Tariffs risk plunging Canada into recession

If the US tariffs remain in place, Canada will undoubtedly fall into recession. The limited decline in the loonie so far suggests markets are still pricing in a quick U-turn from the Trump administration. But even if the tariffs are soon lifted, their imposition represents a sea change for the US-Canada trade relationship and, against the backdrop of plunging immigration and poor productivity growth, the best-case scenario now is a sustained period of even weaker GDP growth than we previously expected. That means the Bank of Canada will cut interest rates again next week and loosen by more than we expected this year.