New U.S. tariffs and import bans unlikely to dent Canada’s near-term growth, economists say

New U.S. tariffs and trade restrictions on Canadian goods are unlikely to significantly affect Canadian economic growth in the near term, economists say. They warn, however, that the latest escalation could prolong the trade conflict, add uncertainty for Canadian businesses and increase the chance of economic stagnation or contraction in the fourth quarter.

A TD Economics client note says the latest U.S. response to Ottawa’s counter-tariffs had three parts: stopping imports of some products, removing tariffs on a handful of products and imposing new tariffs on others.

The change in tariff focus should not materially affect domestic growth in the near term, TD Economics said. But it described the measures as another manifestation of policy uncertainty that reinforces worries about access to the U.S. market and weighs on Canadian firms.

Capital Economics said the U.S. ban on some Canadian goods, including whey, alcoholic beverages and motorcycles, will have little effect on either economy. Still, it said the escalation could keep tariffs in place longer, dealing Canada’s economy a larger blow and potentially causing it to stagnate or contract in the fourth quarter.