Trade uncertainty a ‘tax on businesses’ as Bank of Canada mulls next move

Uncertainty surrounding Canada’s trade relationship with the United States is expected to cloud economic decision making by businesses and households for months, economists are warning, with the outcome of a looming review of the Canada-U.S.-Mexico Agreement (CUSMA) trade deal one of many unknowns.

Though Canada secured a 30-day reprieve from immediate U.S. tariffs on Monday, Bank of Nova Scotia economist Derek Holt is among those who aren’t ready to breathe a sigh of relief.

Holt noted the language used by U.S. President Donald Trump, who said it was his intention to see whether “a final economic deal with Canada can be structured” while tariffs are paused.

“Read that carefully. I think it means onward we go into CUSMA/USMCA talks with Trump setting the same wildly unrealistic timeline he did the last time,” Holt said in a note to clients. “Trump will push for a rapid deal, and when Canada digs in on important issues, he may well threaten tariffs again.”

READ MORE: https://financialpost.com/news/economy/trade-uncertainty-tax-businesses-bank-of-canada-next-move