Bank of Canada governor Tiff Macklem warned that the central bank’s forecasts indicate that if the US were to impose tariffs, it could potentially trigger a recession in Canada. According to BoC’s modeling, in a scenario where the US enforces a permanent 25% tariff on all its trading partners, leading to retaliatory measures, the country could experience a 2-3% decline in growth during an extended trade conflict.
Macklem emphasized that such tariffs act as a “tax on Americans,” resulting in increased prices for imports from Canada. This, in turn, could lead to higher costs for Canadian importers, raising the question of whether these expenses will be transferred to consumers or impact the importers’ profit margins.
He further stated, “We are trying to demonstrate the significant and severe impact this could have on economic activity.”
