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Prime minister-designate Mark Carney and his cabinet will be sworn in on Friday, according to a CBC report.

The change of power, along with a meeting scheduled between Canada and US officials on Friday could pave the way for some deescalation on tariffs.

That could be a Canadian dollar tailwind.

Secondarily, Carney is expected to call an election in short order, perhaps by the end of the month followed by a 6-8 week campaign.

Canadian polls have significantly tightened and are near a dead heat in a big shift from a Conservative runaway lead at the turn of the year.

Finally, I would expect Carney to call an election soon because some recessionary winds are blowing and that will reflect poorly on the governing Liberals.

Update: Bloomberg reports that he will shrink cabinet to 15-20 members from the current 37. That he’s considering keeping a cabinet at all suggests he might be stretching out the timeline for an election. Alternatively, it could just mean that they only need the bare-bones ministers during a campaign.

This article was written by Adam Button at www.forexlive.com.

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• Prior was 22 (revised to 21)

This is the lowest reading since September and the metric for home buyer demand was at the lowest since November 2023.

This article was written by Adam Button at www.forexlive.com.

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In one sense, US President Donald Trump seemingly has a winning communication formula by calling for reciprocal tariffs. What that means is — whatever tariff rates a country charges the US, the US will hit back with.

That makes sense to most people but it begins to fall apart in practice.

For one, many countries aren’t interested in US exports of things like farm goods or autos and already don’t export those things to the US, so they’re pointless. Secondarily, the US may need things that have tariffs on them and the exporting country may not. Think of avocados from Mexico, which are heavily purchased by the US. If Mexico were to have tariffs on US avocados (which are barely shipped south) then reciprocal tariffs wouldn’t accomplish anything except to drive up domestic costs.

More importantly for the short term though is the idea that the US has floated in the case of Europe, Canada and others — that VAT or sales taxes are tariffs. It’s an absurd take, that borders on disbelief. But so does the idea that 0.03 pounds of fentanyl crossing intercepted at the Canada-US border in Dec-Jan is an emergency that justifies 25% tariffs.

If that’s the line that Trump wants to take, the it would be an excuse from tariff levels of 5% (Canada) to upwards of 20% (the UK and Italy). VAT taxes are used in 175 countries. In addition, sub-national governments in those areas may also have sales taxes, complicating the calculation. (It’s also worth highlighting that California’s sales tax is 7.25%, Tennessee is at 7% and Arkansas is at 6.50%, with local governments often adding to those).

The whole thing is a mess.

“The problem is the U.S. administration looks poised to treat those domestic consumption taxes incorrectly as tariffs, and could impose an average reciprocal tariff rate of the same rates,” RBC writes. “In reality, value added taxes like [Canada’s] GST do not discriminate against imports in the way that a tariff would.”

For Canada, the considerations are huge. According to the World Trade Organization, the average tariff rate on US imports is just 1.1% but if the US tries a tariff rate at 5% or higher, it would beg for retaliation.

Perhaps even more dangerously, using VAT taxes as a ruse for ‘reciprocal tariffs’ would undermine any reasonable justification for tariffs. It would beg for an international response and a Congressional one.

We will see what comes with Trump’s promised April 2 reciprocal tariff announcement.

This article was written by Adam Button at www.forexlive.com.

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