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President Donald Trump's imposition of sweeping tariffs on Canadian goods in early 2025 has triggered significant economic repercussions across Canada. The 25% tariffs, particularly targeting sectors like steel, aluminum, and automotive parts, have led to a sharp decline in Canadian home sales, which fell to their lowest March levels since 2009. The Canadian Real Estate Association attributes this downturn to heightened uncertainty stemming from the tariffs, noting a 4.8% drop in sales from February and a 9.3% decrease year-over-year. Additionally, the Bank of Canada has characterized the situation as a "once-in-a-century economic shock," warning of potential recessionary impacts, increased inflation, and rising unemployment rates .​

The financial markets have also felt the strain, with significant losses observed in both Canadian and U.S. stock indices. The S&P 500 and Dow Jones Industrial Average experienced notable declines as investors reacted to the escalating trade tensions and the potential for prolonged economic disruption. In response to the tariffs, the Canadian government has implemented retaliatory measures and is seeking to safeguard its economy by updating the Investment Canada Act to prevent "predatory" foreign investments that could exploit weakened Canadian businesses .​

Beyond immediate economic indicators, the tariffs have strained diplomatic relations and affected cross-border investments. Canadian pension funds, which have historically invested heavily in U.S. real estate, are reassessing their portfolios due to the increased geopolitical risks. Furthermore, Canadian public sentiment towards the U.S. has soured, with a significant portion of the population expressing a desire to reduce economic reliance on their southern neighbor. This shift in attitude is reflected in decreased travel to the U.S. and a growing "Buy Canadian" movement .​

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