US Tariffs Shift May Not Dent Canadian Growth

The United States is set to impose new tariffs on Canadian goods starting September 15, but economists believe this shift will not significantly impact Canada's near-term growth. The tariffs will apply to about 0.6% of US imports from Canada and include goods such as outboard motorboats and metal and paper products.

Meanwhile, the US is removing 50% tariffs on other Canadian goods worth around $1.7 billion, including cement, sugars, toilet paper, and fishing rods.

Stephen Brown, chief North America economist at Capital Economics, notes that these changes 'represent another manifestation of policy uncertainty' and could weigh on Canadian firms. However, he estimates that the new tariffs will apply to only 0.25% of Canada's exports to the US, which is a relatively small percentage.

Despite this, Brown warns that if the tariffs remain in place until the end of the year, Canada's economy could stagnate or contract in the fourth quarter, due in part to the federal government's $7.5 billion stimulus spending being offset by the impact of the tariffs.