Bank of Canada Governor Tiff Macklem said fourth-quarter growth could be roughly halved to below 1 per cent if new US tariffs remain in place. The measures affect about 5 per cent of goods exports, while trade uncertainty could delay investment and hiring and higher oil prices could add inflation pressure.
Bank of Canada Governor Tiff Macklem said Canada's fourth-quarter growth could be roughly halved to below 1 per cent if the new US tariffs remain in place. Their direct reach is about 5 per cent of Canada's goods exports to the United States. Both the Bank's account and Twikup report that the broader effect could come from trade-policy uncertainty spreading beyond those products into company decisions.[1], [2]
Companies may delay new investment, expansion and hiring if uncertainty persists. That risk arrives as the economy shows signs of recovery: private-sector hiring strengthened, unemployment declined and business investment rose at an annualised 8.8 per cent in the second quarter. Macklem's warning centres less on the tariffs' current direct reach than on the possible growth effect of businesses becoming cautious again.[1], [2]
Trade tension could pull growth down while high oil prices push inflation up. Macklem said inflation had remained around 3 per cent in recent months, with fuel prices contributing to that pressure. The Bank of Canada is watching whether energy costs spread into other goods and services. Monetary policy therefore faces risks in two directions: weaker growth and price pressure that could become more persistent.[1], [2]
