion and aluminum products worth $3 billion as well as additional imported U.S. goods worth $14.2 billion.” 

“The list of additional products affected by counter-tariffs includes computers, sports equipment, and cast iron products as examples,” he continued.

“We will not stand idly by while our iconic steel and aluminum industries are being unfairly targeted,” LeBlanc added, according to the CBC. 

President Donald Trump’s 25% tariff increase on all steel and aluminum imports officially took effect on Wednesday, the latest move in the administration’s plans to reshape global trade norms in favor of U.S. manufacturing.  

The action prompted retaliation from the European Commission, which announced shortly after Trump’s tariffs took effect that it would impose counter tariffs on the equivalent of $28 billion worth of U.S. goods starting next month. 

“We regret the unjustified US 25% tariff on steel and aluminium imports. The EU will protect its consumers and businesses,” the Commission said in a statement. “We are launching swift, proportionate countermeasures worth up to ($28 billion), matching the economic impact of the US tariffs.”

Trump’s action to bulk up protections for American steel and aluminum producers restores effective global tariffs of 25% on all imports of the metals and extends the duties to hundreds of downstream products made from the metals – everything from nuts and bolts to bulldozer blades and soda cans.

The countries most affected by the tariffs are Canada, the biggest foreign supplier of steel and aluminum to the U.S., Brazil, Mexico and South Korea, which all have enjoyed some level of exemptions or quotas.

Bank of Canada’s March 12 interest rate announcement

The Bank of Canada cut its policy interest rate by a quarter percentage point to 2.75 per cent and warned of an economic downturn amid a trade war with the United States. This is the seventh consecutive rate cut since last summer.

Governor Tiff Macklem said the bank would “proceed carefully with any further changes” to the policy rate given the challenges of balancing the downside risk to economic activity with the upside risk to inflation caused by tariffs.

Just when canola farmer Roger Chevraux thought things were bad enough, they got worse.

Since U.S. President Donald Trump’s inauguration in January, canola farmers and processors have faced the threat of 25-per-cent tariffs on $7.7-billion of exports to the United States, their largest market.

Now, Canada’s second-largest export market, China, says it is introducing 100-per-cent tariffs on more than $900-million of canola oil and meal on March 20.

This double threat against one of Canada’s largest crops is starting to trickle down through the Prairie agricultural supply chain. Some grain handlers – potentially shut off from two of their largest markets – are closing bids on canola.

“I’ve never seen this before,” said Mr. Chevraux, a fourth-generation farmer who is also chairman at the Canadian Canola Growers Association.

“It’s never good when we lose a market, especially one that size.”

The industry is caught in the middle of political tensions far outside its control. It is hoping Ottawa will negotiate a better deal with Beijing, and the potential double trade war won’t cause lasting effects to a $43.7-billion Canadian product that provides more than 200,000 jobs.

Beijing announced the tariffs Saturday as part of $3.7-billion worth of levies against Canadian agricultural and food products, including 25-per-cent duties on pork and seafood products, in a retaliatory move against Ottawa’s August decision to impose 100-per-cent tariffs on Chinese electric vehicles. That levy was aimed at keeping North America’s industry competitive.

The continued uncertainty is also deterring investment in what until recently wasa fast-paced multibillion-dollar push toward value-added processing in canola seed crushing.

But Mr. Chevraux, like the 40,000 canola farmers across Canada, has few options. Seeding across Western Canada will begin by the start of May at the latest. Switching crops now is challenging.

“This is coming at a moment when we just can’t take any more body blows,” said Chris Vervaet, executive director of the Canadian Oilseed Processors Association.

China is the second largest market for Canadian canola seed, oil and meal, after the United States. The tariffs do not apply to seed. However, China imports $20.6-million of Canadian canola oil and is an irreplaceable market for $918-million of canola meal.

Canola meal – a byproduct from crushing seed – is a source of high-protein feed for livestock and aquaculture. The largest market is California’s dairy sector. The second largest is Chinese livestock and aquaculture, where it is fed to pork and farmed fish.

Replacing these markets is near impossible, Mr. Vervaet said. Few jurisdictions outside the United States and China have the scale of livestock or aquaculture production to absorb the quantities produced by crushing plants in the Canadian Prairies.

And this crushing plant capacity is expanding, fast.

Since 2021, five major investments were aimed at increasing crushing capacity by 60 per cent. These investments came from grain heavyweights Cargill, Louis Dreyfus Company, Richardson International, Viterra Canada, alongside a joint venture from Federated Co-operatives Limited and AGT Foods and Ingredients.

But these projects are beset by other challenges. Legislation in the U.S. and Canada that incentivizes gasoline producers to insert clean fuels into their mix drove the push to canola oil refineries. However, shaky trade with the U.S. is upending export demand, while the looming federal election has thrown the domestic market into uncertainty. Conservative Leader Pierre Poilievre has dubbed renewable-fuel legislation a “second carbon tax.”

These factors drove Federated Co-operatives Limited to announce an indefinite pause on their multibillion-dollar canola crush and refinery plant in Regina on Jan. 17.

Mr. Chevraux could consider planting another crop until the trade war with China abates, however, planning for canola is already under way. Switching would require him to buy different fertilizers, source different seed and reconsider his crop rotation.

Instead, he is hoping Ottawa will be able to successfully negotiate with China.

However, the Asian nation has had long-standing grievances with Canadian canola imports.

In September, Beijing started a one-year anti-dumping investigation into Canadian canola imports. The move came weeks before Canada launched 100-per-cent tariffs on Chinese-made EVs.

While the current tariffs do not include seed imports, there is still room for escalation, Rosa Wang, an analyst with agricultural consultancy JCI, told The Globe and Mail on Saturday. These exports – worth around $4-billion – are the lion’s share of Canada’s market stake in China.

Canola farmers and processors are therefore in the middle of a complex geopolitical fight, far from their own making, that could very well escalate, said Chris Davison, president and chief executive officer of Canola Council of Canada.

Matthew Glover, a spokesman for Saskatchewan Premier Scott Moe, said in a statement that his province is being disproportionately affected by the Chinese tariffs.

“We have reached out to the Federal Government to request they engage with China for a resolution as soon as possible.”

The Canadian dollar CADUSD +0.05%increase weakened against its U.S. counterpart on Monday as investors bet that the Bank of Canada would continue its easing campaign this week to support an economy threatened by U.S. trade tariffs.

The loonie was trading 0.3 per cent lower at 1.4425 to the U.S. dollar, or 69.32 U.S. cents, after touching its weakest intraday level since last Wednesday at 1.4440. Members of the ruling Liberal party in Canada have bet on former central banker Mark Carney as the man best placed to take on U.S. President Donald Trump, who has threatened annexation as well as launching a trade war and punishing tariffs on Canada.

Economic confidence will suffer even if tariffs continue to be delayed, keeping the Canadian dollar “on the weak side,” said Aaron Hurd, senior portfolio manager in the currency group at State Street Global Advisors.

“If you’re an exporter or a U.S. company with production in Canada, you’re not going to do any capex (capital expenditure) until you’ve a lot more certainty.”

Investors see an 87 per cent chance that the BoC will cut its benchmark interest rate by 25 basis points on Wednesday, after the central bank lowered the rate by two percentage points since June to a level of 3 per cent.

“That expected rate cut is going to help keep a lid on CAD as well,” Hurd said. The price of oil, one of Canada’s major exports, was trading 1.1 per cent lower at $66.28 a barrel on tariff uncertainty and rising output from OPEC+ producers. Canadian government bond yields moved lower across the curve, tracking moves in U.S. Treasuries, as investors grew more concerned about the prospects of a U.S. recession. The 10-year was down 5 basis points at 2.983 per cent.

The provider of Canada’s major stock indexes is considering a significant change that would allow some companies to appear in multiple countries’ indexes, paving the way for companies such as Brookfield Asset Management Ltd. BAM-T -3.08%decrease, Shopify Inc. SHOP-T -6.90%decrease and the former Ritchie Bros. Auctioneers Inc. RBA-T -1.35%decrease to be both Canadian and American.

S&P Dow Jones Indices, which runs the S&P/TSX Composite Index, the S&P/TSX 60 Index and others, says it could allow companies “with significant ties to Canada” to stay in a Canadian index even if it normally would consider the company “domiciled” in another country. The company would need to be incorporated in Canada to be eligible.

Until now, S&P Dow Jones has said a company can have just one country of domicile – and that country’s stock indexes are where it needs to be. The new Canadian proposal would be a significant move away from that.

In a statement this week, S&P Dow Jones said the proposal is in response to trends and “market inquiries” around its domicile and listing policies. The changes “are intended to enhance the representativeness of S&P/TSX Indices by expanding eligibility to a broader range of companies.”

The changes would allow British Columbia-incorporated Brookfield Asset Management, which recently changed its principal executive office to New York, to remain in S&P/TSX indexes even as it joins American ones. (S&P has not yet designated Brookfield as a U.S.-domiciled company and removed it from Canadian indexes.)

B.C.-incorporated RB Global Inc., formerly known as Ritchie Bros., RBA-T -1.35%decrease after it formally changed its headquarters to a Chicago suburb, but would be able to return.

Federally incorporated Shopify has not made any public statement about its index plans, but it recently introduced a New York executive office, in addition to its Ottawa headquarters, in its securities filings. It makes those securities filings with the U.S. regulators and has the bulk of its business there. Currently, it’s in the Canadian indexes, but would have to exit them if S&P Dow Jones decided it was a U.S. company. The change would mean it could be in both countries’ indexes.

The former Encana, which moved its incorporation and headquarters to the U.S. from Calgary and renamed itself Ovintiv OVV-T -1.35%decrease, would not be eligible. Neither would Vancouver-based Lululemon LULU-Q -3.08%decrease, which has been incorporated in Delaware since it went public in 2007.

In a presentation released Wednesday accompanying a call for consultation on the change, S&P Dow Jones said there are four companies with Canadian incorporations it currently considers domiciled elsewhere, including the U.S., China and the United Kingdom, that could join the Canadian indexes. It does not name them, but provides descriptive information on them.

In addition to RB Global, analyst Jean-Michel Gauthier at Scotia Capital Inc. said China Gold International Resources Corp. Ltd. could be a candidate for inclusion. China Gold operates entirely in that country and is included in the S&P Asian indexes, according to S&P Global Market Intelligence.

RB Global and China Gold match two of the descriptors in the S&P Dow Jones document.

“We count 20 U.S. listed companies with no Canadian listing and a Canadian incorporation that could be tempted to come back home,” Mr. Gauthier wrote in a research note.

Brookfield Asset Management, with a market capitalization of more than $100-billion, “could be the first S&P 500/TSX 60 dual member,” he said.

At stake is the deep pool of investor money chasing U.S. indexes. Any fund that tracks an index needs to buy the shares of a company that joins that index, driving demand, and prices, up.

In the fall of 2023, when The Globe and Mail examined Lululemon’s U.S. index membership, there was US$3.4-trillion in index funds that track the S&P 500, US$118-billion tracking the S&P MidCap 400 and nearly US$97-billion tracking the Russell 2000, according to Morningstar Direct.

Research by Morningstar Direct for The Globe and Mail found Canadian mutual funds and exchange-traded funds with assets under management amounting to $395-billion had returns that were 95 per cent or more correlated with the S&P/TSX Composite over the 12 months ended Dec. 31, 2023. This included funds that explicitly say they track the index.

The core rule in index providers’ domicile rules, historically, has been where the company is incorporated. For many companies, that’s the same country as their headquarters, where they do most of their business and where most of their stock trades. But other companies mix it up in this increasingly globalized world. So all index providers, including the Russell indexes and MSCI Inc., deal with these realities by considering a long list of criteria.

As part of the consultation, S&P Dow Jones is asking whether it is “sufficient that a company be incorporated in Canada and listed on the TSX, or should additional requirements be considered to ensure significant connection to Canada? (e.g., meaningful operational presence in Canada).”

S&P Dow Jones proposes to implement the changes with the June, 2025, rebalancing, which is effective after the close on June 20.

The Big Six banks all performed well during the last few weeks’ earnings reports. And Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) was one of them. However, despite beating analyst estimates, the stock continues to trade down since the earnings report. So, what’s happening, and what should investors do with CIBC stock on the TSX today?

What happened?

CIBC stock announced a strong earnings report yet again for the quarter. The company announced adjusted earnings per share (EPS) of $3.93 — 45% higher than the year before. Net income was also on the rise — up 48% year over year to $1.73 billion — and total revenue was up 7% to $5.06 billion. Meanwhile, the rise in loan demand continued to increase, up 4% since last year. Best yet, CIBC reported a $99 million reversal of credit losses. That’s compared to a credit loss provision of $525 million last year!

The issue came with expenses. CIBC stock had to join the club when it came to decreasing expenses to clients and thus increasing its own. The Big Six bank announced it would reduce trailing commissions and management fees. The company also may see a decrease in the future from low interest rates in the short term on the TSX today.

So what?

The combination of having to continue to be competitive while also modernizing and adjusting for low interest rates put a lot of pressure on CIBC stock. Instead of rising as some of its peers have, there was a pullback in the stock after reaching all-time highs. That’s despite excellent news for the company.

Even though it looks like it can afford the lower rates and taking on lower fees, it’s bound to come back to haunt them in the near future. This could also mean a reduction in share price in the future.

However, analysts believe the pull back is actually more due to the huge share growth that happened on the eve of earnings. So, it’s more likely investors wanted to get in on the action and take their returns. After all, it entered the pandemic behind its peers and is now set to outperform, according to analysts. This comes from above-average mortgage growth, culminating with the best share performance it’s had of any of the Big Six banks over the last six months.

Now what?

Motley Fool investors may want to seize this opportunity to buy some CIBC stock while it’s down. Analysts continue to put the average share price in the next year at $158. That’s a potential upside of 8% as of writing.

You’ll notice that’s definitely not as strong growth compared to the last year. CIBC stock is up 51% in the last year, and that’s simply not share growth that is sustainable. However, if you look back, CIBC stock has proven to be a strong choice for Motley Fool investors. It rebounds quickly after market crashes and has continued to make improvements that drive share growth.

On top of that, Motley Fool investors can pick up CIBC stock on the TSX today with a P/E ratio of 11.2. That’s incredible value considering the past and future growth of this company. Not to mention the stellar dividend yield of 3.99% as of writing. So, while you might see some short-term volatility, this is the perfect stock to have in your long-term portfolio.

Piling pressure onto a Canadian economy already suffering disruption due to new U.S. tariffs and threats of an all-out trade war, China on Saturday imposed new levies against $3.7-billion worth of Canadian agricultural and food products.

In a long-awaited response to Canada’s decision last August to impose a 100 per cent tariff on electric vehicles, Beijing said it was introducing equivalent levies on Canadian canola oil, oil cakes and pea imports, as well as a 25 per cent duty on Canadian pork and aquatic products.

In a statement, China’s State Council said the initial Canadian tariffs, which also included a 25 per cent levy on Chinese steel and aluminium, had “seriously violated the rules of the World Trade Organization” and “damaged China’s legitimate rights and interests,” leaving it with no choice but to respond.

Notably however, while canola oil was included, the much larger sectors of canola seed and meal were not, suggesting Beijing may be leaving room to negotiate — or escalate, said Rosa Wang, an analyst with agricultural consultancy JCI.

More than half of Canadian canola exports go to China, and one of the first responses China announced to the Canadian tariffs last year was an anti-dumping investigation into the $5-billion worth of Canadian canola products exported to China every year.

Beijing previously banned Canadian canola during a period of high bilateral tension following the arrests of Huawei executive Meng Wanzhou and Canadians Michael Kovrig and Michael Spavor. That ban was lifted in 2022 after three years, to the great relief of the canola industry.

“The investigation on Canadian canola is still ongoing,” Ms. Wang said. “That canola was not included in the list of tariffs this time might also be a gesture to leave room for negotiations.”

China is Canada’s second-largest trading partner, trailing far behind the United States. Canada exported $67.5-billion worth of goods to the world’s second-largest economy in 2024, according to Chinese customs data.

Saturday’s measures cover just 5 per cent of that trade, but they come as Canada is facing intense pressure from new U.S. President Donald Trump, who has repeatedly imposed and then paused 25 per cent tariffs against all Canadian and Mexican imports, a potentially devastating blow to the tightly-intertwined North American economy.

On Thursday, Mr. Trump announced yet another a tariff reprieve on all goods compliant with the United States-Mexico-Canada Agreement, which covers a significant portion of Canadian exports to the U.S. But he has promised to introduce 25 per cent tariffs on steel and aluminum imports, including from Canada, and threatened reciprocal tariffs on Canadian lumber and dairy products.

The whiplash announcements out of the White House have left Canadian business and politics reeling, and raised severe uncertainty as the country heads toward a federal election expected this spring.

The timing of the Chinese measures may be aimed at reminding Ottawa to consider relations with its second-largest partner at a time when all attention is focused south of the border.

Canada’s EV tariffs came after a similar move by the U.S. and following consultation with the Joe Biden administration, much to the chagrin of Beijing, which has always complained about Ottawa following the U.S. lead on foreign policy. In late February, current U.S. Treasury Secretary Scott Bessent encouraged Canada to follow Mexico in matching Mr. Trump’s new tariffs against China.

Speaking to the Global Times, a Chinese state-run newspaper, Shi Xiaoli, director of the Beijing-based WTO Law Research Centre, said it was important for China to send the message that “if any nations try to gain U.S. favour by imposing extra tariffs on China in return for the U.S. to lift tariffs on them, then China will also use tools to defend its own interests.”

In a social media post, state broadcaster CCTV for China “it is not difficult to find alternative sources of goods imported from Canada, but for Canada, its alternative market space has been sharply compressed, which means Canada has to bear more losses.”

Dan Wang, China director at Eurasia Group in Singapore, said Saturday’s tariffs seemed to be a “warning shot.”

“By striking now, China reminds Canada of the cost of aligning too closely with American trade policy,” she said, adding however the delayed response to last year’s measures may also reflect “both capacity constraints and strategic signalling.”

“The commerce ministry is stretched thin, juggling trade disputes with the U.S. and European Union,” Ms. Wang said. “Canada, a lower priority, had to wait its turn.”

Saturday’s tariffs come a day before Canada’s next prime minister is chosen by members of the ruling Liberal Party. Some Chinese analysts previously told The Globe and Mail there may be space for a reset in testy Sino-Canadian relations with the exit of Prime Minister Justin Trudeau, during whose period in office ties frayed significantly.

That could follow a pattern seen with Australia: relations between Beijing and Canberra entered a deep freeze in 2020 after then Prime Minister Scott Morrison called for an international investigation into the origins of the COVID-19 pandemic. That year, China imposed tariffs, bans and other restrictions on key Australian exports, including barley, wine, beef, coal, lobster and timber.

Beijing did not begin lifting the bans until 2023, one year after the opposition Labor Party ousted Mr. Morrison’s coalition and Anthony Albanese became prime minister.

While most observers are skeptical of a similar reset taking place between Canada and China — given the Conservatives are traditionally seen as being tougher on China than the Liberals — Mr. Trump’s aggressive posturing has scrambled geopolitics and left many countries seeking friends elsewhere, something Beijing has been keen to capitalize on.

Speaking this week, Chinese Foreign Minister Wang Yi hit out against Mr. Trump’s “America First” policies, saying “might does not make right” and framing China as the more responsible global actor.

“We are living in a changing and turbulent world, where certainty is becoming a scarce resource,” Mr. Wang said. “China’s diplomacy will stand firm on the right side of history and on the side of human progress. We will provide certainty in this uncertain world.”

With files from Alexandra Li in Beijing and Reuters