OTTAWA, Aug 28 Canada’s economy rebounded sharply in the second quarter after six months of virtually no growth, aided by a strong jump in exports and solid domestic demand, data showed on Friday, though a new round of U.S. tariffs brings new uncertainty.
The economy grew at an annualized rate of 3.3% in the second quarter, the fastest rate since 2023, after a revised 0.3% increase in the first quarter, Statistics Canada said
The upward revision to first-quarter growth means Canada was not in a technical recession, usually defined as two straight quarters of contraction. Healthy domestic demand, led by consumer spending and business investments, signals the economy is slowly brushing off the impacts of more than 18 months of U.S. import tariffs that upended North American supply chains and increased costs. FRESH TARIFF DISPUTE A strong domestic consumption and expenditure pattern puts Canada on a firm footing to withstand a new 50% U.S. import tariff that President Donald Trump imposed this week on $20 billion of Canadian exports.
Canada retaliated with its own counter-measures on Canadian imports from the U.S. “It seems like households and businesses were beginning to find ways of navigating the trade-related uncertainty before the latest round of tariffs.” said Royce Mendes, managing director and head of macro strategy at Desjardins wrote in a note. “While it helps that the economy was on stronger footing heading into August, the fresh wave of protectionism injects a significant amount of uncertainty into the outlook,” Mendes said. The Canadian dollar slightly weakened after the GDP data with loonie trading down 0.01% to C$1.3856 against the U.S. dollar, or 72.17 U.S. cents. Money markets were pricing in no change in interest rates next week..