Canada's Economy Resilient to New US Tariffs Amid Prolonged Trade Conflict Risk

Economists are downplaying the impact of new US tariffs and trade restrictions on Canadian goods, saying they are unlikely to significantly affect Canada's economic growth in the near term.

According to TD Economics, the latest American response to Ottawa's counter-tariffs involves stopping imports of some products, removing tariffs on a handful of products, and introducing new tariffs on others. The shift in tariff focus is seen as 'another manifestation of policy uncertainty' that could weigh on Canadian firms.

Capital Economics agrees that the ban on certain Canadian goods, including whey, alcoholic beverages, and motorcycles, will have 'little effect on either economy'. However, they also warn that the escalation increases the risk of a prolonged trade conflict, which could lead to stagnation or contraction in Canada's economy by the fourth quarter.