TD Economics Warns of Tariff Impact on Canada’s Trade and Jobs Data

TD Economics warns that Canada’s upcoming trade and jobs reports may reveal the early effects of recent US tariffs. The research team is particularly watching for "front-loading", a situation where exporters rush shipments into the US before tariffs take effect. This could make August’s export figures appear stronger than usual, followed by a weaker September as shipments are pulled forward, potentially distorting Statistics Canada’s monthly growth estimates.

The firm also expects September’s Labor Force Survey to show signs of cooling hiring and a slight rise in the unemployment rate. This shift could be attributed to business uncertainty caused by the tariffs. Together, these data points might create a temporary rough patch in the economic reports, even if the underlying economy remains stable.

For investors, the upcoming trade and jobs data will be crucial. A strong August export figure due to front-loading might mislead markets about the true demand trend. If the jobs report also shows weakness, forecasters may lower their near-term growth expectations, even if the weakness is temporary. Such adjustments could impact the Canadian dollar and short-dated government bond yields, as they react to revised growth and rate expectations from the Bank of Canada.