US tariff escalation clouds Bank of Canada rate outlook
The White House’s decision to impose 50% tariffs on a targeted range of Canadian goods has renewed uncertainty over the Bank of Canada’s rate path, reinforcing economist forecasts that the central bank will remain on hold for the rest of 2026, while leaving the door open to easing if trade conditions worsen.
The duties, announced under Section 338 of the Tariff Act of 1930, are due to take effect on August 19th and would cover roughly C$28 billion worth of Canadian exports to the United States, including alcoholic beverages, cement, dairy products, wood and paper products, chemicals, plastics, and electronics.
Energy, potash, critical minerals, fish, and goods already subject to tariffs under Section 232 are exempt. The measures represent approximately 5% of Canadian goods exports to the US and 0.8% of Canadian gross domestic product.
