Canada's Economic Rebound Threatened by Escalating Trade War

The ongoing trade war between Canada and the US is putting Canada's economic rebound at risk, according to economists.

Tombe said the direct impacts of the tariffs will be felt most acutely in British Columbia, followed by Ontario and Quebec. Economic pain won't hit all at once and will instead play out over the coming months, he said.

While some industries are expected to struggle under the weight of the new levies, Canada's economy can absorb the hit from a macro perspective, most economists weighing in since the duties were first threatened last month have argued. Randall Bartlett, deputy chief economist at Desjardins, expects the domestic economy will avoid a recession as it grapples with new tariffs.

Before negotiations imploded on Friday, the economy had been showing signs of a rebound after a pair of quarterly contractions. Bartlett said he expects gross domestic product grew around three per cent on an annualized basis in the second quarter.