Everbright Bank: Trump's threat to Canada is considered lacking in credibility, but it is exacerbating volatility.

Derek Holt of Prosperity Bank believes that the threats made by President Trump over the weekend towards Canada lack detail and credibility. Holt said that Trump threatened that if Canada reaches an agreement with China, all goods exported from Canada to the US could potentially be subjected to a 100% tariff. If this threat is implemented, it could have a devastating impact on businesses in multiple industries in the US, and many goods may no longer be economically viable to supply. The economist said that market reactions could mirror the "Liberation Day" trading patterns seen in April 2025 after the tariff policy was announced, with investors perceiving much higher national risk in the US and selling off assets across the board. He added that if this threat were to be implemented, it would face enormous retaliatory pressure. However, this instability will only increase Canada's reasons to diversify and reduce reliance on the US. Over the next decade, the percentage of Canadian exports to the US may continue to decline.