Canada has escaped much more lightly than we feared from President Trump’s big announcement, with the import-weighted US tariff likely to be 8% based on current plans and potentially below 5% in the near future. Nonetheless, the much larger tariff rate on Canada’s vehicle exports and ongoing concerns among consumers and businesses about future changes in US trade policy mean the economy is still set for a period of below potential GDP growth, prompting the Bank of Canada to cut its policy rate to 2.0%.
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