While Canadians escaped the new tariffs announced by US President Donald Trump on Wednesday, the previous tariffs announced by Trump in March remain in place, and will have an impact on fixed mortgage rates, auto insurance and savings investments, according to personal finance planners at Ratehub.ca.
Mortgage rates
“While Canada emerged from this latest tariff round comparatively unscathed, global markets are reacting harshly to Trump’s widened trade war agenda,” says Penelope Graham of Ratehub.ca.
“Investors are flocking to safe-haven investments; Thursday morning, five-year Canadian bond yields dropped to the 2.4% range, a low not seen since April 2022. This puts strong downward pressure on fixed mortgage rates, following cuts that already occurred over the past week.”
It puts into question how the Bank of Canada views the tariffs and what it might do at its next rate announcement on April 16.
“While exemption from reciprocal tariffs takes some of the domestic recession pressure off the Bank of Canada, they’ll be keeping a close eye on the global impact, especially as affected countries, and slower growth in the US, will still deeply impact our trade industries,” says Graham.
“While rising inflation makes a rate hold most likely in the central bank’s next announcement, its Governing Council has made it clear they’re ready to react if needed to an evolving economic climate.”
Auto insurance
"The 25% tariffs on the automotive industry are expected to trigger immediate and severe repercussions that could significantly harm the sector,” says Ratehub.ca.’s Vice-President of Insurance, Matt Hands.
“Although the exact impact on insurance premiums remains unclear, the costs of vehicles and repairs are certain to increase."
“Rising vehicle and parts prices will drive up car values and repair costs, leading to higher insurance premiums,” says Hands. “Insurers may adjust coverage rates, like collision insurance, due to more expensive repairs. Increased auto and parts prices could also raise total loss claims, affecting premiums for all Canadian policyholders.”
Retirement and other investments
“If you're concerned about the financial impact of tariffs, prioritizing your emergency fund is essential. A solid emergency fund offers peace of mind and security in the face of unexpected events, like rising costs or job loss. Aim to save at least six months’ worth of living expenses to cushion against potential income disruptions or price hikes,” says Natasha Macmillan, director of everyday banking at Ratehub.ca.
“In uncertain economic times, low-risk, long-term investments such as GICs, HISAs, TFSAs, and RRSPs provide stability and help safeguard your savings. These options offer steady growth while minimizing exposure to market volatility. GICs provide predictable returns, making them a reliable choice for stability, while TFSAs and RRSPs allow tax-free or tax-deferred growth, maximizing your returns.”
Enlarge and vary your portfolio, says Macmillan.
“To enhance your investment strategy, ensure your portfolio is well-diversified with a mix of long-term assets suited to your life stage and financial goals,” she says. “Regularly reassess your investments to balance safer, stable options with growth opportunities, particularly if you’re facing economic challenges or tariff-related concerns.”
“Maximizing competitive rates and maintaining a thoughtful investment approach can help shield your finances from inflation and uncertainty.”
Paying down as much debt as possible should be a priority, adds Macmillan.
“The less debt you carry, the more financial flexibility you'll have when challenges arise. If tariffs lead to higher costs, reducing high-interest debt can free up more of your income to handle price hikes and the cost of living.”
An efficient debt strategy is the ‘avalanche method’.
“It focuses on paying off high-interest balances first or consolidating your debt through a balance transfer credit card or personal loan,” says Macmillan.
“Not only does paying off debt relieve financial stress, but it also creates room for you to build an emergency fund or invest in low-risk options, giving you the confidence to navigate any economic challenges ahead.”