Canada's Economic Recovery Hits New Tariff-Induced Speed Bump

Canada's economic recovery is facing another challenge after Bank of Canada Governor Tiff Macklem warned that new US tariffs could cut fourth quarter growth to below 1%. The warning comes at a difficult time for the central bank, which is already dealing with inflation above its target and higher energy prices due to the Middle East conflict.

Macklem said the latest tariff escalation could encourage Canadian businesses to delay investment and hiring decisions. If the measures remain in place, fourth quarter growth could be roughly half of what it might otherwise have been.

The Bank of Canada had previously forecast third-quarter growth at 1.5% in July, before the latest US tariffs were announced. Macklem said the new measures could make businesses more cautious about expanding, hiring workers and committing money to new projects.