It’s almost impressive how Trump manages to create chaos where none previously existed. On Monday, March 3rd, he announced that a 25% tariff would, in fact, be slapped on Canada and Mexico, effective March 4th., stating that “there is no room left” for a deal. The stock market immediately panicked, with the Dow Jones Industrial Average nosediving more than 600 points and the Nasdaq shedding close to 500.

Bond yields took a dramatic plunge, hitting their lowest point since February 2022. Back then, the lowest 5-year fixed mortgage rates were in the mid to high 2% range.

 

Does This Mean Fixed Mortgage Rates Are About to Drop Like a Rock?

I wouldn’t count on it. 

While bond yields are one of the biggest factors influencing fixed mortgage rates, they aren’t the only game in town. Market volatility and overall risk also weigh in heavily. And let’s be real—when Trump is involved, volatility and risk are practically guaranteed.

Yes, there’s now some downward pressure on fixed rates, so we could see lenders make some cuts. But expecting them to fall back to early 2022 levels? There is far too much volatility in the market to expect anything close. If fixed mortgage rates do drop, it would not be anything too significant. 

 

Will Trump Backtrack on the Tariffs?

On Tuesday, U.S. Commerce Secretary Howard Lutnick hinted that Trump would ‘probably’ propose a tariff relief deal for Canada and Mexico on Wednesday, March 5th. At the time of writing, we’re still waiting.

But let’s be honest—implementing tariffs on America’s two biggest trading partners is like shooting yourself in the foot and wondering why it hurts. The U.S. already has an inflation problem, and this move will only pour gasoline on that fire.

American retailers aren’t wasting time passing the costs onto consumers. Target CEO Brian Cornell warned in a CNBC interview that grocery prices would rise within days. According to the Washington Post, gas prices could jump by 20 cents per gallon, avocados might cost an extra 50 cents each, and new car buyers could see prices climb by thousands.

 

Will the Bank of Canada Cut Rates Next Week?

The next Bank of Canada announcement is set for March 12th. Before the tariff news broke, it looked like the BoC was going to hold steady, given that inflation ticked up in January. But as I’ve said before, one big news event can change everything. And tariffs? That’s a game-changer.

Now, a rate cut from the Bank of Canada is looking much more likely.

 

My Final Thoughts

You’d think that after watching the stock market tank every time he talks about tariffs, Trump might start to connect the dots. But here we are.

That said, I still believe he’ll eventually backtrack. Tariffs were a major campaign promise, and he’s following through—at least for now. But at some point, economic reality will force his hand into pulling them back. The big question is: when, and by how much?

One thing is certain—this news is moving fast. By the time you read this, some details may have already changed. That’s just the nature of the beast. Stay tuned, because this ride is far from over.