According to ING analysts, the threat of further US tariffs on Canadian goods, for example on the auto industry, is still a risk for the Canadian economy.
Key quotes
“In a more extreme scenario, the anticipated slowdown in inflation during 2019 could easily be offset by any fresh retaliatory tariffs from Canada, pushing prices up.”
“Further trade escalations would not only be a major risk to Canada’s economic growth prospects, but would also likely dampen sentiment, which so far has been fairly resilient. For the Bank of Canada, it is the risk to growth, rather than inflation, that is likely to drive future policy decisions.”
“That said, the recent advance in Nafta talks shows that the negotiations are beginning to regain some momentum, which could potentially reduce uncertainty over coming months – although this is dependent on the ‘type’ of agreement that gets finalised .”
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