As the Trade War continues, Bank of Canada warns new US tariffs may cut Q4

New US tariffs could reduce Canada’s fourth quarter growth to below 1%, Bank of Canada Governor Tiff Macklem said on Monday. The central bank faces competing pressures as slower growth could push inflation down while the Middle East conflict could drive it higher through rising oil prices.

Canada’s annual inflation rate stands at 3%, above the bank’s 2% target. Macklem said inflation could rise further if oil prices remain near $100 per barrel.

The Canadian economy grew at an annualized rate of 3.3% in the second quarter as businesses and households adjusted their plans after nearly 18 months of US tariffs. The Bank of Canada had forecast third quarter growth of 1.5% in July, before the latest tariffs were announced.

“The latest escalation could once again cause businesses to delay investment and hiring decision,” Macklem said. “If these new tariffs remain in place, growth could be roughly halved in the fourth quarter, to below 1%.”