This week's new US tariffs are unlikely to materially alter Canada's growth trajectory, given their relatively limited direct economic impact, UBS Global Research said in a note.
While the direct economic impact may be limited, renewed trade tensions reinforce the uncertainty surrounding the US-Canada relationship, potentially creating additional headwinds for growth in the near term, said the bank in a note made available to the media on Wednesday.
UBS wrote that it forecasts trade uncertainty to gradually ease, supporting broader growth momentum into late 2026 and next year. In the meantime, recent tariff actions are likely to reinforce the Bank of Canada's cautious stance, keeping policymakers on hold this year as they monitor the outlook.
The US announced Monday that it will impose a 50% tariff on selected Canadian exports, effective Aug. 19.
UBS added it hadn't yet factored the newly announced tariffs into its gross domestic product forecasts for Canada due to the 30-day delay before implementation.
The bank said it viewed the measures as part of the wider US-Mexico-Canada Agreement renegotiation process, with their final economic impact contingent on how discussions between the two countries develop.