Impact of Tariffs on Economic Growth

Tariffs and trade wars significantly weaken economic growth while simultaneously raising inflation, creating a challenging environment for both Canada and the U.S. The consensus is that weak growth will have a more considerable impact than rising inflation, leading to lowered GDP growth predictions, particularly in Canada. For instance, the growth outlook for Canada has been revised down by approximately 1.5 percentage points, shifting from nearly 2% to a range between 0% and 0.5% for the coming years. This is coupled with an expected uptick in inflation, which is projected to increase by half a point in Canada due to these tariffs.