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Trump delivered a contradictory message on the Iran war last night, portraying it as nearing completion while simultaneously threatening further escalation, highlighting growing confusion among investors. The conflict has produced significant unintended consequences, which now includes (further) strained relations with U.S. allies, many of whom are reassessing their reliance on American security guarantees. Despite the might of the U.S. military, the U.S. may be losing off the battlefield, with adversaries like China and Russia benefiting from higher energy prices and shifting geopolitical dynamics. The prolonged conflict is also straining U.S. military resources and undermining other priorities. While Trump appears eager to declare victory and exit, uncertainty remains over whether Iran will allow a clean resolution.
Add this to the list. Trade friction between the U.S. and Canada continues, with the latest U.S. demand targeting Canada’s digital policies. In its 2026 National Trade Estimate report, the U.S. Trade Representative noted Canada’s Online Streaming Act, Online News Act, and push for sovereign cloud infrastructure as “barriers” to U.S. firms, adding to existing tensions around dairy, drug pricing, and procurement rules. The timing is interesting given the upcoming CUSMA review, where these issues are likely to resurface. From a market perspective, this continues a familiar pattern, with trade tensions spilling beyond goods into digital and regulatory areas where rules are less harmonized and more politically sensitive. The broader impact is less about near-term tariffs and more about a gradual buildup of friction affecting cross-border investment, data movement, and how companies structure their operations, especially in tech and media. Canada will have to strike a balance to preserve policy sovereignty while avoiding escalation that could spill into trade channels.
Less complicated, maybe. America will introduce a tiered tariff system on steel and aluminum imports, maintaining 50% duties on core and certain derivative products while applying 25% or lower rates to others, in an attempt to simplify a system that has been operationally complex for companies. While initially aimed at restricting Chinese overcapacity, the tariffs have also hit other major trading partners, including Canada. The updated tiered system will tax metal content to the full value of the imported product, addressing challenges firms faced in trying to calculate duties on goods with minimal metal input. The new rules follows push back from industry, where compliance burdens were beginning to impact sales and margins. While framed as simplification, the structure still preserves higher protection levels and retains flexibility to adjust rates if import volumes do not decline. Markets took the announcement in stride, though metals producers saw modest weakness. Attention appears to remain on more immediate macro risks.
If you are a regular Launch Pad reader, you may have noticed a flow of M&A activity in company news recently. Global M&A activity rose about $1.3 tln in Q1, marking a record start to the year, driven by major deals such as Unilever’s $44.8 bln sale of its food business and Sysco’s $29.1 bln acquisition of Jetro. Despite the strong quarter, dealmaking has slowed roughly 15% since the beginning of the Iran conflict, as geopolitical volatility and rising oil prices push some companies into a wait-and-see stance. Still, advisers note that underlying conditions, such as available financing, remain supportive with 18 deals over $10 bln already announced this year. Some executives seem willing to pursue transactions through uncertainty, taking a longer-term view rather than trying to time markets. At the same time, AI is emerging as an even bigger influence on deal decisions than geopolitics, particularly in the tech sector.
Firms in the UK expect to accelerate price increases over the next year as higher energy costs from the Iran conflict feed through the economy, with a Bank of England survey showing expected price growth rising to 3.7%, the highest since October. At the same time, companies anticipate weaker wage growth and modest job cuts, signaling softening labour market conditions alongside rising inflation pressures. Firms’ inflation expectations have climbed to 3.5%, raising concerns about second-round effects even as pricing power remains somewhat under control. Policymakers are now closely watching how much of the energy shock is passed through to consumers. With this in mind, markets are now pricing in two interest rate hikes this year as inflation is expected to move back up toward 3.5% in the near term.
Privileged bet? Scrutiny is increasing around whether prediction markets tied to geopolitical events may be vulnerable to insider trading, after researchers found roughly $143 million in unusually well-timed profits on platforms like Polymarket. Regulators found clusters of coordinated accounts placing highly accurate bets on decisions related to Iran and Venezuela, often just before key announcements raising questions about whether traders may be acting on privileged information. This has led to bipartisan calls for tighter regulation and disclosure rules as trading volumes surge into the billions, and questions grow over whether nonpublic national security information is being used to generate outsized gains.
Diversion: That totally makes cents sense…
