A new report said Donald Trump's tariffs on Canada pose the worst trade shock since the 1930s, with a recession in the Canadian economy on the horizon.
’s tariffs on Canada , and Canada ’s retaliatory measures, could be the most “significant trade shock” that Canada has suffered in nearly 100 years, economists say.A Royal Bank of Canada report on Sunday compared the trade shocks from Trump’s tariffs to the ones caused by the Smoot-Hawley tariffs of the 1930s.
“Tariffs removed within a matter of weeks are likely to create a temporary stall for Canada. However, if they extend over a matter of months , Canada’s recessionary risks increase rapidly,” the report said.Tu Nguyen, economist at RSM Canada, said sustained U.S. tariffs and a response from Canada could likely see the Canadian economy contract by two per cent – a sharp contrast to the projected 1.8 per cent growth rate for 2025.
The RBC report concurred with the Bank of Canada’s findings that a 25 per cent tariff applied across the board would reduce Canadian GDP by 3.4 to 4.2 per cent.Nguyen said Canada will likely see lower demand for “all goods and services like new cars, dining out and entertainment.” “Canada’s manufacturing sector is most exposed, but the knock-on effects will also matter in many other indirectly exposed industries,” the report said.
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