Bank of Canada — “The impact of US trade policy on jobs and inflation in Canada” (June 2025)

The surge in trade and inventories boosted the economy—Canadian GDP growth was 2.2% in the first quarter.

But getting ahead of tariffs borrowed activity from the future, and we’re now seeing a sharp reversal. Canadian goods exports to the United States dropped more than 15% in April. This reflects both the payback from the first-quarter surge and the fact that tariffs are making Canadian goods more expensive in the United States. In April, exports of steel and aluminum products fell 11% and 25%, respectively, and motor vehicle exports were down almost 25%.

There has also been a second, less-dramatic shift caused by US trade policy—destination. As Canadian exporters have tried to adapt to US tariffs, trade with countries other than the United States has picked up (Chart 2).