RBC says resilient domestic demand and net trade drove Canada’s Q2 recovery, with U.S. tariffs posing minimal nationwide risk.
Canada’s economy grew strongly in the second quarter, fueled by resilient domestic demand and a rebound in net trade. The recovery follows a weak first quarter, with growth exceeding expectations despite ongoing trade tensions.
U.S. Section 338 tariffs target a narrow range of Canadian products, limiting broader economic impact. However, specific regions and industries face higher risks. Meanwhile, global U.S. tariff rates have declined, aligning with a resilient U.S. economy supported by infrastructure spending.
The Bank of Canada is likely to maintain its current policy stance, given firming economic activity and softer core inflation readings. Analysts expect modest rate adjustments in 2027 if trends persist.