Trump 2.0: The First 100 Days | Canada

TRUMP 2.0 THE FIRST 100 DAYS

IMPLICATIONS FOR THE ECONOMY & PROPERTY

CANADA

As of April 28

Cushman & Wakefield

Executive Summary

The Economy

Property

• In the first 100 days, we have observed a hard shift in economic policy under President Trump . From trade policy to immigration, DOGE to tax and spending policy — the Trump Administration has been busy. • Given the flurry of changes, the word that dominated the marketplace in the first 100 days was uncertainty. • The Canadian economy has remained resilient so far, but the policy uncertainty is beginning to weigh on some of the leading indicators pointing to slower growth ahead . • Recession odds are rising and short-term stagflation — meaning slowing economic growth and sticky inflation — is emerging as the new consensus for 2025. A stronger growth scenario is forming for 2026 . • The situation remains fluid with many developments still unfolding, and there may be both potential benefits and drawbacks to these policy changes that will unfold over time.

• The property sector has largely remained resilient through the first 100 days. The leasing fundamentals held mostly steady while the capital markets were still finding their way but showing flashes of early green shoots. • Industrial and retail will be most impacted by the tariffs, but overall, the leasing fundamentals are expected to remain resilient. Assuming no recession, our base case calls for a near-term slowdown in occupier demand, with upside materializing in 2026. • Rising construction costs will put some upward pressure on costs and slow the construction pipeline which was already slowing going into 2025. Existing assets will likely benefit on a relative basis . • It will continue to be a bumpy road for the capital markets in 2025. In addition to the price recalibration, investors will also need to navigate through the tariff uncertainty. As the uncertainty fades, the recovery in the debt and capital markets will resume and gain more pace in 2026.

Cushman & Wakefield

Demand for Space Mixed Bag So Far Trailing Four-Quarter Net Absorption

Key Observations

• The CRE sector came into 2025 with

momentum in some sectors. As the table shows, demand for space is a mixed bag depending on the sector. • Through Q1, despite the uncertainty, demand for space has held up. Quick recap: Office net absorption continues to be negative but is trending better and the flight to quality continues. Multifamily had another strong quarter in Q1 following an above average year in 2024. Industrial demand has clearly slowed from the staggering growth years coming out of the pandemic but was mainly negative in Montreal and resilient elsewhere throughout Canada. Retail’s main issue is lack of supply as this sector is >98% occupied.

2024 Q1

2024 Q2

2024 Q3

2024 Q4

2025 Q1 General Trend

Strengthening (becoming less negative)

Office (MSF)

-4.1

-5.3

-5.2

-1.1

-2.9

Weakening (driven by one market)

Industrial (MSF)

6.5

-1.7

-3.9

-2.9

-7.5

Multifamily (000s)

Strong and stable

14,800

14,500

15,400

14,300

14,900

• Clearly a weaker economy will result in

weaker demand for space going forward, but in general, assuming a recession is avoided, the leasing fundamentals are generally expected to remain resilient.

Weakening (very limited space options)

Retail (MSF)

5.5

5.6

5.3

5.2

2.6

Source: Cushman & Wakefield Research, CoStar/Cushman & Wakefield Research

Cushman & Wakefield

Canada Capital Markets Lagging

Key Observations

• Heading into 2025, there was growing sentiment in the CRE investment space.

Sales Volume Slightly Down (YOY)

Pricing Still Correcting

• Although most global regions were showing signs that a trough in markets had been reached in both pricing and volumes, Canada appears to be lagging. In Q4 2024, volumes continued to mildly decline at a ~10% YOY pace for the third quarter in a row, while others saw stabilization or increases: APAC (-5.5%, less than Q3 2024 when the decline was -16.3%), Europe (+16.8%) and the U.S. (+15.0%). Likewise, Canada’s CPPI has not mimicked patterns in other regions and is 1% off its Q3 2024 peak. By comparison, the U.S. All Property CPPI is down 11% after peaking in Q2 2022. • Although all sectors have been hit by the recent market sell-off, CRE pricing has been relatively more resilient in public markets and during periods of uncertainty — especially those accompanied by inflation — hard assets tend to be favored. • Despite that, rising uncertainty may create a cloud over investor sentiment that derails some of the recent positive progress.

245

200%

150%

240

100%

235

50%

6.5%

230

0%

-10.3%

-50%

225

-100%

220

22Q1

22Q2

22Q3

22Q4

23Q1

23Q2

23Q3

23Q4

24Q1

24Q2

24Q3

24Q4

22Q1

22Q2

22Q3

22Q4

23Q1

23Q2

23Q3

23Q4

24Q1

24Q2

24Q3

24Q4

Global

Canada

Canada All Property CPPI

Source: MSCI Real Capital Analytics

Cushman & Wakefield

4

TRADE BETWEEN CANADA AND THE U.S.

Tariffs Will Spike, then Drift Lower U.S. Effective Tariff Rate on All Goods Imports, %

Impact on CRE

• Tariffs are clearly a big part of why there has been a spike in uncertainty and market volatility. • The initially announced reciprocal tariffs (April 2) were paused for 90 days on April 9, and tariffs on China were raised to 145%. The net impact was an increase in the overall effective tariff rate. • As of April 24, we estimate the effective tariff rate — think of it as the average tariff rate on all imports into the U.S. — to be around 25%, up from 3% on January 20, 2025. • These are only static assumptions, meaning they assume import volumes remain unchanged. Dynamically, we expect imports from China to plummet which will effectively lower the overall tariff rate to around 17.5%. rate will gradually come down as the economic damage mounts and as trade deals are negotiated. • Tariff policy is changing rapidly, and occupiers and investors alike should consider multiple potential scenarios to ensure adequate preparedness. • Our baseline assumes that the effective tariff

30

Effective Tariff Rate (C&W Baseline), %

Liberation Day (Apr 2)

25.4

25

90-day pause, China increase to 145% (Apr 9)

20.5

20

Tariffs slowly fall off in 2026 as trade deals are negotiated

17.5

15

July 1 2026: USMCA renewal

Effective tariff rate climbs from 1.5% to 3%

10

Trump’s second term

Trump’s first term

5

0

2015Q1

2015Q3

2016Q1

2016Q3

2017Q1

2017Q3

2018Q1

2018Q3

2019Q1

2019Q3

2020Q1

2020Q3

2021Q1

2021Q3

2022Q1

2022Q3

2023Q1

2023Q3

2024Q1

2024Q3

2025Q1

2025Q3

2026Q1

2026Q3

2027Q1

2027Q3

Source: Moody’s Analytics, Cushman & Wakefield Research

Cushman & Wakefield

Timeline of the Trump 2.0 Trade Spat With Canada

Feb 10: Trump announces global 25%

Other Trade Actions

Mar 26: Global 25% tariff on steel and aluminum imports goes into effect.

tariff on steel and aluminum imports.

Mar 10: Global 25% tariff on steel and aluminum imports goes into effect.

Mar 1: Trump launches study on timber and lumber.

Feb 13: Trump announces upcoming reciprocal tariffs.

Apr 2: Reciprocal tariffs announced with April 8 implementation date. Canada exempted.

Feb 1

Feb 3

Feb 21

Mar 4

Mar 6

Mar 12

Apr 3

Apr 9

• Executive Order issued announcing tariffs on Canada, Mexico and China coming Feb 4. EO ends exemption from duties for de minimis packages. Tariffs on Canada are 25%, except for energy resources which are 10%. • Trump uses an tariffs with a 12% tariff rate fallback if the emergency expires. • USMCA compliant goods are NOT exempt from the 25% tariffs. emergency authority to impose these

• Canada announces two rounds of retaliatory tariffs. It plans to impose 25% tariffs on C$155B of U.S. goods with C$30B going into effect immediately (including on orange juice, wine/spirits/beer, coffee, appliances, motorcycles, etc.)

• Trudeau announces plan to secure northern border, and Trump responds with pause on tariffs until March 4.

• Trump ends pause on tariffs and the 25%/10% tariffs go into effect. • Canda’s retaliatory tariffs go into effect.

• Trump amends tariffs to make USMCA compliant goods exempt . • Tariffs on potash are lowered to 10% (from 25%).

• Canada plans round of retaliation on March 13, with 25% tariffs on list

• Canada announces 25% tariffs on non USMCA compliant vehicle imports from the U.S., 25% tariffs on non Canadian/non Mexican content of USMCA compliant vehicle imports from the U.S..

• Canada’s planned tariffs announced on April 3 go into effect.

of U.S. goods worth C$30B, including

C$12.6B of steel products, C$3B of aluminum and the rest comprised of tools, computers, servers, displays, sports equipment and

cast-iron products.

Source: Peterson Institute for International Economics

Cushman & Wakefield

U.S. Most Important Partner for Canada Canada’s Trade Flows with North American Partners

Key Observations

• In the past 12 months, Canada exported C$795 billion and imported C$802 billion.

• The U.S. remains Canada’s largest trade partner by a wide margin. The U.S. accounts for 77% of Canada’s exports and 49% of its imports. • Canada’s top sources for exports, besides the U.S., are, in order: the EU (4.4%), China (3.6%), Japan (1.9%), Mexico (1.1%), South Korea (0.9%), the UK (0.9%), Switzerland (0.6%) and India (0.6%). All other nations receive 0.5% or less of Canada’s exports. • Diversifying exports away from the U.S. in the immediate-term will be difficult given Canada’s extremely large dependence (77%). • Canada’s top sources for imports, besides the U.S., are, in order: the EU (11.1%), Mexico (6.1%), the UK (3.0%), Japan (2.7%), South Korea (2.2%), Brazil (1.4%), China (1.3%), India (1.1%), Switzerland, 1.1% and Taiwan (1.0%). All other nations comprise less than 1% of Canada’s imports.

Canada

77.0% of exports go to U.S. 49.3% of imports from U.S.

1.1% of exports go to Mexico 6.1% of imports from Mexico

16.8% of exports to Canada 12.4% of imports from Canada

3.1% of exports to Canada 2.0% of imports from Canada

16.2% of exports go to Mexico 14.9% of imports from Mexico

Mexico

U.S.

83.3% of exports to U.S. 39.9% of imports from U.S.

Source: Statistics Canada, U.S. Census Bureau, Instituto Nacional de Estadística Geografia e Informática (INEGI). Note: All data based on customs based method.

Cushman & Wakefield

Deeper Dive into Canada-U.S. Trade Exports From Canada to the U.S.

Key Observations

• Energy and derivatives of minerals are by far the largest category of goods that Canada ships to the U.S. — this group accounts for 30% of Canada’s exports to the U.S. (Energy-related exports and potash are subject to the 10% tariff, as a reminder.) • Autos, auto parts and other transportation equipment are the second largest category of goods exported to the U.S., making up just under 15% of the total. Autos are subject • Ontario (home to Toronto, Ottawa), Alberta (Calgary, Edmonton) and Quebec (Quebec City, Montreal) are the provinces where most exports destined for the U.S. are created. This does not mean they have the most concentrated economic exposure — just that they nominally account for the largest share of the U.S. export pie. • Provinces with the largest dependence on U.S. exports are Alberta (Calgary, Edmonton), New Brunswick (Moncton, Saint John and Fredericton) and Ontario (Toronto, Ottawa). to a 25% tariff, and auto parts will be subjected to a 25% tariff on May 3.

Most Exposed Goods / Categories

Most Exposed Provinces**

Misc. Manufactured Wood Pulp Livestock Other Wood Precious Stones Agriculture Plastics Art Food & Bev. Chemicals Metals Machinery Transport/Auto Energy*

Ontario

Alberta

Quebec

British Columbia

Saskatchewan

New Brunswick

Manitoba

Newfoundland and Labrador

Nova Scotia

Prince Edward Island

0% 10% 20% 30%

0% 10% 20% 30% 40%

Exports to U.S. (% of Canada Total)

Exports to U.S. (% Canada Total)

Source: Statistics Canada. Note: * “Minerals” includes coal, crude oil and other energy derivatives. Relabeled for conceptual clarity. **Based on trend in last 12 months. Missing provinces have zero or no data.

Cushman & Wakefield

9

Canadian Auto Sector Spotlight Manufacturing Employment

Impact on CRE

• Canada exports more than 90% of the vehicles it produces, and about 96% of the industry’s exports go to the U.S. • Motor vehicle and parts exports account for 14% of all exports (prior slide), and motor vehicle exports to the U.S. account for about 3.4% of Canadian GDP. • Because factories in Canada often assemble imported components, the industry’s value added to GDP is shy of 1%. In other words, the upcoming decline in auto exports will coincide with a decrease in parts imports. • Given their current magnitude, the tariffs also erase the cost advantage of producing in Canada. • Less activity from the auto and auto parts manufacturing sectors will have downstream effects on transportation and logistics economic activity, and related CRE demand.

Metros With Largest Number of Auto Jobs (Ths.)

Metros With Most Reliance on Auto Jobs (% Nonfarm)

Toronto

Windsor

Windsor

Guelph

Kitchener

Barrie

London

London

Montreal

Kitchener

Guelph

Oshawa

Hamilton

St. Catharines

Barrie

Brantford

Oshawa

Hamilton

Winnipeg

Toronto

0

10

20

30

40

0% 15% 30% 45%

Source: Statistics Canada, Moody’s Analytics

Cushman & Wakefield

10

OUTLOOK

Stagflation Signs Already Emerging

Unemployment Rising

Tourism Dropping

Business Confidence Falling

1,600

10 15 20 25 30 35

25%

1,500

15%

1,400

5%

1,300

-5%

0 5

1,200

120 122 124 126 128 130 132 134 The Stag The Flation

-15%

Jul-24

Apr-24

Oct-24

Jan-24

Jun-24

Jan-25

Jul-24

Feb-24

Mar-24

Feb-25

Mar-25

Nov-24

Dec-24

Aug-24

Sep-24

May-24

Apr-24

Oct-24

Apr-25

Jan-24

Jun-24

Jan-25

Feb-24

Mar-24

Feb-25

Mar-25

Aug-24

Sep-24

Nov-24

Dec-24

Jul-24

May-24

Apr-24

Oct-24

Jan-24

Jun-24

Jan-25

Mar-24

Feb-24

Feb-25

Aug-24

Sep-24

Nov-24

Dec-24

May-24

Unemployment (Ths.)

Diffusion Index

Tourism to Canada

Canada's Foreign Travel

Import Prices Rising

Manufacturers’ Pricing Ticking Up

Businesses Expecting Higher Inflation

55 60 65 70 75 80

0 20 40 60 80 100

Jul-24

Jul-24

Apr-24

Oct-24

Apr-24

Oct-24

Jan-24

Jun-24

Jan-25

Jan-24

Jun-24

Jan-25

Feb-24

Mar-24

Feb-25

Feb-24

Mar-24

Feb-25

Mar-25

Aug-24

Sep-24

Nov-24

Dec-24

Aug-24

Sep-24

Nov-24

Dec-24

May-24

May-24

2019Q1

2019Q3

2020Q1

2020Q3

2021Q1

2021Q3

2022Q1

2022Q3

2023Q1

2023Q3

2024Q1

2024Q3

2025Q1

All Imports to Canada

Diffusion Index

2% or More

3% or More

Source: Various

Cushman & Wakefield

Tariffs Create Stagflation Shock in 2025

Impact on CRE

Canada

• A good rule of thumb for how the tariffs affect the economy is that for every one percentage point increase in the effective tariff rate, real GDP falls by 20-25 bps and the CPI increases by 6 bps. • The main hits to GDP come from higher prices causing consumers to buy less, reduced trade with the U.S., tighter margins at importing firms, and tighter financial conditions related to recession risks and uncertainty effects. • The hit to inflation comes from higher import prices and higher input costs, some of which get passed on to consumers. • The end result is near-term stagflation, meaning weaker economic growth (or mildly negative growth) and higher inflation. • What it means for CRE? Weaker growth = weaker demand for space. Higher inflation = complicated decisions for the Bank of Canada.

Stag…

…flation

3.0

3.0

2.8

2.5

2.6

2.0

2.4

2.2

1.5

2.0

1.0

1.8

1.6

0.5

1.4

0.0

1.2

-0.5

1.0

2024Q1

2024Q2

2024Q3

2024Q4

2025Q1

2025Q2

2025Q3

2025Q4

2024Q1

2024Q2

2024Q3

2024Q4

2025Q1

2025Q2

2025Q3

2025Q4

Real GDP, AR%

CPI, YOY%

Source: Cushman & Wakefield Research, Consensus Forecast

Cushman & Wakefield

13

But Odds of Recession Ratcheting Up Recession Odds of 30 Financial Market Participants

45

40

40

38

35

30

30

25

25

25

25

20

20

20

15

10

5

0

In 0-6 Months

In 6-12 Months

In 12-18 Months

In 18-24 Months

Current

6 Months Ago

Source: Bank of Canada

Cushman & Wakefield

Thesis for Expected Rebound in 2026 Canada

Impact on CRE

• While the outlook for 2025 has become more subdued, the stage is being set for a greater growth story in 2026. • The baseline calls for the average effective tariff rate to be notching down, which will allow inflation to decelerate, creating an easier pathway for the Bank of Canada to cut. • Some of the impacts of President Trump’s other priorities will start to materialize more meaningfully — boosting U.S. growth. • This is important for Canada because as the U.S. recovers, there will be spillover benefits despite the ongoing trade tensions. • We assume that, between escalation and USMCA, the effective tariff rate on Canada declines to under 1% by Q4 2026 from 10 15%* in Q2 2025.

Growth Accelerates

Inflation Rolls Over

3.0

3.0

2.8

2.5

2.6

2.0

2.4

2.2

1.5

2.0

1.0

1.8

1.6

0.5

1.4

0.0

1.2

-0.5

1.0

• This implies that property demand will accelerate in 2026 at a time when the

construction pipeline has thinned out more than was expected “pre - tariff.” Downward movement in vacancy and upward pressure on rents will begin to form across most property types and markets as a result.

2024Q1

2024Q2

2024Q3

2024Q4

2025Q1

2025Q2

2025Q3

2025Q4

2026Q1

2026Q2

2026Q3

2026Q4

2024Q1

2024Q2

2024Q3

2024Q4

2025Q1

2025Q2

2025Q3

2025Q4

2026Q1

2026Q2

2026Q3

2026Q4

Real GDP, AR%

CPI, YOY%

Source: Cushman & Wakefield Research, Moody’s Analytics. Note: *Depends on underlying assumptions about what share of Canadi an exports are USMCA compliant. Moody’s Analytics estimates ~10% while the Richmond Fed estimates ~15%.

Cushman & Wakefield

15

What to Watch: Inflation Expectations Prices Ticking up Among Manufacturers

Impact on CRE

• Inflation expectations have surged in the last month as tariff talk has escalated.

90

• Notably, Canadian manufacturers are now reporting greater rates of price increases.

85

• Consumer inflation expectations are also rising, at the same time that sentiment is taking a hit. Households take into account rising costs in their purchasing decisions; for example, we saw a surge in automobile purchases ahead of the tariffs since consumers expect prices to rise imminently. • Tariffs will soon send consumer prices higher, leading to more pessimistic sentiment and potentially less retail spending. announcements were already on the rise, and a consumer pullback will only dampen retail CRE demand further. • Industrial CRE demand will also take a step back if tariffs aren’t pulled back soon, as supply chains recalibrate to the more subdued spending outlook. • Retail store closures and bankruptcy

80

75

70

65

60

55

50

Diffusion Index

Source: Richard Ivey School of Business - Purchasing Management Association of Canada (PMAC)

Cushman & Wakefield

What to Watch: Jobless Claims Initial and Renewal Claims for Unemployment Insurance (Ths.)

Impact on CRE

• Job layoff announcements have been creeping higher recently, but the number of Canadians filing for unemployment insurance has not increased materially, yet. • The jobless claims may be lagging for a variety of reasons, including the fact that most people do not file until their severance expires. • That said, the trade war has made Canadians across different job groups feel less secure. • The hiring rate has slowed relative to the past several years, and job gains are highly concentrated in a few industries. This alone will weigh on demand for CRE across a variety of uses, but is not alone a predictor of recession. Not until we see a decisive upward trend in jobless claims should we expect widespread job loss and rising unemployment rate. Jobless claims can serve as a useful leading indicator to watch for breaks in the labor market.

290

280

270

260

250

240

230

Source: Statistics Canada

Cushman & Wakefield

WHAT DOES IT MEAN FOR OCCUPIERS AND INVESTORS?

What it Means for Occupiers & Investors

Occupiers

Investors

• Maintain a long-term perspective: Continue to implement workplace strategies with a focus on long-term objectives.

• Focus on the investment horizon: Prioritize long-term real estate investments, as consistent value appreciation typically occurs over time. Secular themes are still relevant. • Take advantage of market volatility: Overlook short-term market fluctuations and strategically acquire assets from sellers motivated by uncertainty. • Interest rates are unlikely to return to pre-pandemic levels: Seize opportunities when long-term debt dips below historical averages and strategically allocate capital. • Capitalize on short-term rate movements: The Fed is likely to continue normalizing rates, with more cuts if economic conditions weaken. Leverage these changes to optimize your investment strategy.

• Leverage tariffs and uncertainty: Use the current environment of tariffs and uncertainty to your advantage in shaping business strategies and negotiations. Use term and credit to your advantage. • Regardless of tariff impacts, it is essential for manufacturers to diversify supply chains as a prudent risk management strategy. Operational risk can be diversified through strategic use of 3PLs. • Large corporations are likely to capture increased market share post uncertainty. Position your organization for growth by preparing for future opportunities. • Take a proactive approach by targeting high-quality assets and locations . As the availability of premium options becomes limited and uncertainty fades, it will become an increasingly competitive market. • Re-evaluate and re-assess your real estate strategy in alignment with your business outlook. Determine your organization’s risk profile and tailor your approach accordingly to optimize space utilization.

• Consider CRE as a hedge: During periods of uncertainty, especially with higher inflation, real income-producing assets are favored.

• CRE subtypes matter : CRE has a myriad of necessity-based asset classes (residential, grocery-anchored retail, healthcare) that often outperform during weaker growth environments.

• Prepare for more expensive construction fit-outs in the immediate term , and fewer new construction options in one or two years.

• Re-assess investment strategy: Evaluate your risk profile and begin executing an updated strategy tailored to current market conditions.

Cushman & Wakefield

AUTHORS

REBECCA ROCKEY Deputy Chief Economist, Global Head of Forecasting rebecca.rockey@cushwake.com

DAVID SMITH Head of Americas Insights, Global Research david.smith4@cushwake.com

KEVIN THORPE Chief Economist kevin.thorpe@cushwake.com

ABOUT CUSHMAN & WAKEFIELD Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2024, the firm reported revenue of $9.4 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles , the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com. ©2025 Cushman & Wakefield. All rights reserved. The material in this presentation has been prepared solely for information purposes, and is strictly confidential. Any disclosure, use, copying or circulation of this presentation (or the information contained within it) is strictly prohibited, unless you have obtained Cushman & Wakefield’s prior written consent. The views expressed in this presentation ar e the views of the author and do not necessarily reflect the views of Cushman & Wakefield. Neither this presentation nor any part of it shall form the basis of, or be relied upon in connection with any offer, or act as an inducement to enter into any contract or commitment whatsoever.