The Canadian economy has demonstrated resilience despite mounting trade uncertainty as the US moves forward with new tariff measures, according to TD.
Unlike the broad tariff measures announced in 2025, last week's tariffs appear targeted at pressuring Canadian producers while limiting the impact on US consumers and manufacturers, with no exemption for USMCA-compliant goods, said the bank. Businesses may front-load shipments ahead of August, adding volatility to trade data over the summer.
However, implementation remains uncertain as US-Canada trade and US-Mexico-Canada (USMCA) negotiations continue, said the bank.
Inflation moderated in June as lower energy prices pushed headline consumer inflation lower, while core inflation remained broadly consistent with the Bank of Canada's target. Although the recent rebound in oil prices is likely to partially reverse this disinflationary trend in July, the temporary easing has helped bolster household purchasing power, according to TD.
However, the outlook remains clouded by trade uncertainty and geopolitical risks, according to the bank. TD's baseline view is that these pressures will ease over time, allowing oil prices and trade tensions to moderate, USMCA talks to advance and Canada's economic resilience to emerge better.