Canada: Solid growth with limited tariff drag – RBC

Royal Bank of Canada (RBC) economist Claire Fan highlights that Canadian growth rebounded strongly in Q2, supported by resilient domestic demand and improving net trade. She notes that U.S. Section 338 tariffs target a narrow set of Canadian products, limiting nationwide impact but posing risks to specific regions and industries. Broader U.S. tariff rates are edging lower, consistent with a resilient U.S. economy.

Growth resilient despite tariff risks

"Canada’s economy bounced back strongly in Q2."

"Domestic demand remained resilient, while net trade recovered from a soft Q1."

"U.S. Section 338 tariff threats won’t derail overall growth in Canada, as they target a narrow base of Canadian products."

"Impact to targeted producing regions and industries will be more significant."

"Broader U.S. tariff rates globally have continued to edge lower, consistent with our outlook for a resilient U.S. economy benefiting from major infrastructure buildouts and government spending."

"We expect modest adjustment hikes in 2027 should these trends persist."

"The Bank of Canada is more comfortably on hold amid signs of a firming economy and soft core inflation prints."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)