The Bank of Canada published an article assessing how tariffs and other trade barriers are reshaping production, supply chains and demand for Canadian exports. It concluded that the resulting adjustments will have lasting effects on the economy, potentially reducing employment, investment, growth and productive capacity. The Bank cannot offset these structural effects through monetary policy but can support adjustment by keeping inflation low, stable and predictable. US tariffs imposed on many Canadian products since early 2025 have hit the automotive, steel, aluminum and lumber industries particularly hard. Many other trade exposed sectors have been less affected than initially feared because the Canada-United States-Mexico Agreement shields numerous Canadian goods and services from tariffs. Businesses are responding by changing suppliers, investing in technology and seeking new markets, although manufacturers face greater difficulty diversifying than agricultural, mineral and energy producers. Continued uncertainty over the Canada-US trade relationship and the future of the agreement may further influence where companies produce and source goods.
2026-09-24Bank of Canada
Bank of Canada assesses lasting economic effects of shifting global trade barriers
The Bank of Canada assessed how tariffs and other trade barriers are reshaping Canadian production, supply chains and export demand, with lasting consequences for growth, investment and productive capacity. Trade agreement protections have limited some effects, but key industrial sectors remain under pressure and uncertainty continues to influence business decisions. The Bank said monetary policy cannot offset these structural changes but can support adjustment through stable inflation.