2025-2029 Surrey Financial Plan

ECONOMIC OVERVIEW

50.0%. US trade officials admitted that the aim of the tariffs is to have balanced trade with other countries and to compel companies to invest and create jobs in America as a means to avoid punitive tariffs. Countries around the world had different responses to the tariffs; some attempted negotiations with the US, some retaliated in equal measure, and others chose to target their retaliation to specific industries and economic sectors. On April 9th, the day when reciprocal tariffs were set to come into effect, President Trump dramatically reversed course and signed an executive order to pause the country-specific tariffs for ninety days and applied a universal 10.0% tariff all trade partners except for China. In an escalation of the trade war between the two economies, the US retaliated against counter tariffs and raised the total duties on Chinese imports to 145.0%. China responded in kind with total duties of 125.0% against US goods. The US and Chinese governments are both trying to convince world leaders that their country is the more reliable trading partner. The unpredictable, chaotic and adversarial trade approach that the US administration has taken thus far may provide China with more leverage as global leaders become increasingly frustrated with US policies and foreign relations. UNITED STATES The US Federal Reserve (“Fed”) kept its benchmark interest rate unchanged during the March meeting citing concerns over inflation and uncertainties around the economy. US inflation remained higher than pre-pandemic levels, with the Consumer Price Index (“CPI”) coming in at 2.8% in February, and then dropping to 2.4% in March. The slowdown in price growth would normally create optimism that Americans’ cost of living is not increasing. However, consumer surveys showed consumers’ expectations of inflation are rising. According to monthly surveys, consumer expectations of annual inflation rose from 2.8% in December to 6.7% in April. The swift rise in inflation expectations will directly impact consumer consumption and business investments, likely leading to higher unemployment and an economic downturn. The US unemployment rate came in at 4.2% in March, edging up from a prior low of 3.7%, driven higher in part by new participants in the labour market. The employment gains in the first quarter of 2025 averaged 152,000 per month compared to an average of 276,000 monthly job gains in the last quarter of the prior year. US tariff policies pose a meaningful threat to the Fed’s progress towards battling inflation. The central bank is closely monitoring the unemployment rate

CAD to USD 5YearTrend

and CPI, stating that it stands ready to support the US economy through the possible turbulence ahead. US tariff policies are creating upheaval in domestic and global financial markets with US stock and bond markets plummeting, along with the US dollar. The US dollar index, which measures the strength of the US dollar against other major currencies, fell

0.84

0.82

0.80

0.78

0.76

0.74

0.72

0.70

0.68

0.66

0.64

Source: Bank of Canada

City of Surrey | 2025—2029 Financial Plan | Financial Overview

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