U.S. tariffs’ bark bigger than their bite: analyst

Market movers and shakers were forecasting a disaster last April as U.S. president Donald Trump threatened a tariff war on his international neighbours, but at least where equity markets are concerned, it has ended up being the furthest from the truth.

The initial panic in early April caused the S&P 500 to drop more than 18 per cent in less than three weeks.

“The markets were convinced we were heading into a recession. Everyone was talking about tariffs hitting around 25 per cent overall, and it could even be higher than that by April 8. Investors thought the trade war was about to devastate agriculture, manufacturing, everything on planet Earth,” Ashish Utarid of IG Wealth told the recent MNP AG Connections Conference in Medicine Hat.

“None of that has happened. Here we are in November 2025, and we’re sitting at all time highs on the equity markets.”

Why it Matters: Panic and reality are two different things in the aftermath effects of Trump’s tariffs on Canada and other international partners.

At the time of the presentation, the over-the-counter securities market was up 24 per cent, the S&P 500 rose 17 per cent, Europe 18 per cent and Germany was more than 23 per cent.

If tariffs had indeed hit 25 per cent, agricultural producers and companies would not have been able to absorb it, consumers would have paid more and inflation would have spiked, so countries made deals.

Fifty-five days after the 18 per cent drop, the S&P 500 had recovered all of its losses and hit new highs. The effective tariff rate was not 25 per cent. Instead, it ended up being around 11 per cent.

Utarid said Canada is in a labour recession, but the tariffs ended up being targeted in order to boost U.S. manufacturing. The country left alone items such as semiconductors for artifical intelligence, critical minerals, pharmaceuticals and agricultural products that the U.S. does not grow itself.

“If you look at potash, just the commodity price alone in Canadian dollars, is up over 18 per cent this year,” he said.

“Coffee is more than 50 per cent, but there are certain things that they want to produce down in the States that are hurting those prices for you today. So as much as this seems like economic chaos, it was calculated leverage.”

He said there is no guarantee that tariffs are going to be eliminated or that there is going to be trade utopia for agricultural producers, but agriculture can look at four pillars in the upcoming year.

Central banks are cutting rates.

The Bank of Canada has an overnight rate of 2.25 per cent as its overnight rate, and the U.S. Federal Reserve is taking similar steps. Utarid said it is not because the economy is tanking but to control inflation.

“Lower rates equals lower financing costs. If you’re managing equipment purchases or land acquisition, working capital throughout the season, your borrowing costs are coming down, and that’s real money,” he said.

“Rate cuts also compress the discount rate when we’re looking at cash flows for big businesses, for businesses that generate steady income, predictable cash. This is a tailwind for you because your future earnings are worth more when interest rates are lower.”

Governments around the world are spending money.

In Canada, Ottawa is front loading spending on housing, productivity and infrastructure, and the recent federal budget has explicitly said that it is expansionary, which means big deficits.

“When governments are spending and the tax cutters are in place, demand stays up, and consumer spending stays up, Utarid said.

“But here’s the onus part, these government supports, they’re just a bridge, they’re not a destination. The 2026 questions for you and your operations is whether this government will support you through it, and what are you doing during this window to position yourself better?”

Utarid sid AI may be taking jobs, but it is here to stay and can benefit the agricultural industry.

He said the eight largest tech companies in the world — Nvidia, Tesla, Microsoft, Meta, Alphabet, Amazon, Apple and Oracle — have committed $150 billion in capital expenditure spending, which is 1.5 per cent of total U.S. gross domestic product from a handful of companies.

It has created fears of another tech bubble like the one that burst 25 years ago, he added, but the current landscape is funded differently.

“They’re funding it from cash flows, not from borrowing,” he said.

“What was different about the tech model in the early 2000s was those companies had no revenues. They had no cash. They were using investor and shareholder inputs in order to spend egregiously, and then had no revenues to actually back it up. The companies (now) are doing enough cash flow. They have the ability to double down and they also have the ability to pay.”

Utarid sees under-investment in artificial intelligence as a bigger competitive risk than over-investment for the agricultural sector, with its precision farming, AI-driven crop predictions, input optimization and processing efficiency.

“These are phenomenal innovations, but this timeline is going to take years, at minimum, two to three years just to get some of these products in place. But the good news is that the capital is flowing. There’s cash available for these innovations, and the hope is is that productivity will emerge.”

Utarid said the top 20 per cent of earners own 85 of the equity market and 40 per cent of all spending.

“Research shows that each dollar of household wealth increasing generates up to 34 cents of incremental spending, and that spending shows up in goods, services, premium products and even value-added agricultural products, and right now, discretionary spending is outpacing staples. So people are not just spending on their needs, but also other wants,” said Utarid.

”Agriculture isn’t going away. And those of you that can survive and thrive in 2026 are going to be the ones that adapted smartly, positioned deliberately and moved.”

Tags: U.S., panic, markets, tariffs, agricultural sector, Canada, forecast