Trade
Tariff War Would Push Inflation Higher in Canada, Macklem Says
- Bank of Canada models US, Canada each imposing 25% tariffs
- Scenario would lower GDP growth, juice CPI in both economies
A worker at a distribution center in Montreal.
Photographer: Graham Hughes/BloombergThis article is for subscribers only.
Bank of Canada Governor Tiff Macklem has managed to wrestle inflation back under control. But a looming US-Canada tariff war now threatens to undo his work on price stability.
The Canadian central bank cut interest rates Wednesday for a sixth straight meeting in a bid to strengthen economic growth after consumer prices stabilized near the 2% target since mid-2024. But the January decision and its new economic projections largely didn’t consider the impact of a potential trade spat, which could begin as early as Saturday.