Investment

Executive:

Stagflation

is

Here

to

Stay,

Regardless

of

Tariffs

By Kevin Press

March 11, 2025

Excerpt:

The Canadian economy has entered a period of stagflation that will impact market returns in the years ahead, says Stephen Johnston, director of Omnigence Asset Management in Calgary. Regardless of whether U.S. President Donald Trump makes good on his threats to impose tariffs on Canadian imports, portfolio managers will have to adapt to a new period of slow economic growth and stubborn inflation.

Make no mistake though. A trade war will make matters worse. “I don’t think you can continue on as you’ve done historically,” Johnston said.

We’re not the only economy facing down a slow-growth, high-inflation future. Any country that depends significantly on U.S. consumers for its goods is at risk, as Washington seeks to rebuild America’s domestic manufacturing base. “Canada is the poster child for that,” Johnston said. “We’re the most reliant, as a percentage of our GDP, on the U.S. as a counterparty.”

Johnston said that Canada’s predicament is its own doing. “We’ve really painted ourselves into a corner,” he said. Other developed economies invest greater sums than we do in productive capital — machinery and intellectual property, for example — that contributes to economic growth. According to Statistics Canada, residences make up about 54% of total fixed capital stock in Canada.

Original article here