The 10-Minute Take

The U.S. unemployment rate has remained near historic lows amid massive uncertainty from trade wars.

A long-term structural trend—surging retirements—is keeping the unemployment rate from rising drastically even during short-term cyclical deterioration in the labour market.

In this episode of the 10-Minute Take, RBC Economics’ Carrie Freestone and Claire Fan discuss:

• The mechanisms of how record retirements keep the unemployment rate low over the medium-term.

• Why the U.S. arguably needs more new workers than it needs new jobs.

• How these structural forces will play out with near-term cyclical forces (like a labour market deterioration).

• How immigration policy in Canada has blunted—but not fully eliminated—the cost of population aging.

Oil prices spiked last week following escalating conflict in the Middle East between Israel and Iran. This has raised concerns about higher inflation against an already uncertain economic backdrop.

In this episode of the 10-Minute Take, RBC Economics’ Claire Fan and Carrie Freestone unpack:

• How high inflation could hit in Canada and the U.S. if oil prices continue higher.

• How higher energy prices could impact growth.

• What this could mean for interest rates in Canada and the U.S.

An enormous U.S. government deficit continues to raise concerns about fiscal sustainability as Moody’s joined other rating agencies in downgrading the U.S.’s credit rating.

This raises questions about the implications for U.S. monetary policy, interest rates, and the impact on neighboring economies.

In this episode of the 10-Minute Take, RBC Economics’ Claire Fan and Carrie Freestone explore:

• Why fiscal challenges may be limiting the U.S. Federal Reserve’s ability to cut interest rates.

• How the recent "Big Beautiful Bill" could add to the fiscal burden.

• What these trends mean for Canada’s economy and monetary policy.

The U.S. administration reducing tariffs on Chinese imports from a staggering 145% to 30% marked a significant breakthrough in the ongoing trade war. But, the average effective U.S. tariff rate still sits at 13%— and fundamental trade headwinds haven't disappeared.

In this episode of the 10-Minute Take, RBC's Economics Claire Fan and Carrie Freestone take you through how our forecasts for U.S. core inflation, consumer spending and growth have changed with the reduction of Chinese tariffs. They also tackle:

• How an unwinding of tariffs on Chinese imports will impact our outlooks for U.S. core inflation, consumer spending, and growth.

• How this policy shift factors into the U.S. Federal Reserve’s interest rate decisions for 2025.

• Whether Canada's economic outlook will be impacted by U.S.-China trade developments.

The trade war is changing travel plans. As tensions simmer, Canadians’ trips to the U.S. dropped substantially in early 2025 compared to last year.

But, vacations weren’t cancelled altogether—Canadians are just going somewhere else. And, this trend of travelling less to the U.S. isn't unique to Canada – arrivals to the U.S. from other countries have also slumped this year.

In this episode of the 10-Minute Take, RBC economists Claire Fan and Carrie Freestone explore:

• How travel patterns have changed in 2025 to reflect broader trade tensions.

• Whether tourism within Canada will rise to offset international declines.

• How these trends may impact the services sector’s outlook and trade deficits.

Full-blown reciprocal U.S. tariffs are on pause for 90 days, but sizeable 10% tariffs imposed on most countries on April 5 remains in place, and it, along with steep tariffs on imports from China, could have significant implications for the country’s inflation and growth.

The U.S. trade-weighted average tariff rate is currently at its highest since the 1930s, but, in a twist of fate, Canada has emerged as one of the least impacted countries, thanks to USMCA exemptions.

RBC Economics has updated forecasts for the U.S. and Canada to reflect these developments. In this episode of the 10-Minute Take, Claire Fan and Carrie Freestone attempt to answer these questions:

· How will tariffs influence inflation and GDP growth in the U.S. and Canada?

· Will either country see a recession in the coming year?

· What could future policy from the Bank of Canada and Federal Reserve look like?

More attention is being focused on how Canada can better diversify trade to alternative sources as U.S. tariffs and threats continue to escalate.

In the goods trade, Canada's geographical proximity to the U.S. makes it difficult to diversify away from the U.S. But, that is much less of a constraint for services.

In this episode of the 10-Minute Take, economists Claire Fan and Carrie Freestone dig into:

• How much services Canada trades and with who?

• Is Canada is well positioned to leverage services for broader trade diversification?

• What are the headwinds facing services amid the ongoing trade war?

Consumers and businesses on both sides of the border have been paralyzed with uncertainty related to trade. Confidence has tanked and we've also witnessed a notable deterioration in other “soft” sentiment data in recent months.

The extent that recent trade policies have impacted hard data is unclear but matters more for central bank decisions. In this week’s episode, RBC Economics’ Claire Fan and Carrie Freestone break down how trade turbulence is impacting labour markets in Canada and the U.S., and what to expect next in the ongoing trade war.

Economic data has shown that Canadian inflation was a little firmer than expected in early 2025, especially after considering the impact of the federal tax holiday that pushed prices lower for a few categories including restaurant dining.

In the U.S., the picture is a bit “stickier.” Broadly resilient consumer demand has been keeping price pressures at uncomfortably high levels, and not all U.S. households are impacted equally. Those that earn less tend to have less options in avoiding higher priced essentials.

Join RBC Economics’ Claire Fan and Carrie Freestone as they give their latest take on inflation, and how the looming trade rift plays into that.

As the threat of tariffs has been evolving, economists have been busy assessing the potential economic fallout. In this episode, RBC Economics’ Carrie Freestone and Claire Fan discuss:

-What we know about the tariffs announced, what retaliation could look like and how these forces will impact both the Canadian and U.S. economies.

-What Bank of Canada Governor Tiff Macklem said in the January meeting about how the Bank could respond.

-How markets reacted to tariff news and how we are assessing the balance of risk between a hit to demand and price pressures arising from potential policies.

Join us as we unpack how we’re thinking about the potential damage from a trade war.