Tariffs Slam Canada's Economic Outlook

RBC Economics has released an updated outlook for Canada's economy, warning that tariffs are fundamentally reshaping the country's economic trajectory. The report highlights a slowdown in GDP growth over the next two years due to increased costs for manufacturers and exporters.

The impact of tariffs is expected to be most pronounced in sectors heavily integrated with U.S. supply chains, such as automotive, aerospace, and agriculture. RBC economists note that uncertainty around trade policy is already dampening business confidence, which could delay capital spending decisions.

Tariffs are also expected to push inflation higher in the near term, as businesses pass on increased import costs to consumers. This complicates the Bank of Canada's path, as it must balance supporting growth against containing price pressures.