CIBC: Canada Faces Growing Economic Risks From a Prolonged US Trade War - FJElite

Canada still needs to re-engage with the US despite the breakdown in trade talks. Even a standstill at current tariff rates would weaken the 2027 outlook, while threatened auto and parts tariffs would add further pressure. The larger risk is a continued escalation that eventually undermines CUSMA, which still provides tariff-free access for much of Canadian exports. Canada is especially vulnerable because its economy is far more dependent on two-way trade with the US than other major economies.

Canada can reduce that dependence over time by expanding energy, minerals, defence production and other globally demanded industries, but that reindustrialisation will take years. Fiscal support and lower interest rates can cushion the transition, but not eliminate the damage. In the meantime, Canada’s best path is to build pressure through US businesses, unions and potentially the courts, while keeping the door open to renewed talks with the Trump administration.