Trump war unleashes inflation wave and job-killing GDP damage

Tom Parkin

March 10th, 2026

BURLINGTON, ON

Destroying major pieces of the global energy supply system will hurt many, benefit a very few.

From under $60 earlier this year, on Monday morning oil prices surged past $120. The Dow Jones Industrial Index, at a high of over 51,000 points just one month ago, plummeted to 46,600, a loss of about nine per cent.

But later in the morning came news G7 nations may release oil reserves to support supply and dampen inflation. And in the afternoon came comments from U.S. President Trump suggested him might abandon his war.

Damage at the eight-day point in the war in Iran

As horrific images of the eight day war circulated, polls sagged and bad economic news piled up, Trump told CBS News his war “is very complete,” despite only a few days ago saying it would take at least four weeks.

By day’s end, oil was below $85 and the Dow Jones Industrial Average finished slightly up.

Trump war threatens Canadian inflation, GDP, jobs

Whether war continues or ends early, there has been massive damage to the world’s energy supply system. And the cost to Canadians from those cheering-on Trump and his war has been made clear, even through the thickest skulls.

Pump prices are already up across Canada. And those higher costs will work their way into almost everything Canadians need. That’s the first punch.

But Bank of Canada Deputy Governor Sharon Kozicki late last week cautioned that supply shocks can create inflation that, even in a weak economy, the Bank may respond to with interest rates hikes.

Such hikes would land a second punch to Canadians on affordability, cutting consumer spending, business investment, economic growth and jobs.

Trump’s economic damage is already being reflected in U.S. central bank projections. Friday, the Federal Reserve Bank of Atlanta’s GDP “nowcast” dramatically slumped to 2.1 per cent, down from 3.2 per cent just days before. The Bank is part of the Federal Reserve System, backing and servicing banks in the United States’ Southeast states.

A very select few will benefit very well

But oil companies with production intact are suddenly in a sellers’ market from which they can extract windfall profits. That windfall will be paid from the wallets of workers and the bank accounts of businesses that employ them.

The Toronto Stock Exchange energy index, which includes key companies such as Canadian Natural Resources Limited, Cenovus, Imperial Oil and Teck Resources, gained ground in the morning as the economic gloom set in, then fell on the comments from Trump and the G7.

An analysis by economist Isabella Weber found that after the 2022 oil price spike, 50.4 per cent of the $377 billion in U.S. windfall profits flowed to wealthiest one per cent.

Political fall-out in Canada?

As the economic damage of the war becomes clearer, there may be risks and opportunities for Canadian political parties.

If the Iranian war drives down support for Trump far enough it could also release him from the MAGA monkeys on his back.

Polls show about two-thirds of Conservative supporters back the war. But realizations about the economic pain from war may shrink that support, further isolating Poilievre. But, if it drives down support for Trump far enough it could also release him from the MAGA monkeys on his back. If he wants them removed.

Interim NDP leader Don Davies, speaking on the Left East to West podcast released Monday, argued PM’s confused backing of Trump was now “a step too far” for many centre to left voters. Polls show Carney’s support is shared by less than 20 per cent of Liberal voters and under 10 per cent of NDP voters.

If anyone should have foreseen the economic damage that Trump’s war was going to inflict on working class Canadians it ought to have been the former central bank governor. Or maybe he did and just followed the path of least resistance.