Bank of Canada warns Q4 growth could be halved by US tariffs

Bank of Canada Governor Tiff Macklem delivered a pointed warning during his September 2 monetary policy press conference: if the latest round of US tariffs stays in place, fourth-quarter growth in Canada could be cut roughly in half. The culprit is a fresh batch of 50% US tariffs imposed on approximately 5% of Canadian goods exports, effective August 22. Canada isn’t taking it quietly, with dollar-for-dollar counter-tariffs set to kick in on September 8. Steady hands, shaky ground Despite the tariff headwinds, the Bank of Canada opted to hold its overnight policy rate at 2.25% for the seventh consecutive meeting. That decision reflects a balancing act between acknowledging real trade risks and not overreacting to what Macklem characterized as a targeted, rather than economy-wide, shock. The rate hold came against the backdrop of a surprisingly strong second quarter. Canadian GDP grew at an annualized 3.3% in Q2, a broad-based rebound that gave the central bank some breathing room. Macklem stressed that while the tariffs will significantly hit the sectors they target, the direct impact on the broader Canadian economy should remain modest. Analysts peg the GDP drag from this latest t...