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Tariff timetable leaves Canada outlook bumpier as GDP seen rising
Canada is expected to post 0.2% May GDP growth next Friday, while planned U.S. tariff changes on July 24 and Aug. 20 hinge on exemptions for Canadian imports.
Action Forex says Canada’s economy is still set for another month of recovery, with GDP for May expected to rise 0.2% in data due next Friday. The outlet cautions that the outlook remains clouded by renewed U.S. tariff threats, which it says could make the path ahead more uneven.
The tariff risk is tied to two upcoming dates and their stated scope. Action Forex notes that new U.S. Section 301 broader global tariffs imposed on July 24 keep a duty free exemption for imports from Canada under CUSMA, while the more severe 50% Section 338 product and Canada-specific tariffs are not set to take effect until Aug. 20.
The piece also links market impact to policy and currency dynamics, saying the effect will depend on how firms navigate tariffs, the path of the Canadian dollar, government responses, and Bank of Canada decisions. It adds that the Federal Reserve is expected to stay on hold at its Wednesday meeting.
Finally, Action Forex points to near-term macro data for guidance. It argues that June’s Consumer Price Index showed broad-based deceleration in inflation pressures, which takes an immediate rate hike off the table, and it expects Thursday’s advance Q2 U.S. GDP report to show headline growth at an annualized 2.4% quarter-over-quarter, supported by resilient consumer spending, with net trade projected to subtract from growth.