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CIBC Says New US Tariffs Unlikely to Alter Bank of Canada Outlook

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CIBC Economics said late Monday that the latest US tariff announcement is not large enough to change its outlook for the Bank of Canada.

President Donald Trump's Monday decision to impose a 50% tariff on nearly $20 billion of Canadian imports under rarely-used Section 338 marks a targeted escalation in trade tensions, said the bank. The measures affect just under 5.5% of Canada's exports to the US and would lift the average Canada-US tariff rate by slightly more than 2.5 percentage points.

"We see this as a sector-specific development rather than a broad macroeconomic story, though it is clearly significant for the industries directly affected," wrote CIBC's Benjamin Tal in the note.

The timing of the measures indicates they are likely intended to strengthen the US negotiating position ahead of upcoming USMCA talks, added CIBC.

The new tariffs will become effective in 30 days.

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