Bank of Canada Warns U.S. Trade War Threats Could Permanently Harm Canadian Economy

Central bank highlights risks of prolonged tariffs, reduced GDP, and rising inflation from potential U.S.-Canada trade conflict.

The Bank of Canada cautioned that even the threat of U.S. tariffs could damage business investment, consumer confidence, and economic growth in Canada.
A protracted trade war could permanently lower Canada's GDP and disrupt industries heavily dependent on U.S. exports, exacerbating competitiveness challenges.
The Canadian dollar has already weakened due to trade uncertainty, and tariffs could lead to further depreciation and inflationary pressures.
Retaliatory tariffs by Canada could raise domestic prices and complicate monetary policy, which cannot fully offset the long-term economic adjustments required.
The central bank cut its policy rate to 3% in January to support growth, citing trade uncertainty as a key factor while warning of potential unemployment increases if tariffs are implemented.