The U.S. economy faces challenges as consumer sentiment and business confidence decline amid escalating trade tensions. The Trump administration's reciprocal tariffs, targeting major trading partners such as Canada, have contributed to economic uncertainty. The Atlanta Fed GDPNow tracker projects a potential contraction of 1.6% in Q1 2025, though an adjusted estimate suggests 0.4% growth. Canadian small business optimism has dropped to a 25-year low, with the CFIB's Business Barometer index falling to 25 in a survey conducted March 5-7. Nearly 60% of respondents expect weaker business performance over the next year. This decline coincides with U.S. tariffs on Canadian goods and Canada's retaliatory measures, including C$60 billion in tariffs. U.S. stock markets have experienced a significant downturn, with the S&P 500, Nasdaq, and Dow indices falling 2.2%, 2.3%, and 3.0%, respectively, over the past week. Economists note that business optimism is now worse than during the 2008 financial crisis. The Bank of Canada has warned of weaker growth and higher costs, with 19% of small businesses planning layoffs this summer. Rising unemployment, declining consumer sentiment, and economic policy uncertainty have led to increased concerns about a potential recession.