Market Wire: Update on Trump tariffs
Update: The White House posted annexes setting out product-specific tariff rates after my earlier market wire was sent. Using the information in the annexes applied to pre-Trump trade volumes, our rough estimates suggest the overall increase in potential levies comes in at around $19.1 billion USD or 4.6% of Canadian exports to the US, meaning that the average tariff rate applied to Canadian products could rise by roughly 2.3 percentage points.
This would undoubtedly be painful for the affected Canadian industrial sectors, but should be substantially less damaging to the economy than initially feared. The implications for Bank of Canada policy might mainly arise from the additional uncertainty facing businesses and households, meaning that the directional impact on rate expectations is unknowable at this point.
The Canadian dollar is gradually recovering altitude as the Asia trading session progresses — although it could come under renewed selling pressure when retail trading begins in North America tomorrow morning.
Notes: Estimates are based U.S. imports for consumption from Canada, full-year 2024. Exclusions for goods already under Section 232 or the civil-aircraft agreement (Annex II note (c)–(d)) were applied using CBP's steel and aluminum derivative lists (headings 9903.81.91 and 9903.85.08, March 2025 baseline — later inclusions expanded these, so the ~$0.96B metal overlap is a slight lower bound), the Section 232 timber action (U.S. Note 37, which covers softwood lumber/upholstered furniture/cabinets and therefore does not overlap the 338 wood lines), and a probable copper-wire line pending confirmation against the copper CSMS; the civil-aircraft figure is an estimate, since note (d) removes only the General-Note-6 aircraft-qualifying portion of the 18 dual-listed lines, not their full value. All product descriptions are informational only: US Customs and Border Protection governs actual classification, and these measures remain subject to change through implementing guidance and litigation before the August 19, 2026 effective date.
Presidential Proclamations:
Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States With Respect to Motor Vehicles
Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States With Respect to Alcoholic Beverages
Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States With Respect to Dairy
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