Governments in Canada Rush to Issue Bonds as Trump’s ‘Liberation Day’ Arrives

Governments across Canada are rushing to issue bonds as U.S. President Donald Trump initiates “Liberation Day,” the next phase of his protectionist trade agenda.

The exact details of the import tariffs the Trump administration plans to impose on Canadian goods remains unclear. However, Trump has said that he is considering slapping across the board tariffs of 20% on all imports into the U.S., a move economists say would be disastrous for the global economy.

Across Canada, businesses, governments, and consumers are preparing for the worst as additional U.S. tariffs go into effect today (April 2). Canadian provinces, facing the prospect of bigger deficits, are selling more bonds.

Bond Sales

Seven provinces, including the largest Ontario, plan to raise nearly $30 billion from bond sales. That’s more than quadruple the $6.7 billion raised through bonds in 2024. Early indications are that investors have been receptive to the provincial bond sales, with demand rising to meet supply.

The federal government has also pledged financial support to small and medium-sized businesses across Canada through low-interest rate loan guarantees to help them with the impacts of tariffs. Many businesses ordered a flurry of products and materials ahead of the April 2 deadline for Trump’s tariffs to come into effect, buying items before they were hit with extra duties.

The Bank of Canada has warned that a trade war with the U.S. would likely push the country into an economic recession and there are early indications of a slowdown taking place. Preliminary results from Statistics Canada show that the Canadian economy posted no growth in February of this year.

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The iShares S&P/TSX 60 Index (TSE:XIU), which tracks the 60 largest securities on the Toronto Stock Exchange, has a consensus Moderate Buy rating among 61 Wall Street analysts. That rating is based on 53 Buy, six Hold, and two Sell recommendations issued in the last three months. The average XIU price target of C$43.79 implies 15.20% upside from current levels.

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