New US Tariffs Threaten Canada's Fourth-Quarter Growth

Bank of Canada Governor Tiff Macklem warned that new US tariffs could severely impact Canada's fourth-quarter growth, potentially slashing it to below 1%. This development adds to the wave of uncertainty affecting investment and hiring.

Macklem pointed out that while slower growth might lead to lower inflation, the Middle East conflict is pushing oil prices up. As a result, Canada's annual inflation rate could rise above the Bank's target of 2% if oil prices remain near $100 a barrel.

Canada's economy rebounded in the second quarter with an annualized growth rate of 3.3%, but the recent trade deal collapse and new tariffs have caused concerns about investment delays and hiring freezes.

Macklem emphasized that businesses are adapting by changing supply chains and sourcing strategies to minimize their exposure to tariffs, but slower population growth and an aging population are also hitting labor supply and consumer demand.