US Tariffs Won't Dent Canada's Growth in Near Term, But Prolonged Conflict Looms

Canada's economy is unlikely to be significantly impacted by new U.S. tariffs and trade restrictions on Canadian goods in the near term, economists said.

However, the latest escalation raises the risk of a prolonged trade conflict, adding uncertainty for Canadian businesses and increasing the odds that the economy could stall or shrink in the fourth quarter.

The U.S. has shifted its tariff focus to certain products, including outboard motorboats, metal, and paper products, while removing tariffs on goods like cement, sugars, toilet paper, and fishing rods.

According to TD Bank Group senior economist Andrew Hencic, the shift in tariff focus represents 'another manifestation of policy uncertainty' that will weigh on Canadian firms.