A new report from Royal Bank of Canada says U.S. President Donald Trump’s “dazzling” tariffs on Canada have caused great uncertainty in the Canadian economy, but so far they may not have triggered a recession.
Nathan Janzen and Claire Fan’s report was published Monday.
The report further said that this is because “the vast majority of USMCA/CUSMA-compliant imports from Canada were quickly exempted” from Trump’s substantially broad massive tariffs on 25% of all Canadian goods.”
“The additional steel and aluminum tariffs implemented on March 12 are large, but the products affect a relatively small share of Canada’s exports to the United States (about 4%),” the economists said.
They added that while the auto tariffs originally scheduled to come into effect this week will have an impact, some vans may ease the Canadian auto industry.
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“Most motor vehicle parts (critical) are not included in the initial automatic tariff announcements, and the value of the U.S. intermediate products embodied in these finished vehicles will be excluded from half of the total value in Canadian cases, or about half of the total value,” the report said.
Royal Bank of Canada pointed out that there are also signs of movement in the Canadian economy.
The report noted that consumer and business confidence in the economy began to shrink, with consumer confidence reaching an all-time low in March.
The report added that although Canada already has targeted tariffs, the so-called “countdown” tariffs scheduled for the U.S. on Wednesday are global.
“There is a smaller gap in tariff rates between Canada and other countries, which may also be smaller for Canada than it is currently in the current situation,” the report said.
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