U.S.-Canada Trade War Escalates with New Tariffs Threatening Economic Stability
The escalating trade war between the United States and Canada has intensified with the imposition of hefty tariffs, raising concerns about Canada's economic stability and potential job losses. Analysts predict that the current tariffs could lead to the loss of up to 100,000 Canadian jobs and potentially push the country into a recession if the United States-Mexico-Canada Agreement (USMCA) is not renewed.
On August 22, the U.S. imposed 50 percent tariffs on approximately $20 billion worth of Canadian goods. In retaliation, Canada announced counter-tariffs ranging from 15 to 50 percent on over 700 U.S. products, also valued at $20 billion, set to take effect on September 8.
According to Oxford Economics, these tariffs could reduce Canada's GDP growth by 0.3 percentage points next year. Tony Stillo, Director of Canada Economics at Oxford Economics, warned that the collapse of the USMCA could lead to a recession and a permanently lower economic growth path for Canada.
The Bank of Canada projects that the sustained U.S. tariffs will reduce Canada's GDP by about 1.5 percentage points by the end of 2026, with growth expected to remain modest at 1.1 percent in 2026 and 1.5 percent in 2027.