Canada's economy is showing 'resilience' against U.S. tariffs. Why?
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Just a few days later, U.S. President Donald Trump added 35 per cent tariffs on Canadian goods to a running tally that includes hefty duties on steel, aluminum, automobiles and, more recently, semi-finished copper.
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With tariffs piling up over the past few months, economists say Canada's economy is starting to show cracks — but few signs of collapse.
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TD Bank economist Marc Ercolao conceded it's a 'bit of surprise' to see the economy holding up against a massive disruption from Canada's largest trading partner.
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'Many months ago, ourselves — as well as other economic forecasters — had an outlook for a much weaker Canadian economy. Obviously, that isn't manifesting now,' he said in an interview.
On Thursday, Statistics Canada gave a glimpse at how the economy wrapped up the second quarter of the year when many of those tariffs came into full effect.
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While the agency sees a couple of small contractions in real gross domestic product by industry in April and May, its flash estimates show the economy rebounding somewhat in June.
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If those early readings pan out, StatCan said that would be good enough for flat growth overall on the quarter.
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Some of those results are distorted by volatility — businesses rushing to get ahead of tariffs boosted activity in the first quarter, and that's giving way to weakness in the second quarter, for example.
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It's still hard to pinpoint exact impacts tied to tariffs, Ercolao said, but a broad trend is emerging.
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'What we can say over the last six months or so is that economic activity is somewhat flatlining,' he said.
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Services sectors are holding up relatively well, but Ercolao said export-heavy industries such as manufacturing and transportation are bearing the brunt of the impact.
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In an attempt to shore up some of that weakness, the federal government has announced various programs to support tariff-affected workers and broader plans to accelerate defence and infrastructure spending.
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Macklem noted during his press conference Wednesday that business and consumer confidence are still low, but have improved according to the central bank's recent surveys.
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