Canada: Trade shock and GDP drag – TD Securities
TD Securities’ Robert Both analyzes the impact of new Section 338 US tariffs and Canada’s retaliation on the Canadian economy. The report estimates the combined measures will trim about 0.3 percentage points from GDP by 2027, with growth effects concentrated in late 2026.
TD Securities analyst Robert Both examines the impact of the new U.S. Section 338 tariffs and Canada's retaliation on the Canadian economy. The report predicts a 0.3 percentage point reduction in GDP by 2027, with the effects concentrated in late 2026. Fiscal support of CAD 7.5 billion is expected to mitigate the blow, while inflation remains contained.
The higher tariff rate under Section 338 and lack of USMCA provisions will increase total policy-implied tariff rates to 7.5% from approximately 5.0% in Q2, marking the highest rate since the 35% IEEPA tariffs were replaced with Section 122. This escalation in the trade dispute between the U.S. and Canada may have a broader impact on the economy, despite the targeted nature of Section 338.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
