Tariff Dispute Weighs Heavily on Canadian Economy, Says Bank of Canada

The Bank of Canada is keeping a close eye on the ongoing trade dispute between Canada and the US, which could potentially weigh on business and consumer confidence. Governor Tiff Macklem noted that while the economy had been showing signs of strength, the latest tariff wave could put a chill on household spending, business investment, and hiring.

The central bank's governing council met in early September to discuss the impact of the US tariffs on Canadian goods, which were imposed on August 22. The tariffs targeted specific sectors, but the Bank of Canada felt that their overall economic impact would be modest.

However, the council was concerned about the potential for a re-escalating trade dispute to offset some of the inflationary pressures coming from high energy prices tied to the war in Iran. High gasoline prices could lead to higher costs across other goods and services if left unchecked.