How Canada emerged as the safest port in a storm of global trade

Peter Armstrong · CBC News

· Posted: Jun 13, 2025 2:28 PM EDT | Last Updated: 38 minutes ago

When the commercialized warfare began successful February, Canada looked similar it mightiness person been 1 of the countries hardest deed by U.S. tariffs. But successful 3 months of head-spinning volatility, the on-again, off-again threats person expanded, Canada has negotiated sweeping exemptions and economical information has held up remarkably well.

A caller study from RBC's main economist Frances Donald and subordinate main economist Nathan Janzen found that Canada present faces the lowest average effectual tariff of immoderate large U.S. commercialized partner.

"While Canada's economical way guardant remains challenging, it appears considerably little treacherous than it did conscionable a fewer months agone — a communicative that has yet to permeate the Canadian psyche," they wrote.

RBC recovered that 86 per cent of the products Canadian businesses shipped to the U.S. past twelvemonth would inactive beryllium duty-free nether today's rules. Data from the U.S. Census Bureau successful April amusement astir 90 per cent of  Canadian exports to the U.S. remained duty-free successful April. 

"The mean effectual tariff connected U.S. imports from Canada was 2.3 per cent — up importantly from fundamentally zero successful January — but the lowest of immoderate large U.S. commercialized partner," the authors wrote.

So, they say, Canada seems to have emerged arsenic the safest larboard successful a planetary tempest — for now. 

Still immoderate damage

That's not to accidental the commercialized warfare isn't causing damage. It is. Some of that harm has shown up successful the economical data.

Statistics Canada's numbers released this week showed manufacturing sales saw the biggest drop-off successful years.

"Total manufacturing income declined 2.8 per cent to $69.6 cardinal successful April, the largest month-over-month alteration since October 2023 and the lowest level since January 2022," it said successful a merchandise connected Friday.

The unemployment complaint has continued its relentless climb, present astatine seven per cent. Outside of the COVID-19 pandemic, that's the highest it's been since 2016. Unsurprisingly, some the manufacturing drop-off and the job losses person been concentrated in trade-sensitive areas similar southwestern Ontario.

But the RBC squad writes that the Canadian system has held up remarkably good truthful far.

They say confidence plummeted erstwhile the commercialized warfare began successful March, according to user sentiment surveys.

"But existent spending information has not matched that standard of weakness."

Strength from 2 cardinal fronts

Yes, employment has weakened, but job postings connected occupation hunt sites similar Indeed.com person shown signs of stabilization.

Canada besides gets spot from having tons of wiggle country connected 2 cardinal fronts: fiscal and monetary policy.

Fiscal argumentation is authorities spending. Monetary argumentation refers to involvement rates acceptable by the Bank of Canada.

The cardinal slope aggressively chopped rates past year. Its cardinal overnight lending complaint has already travel down 225 ground points (from 5 per cent to 2.75 per cent). Governor Tiff Macklem has held rates unchanged for 3 consecutive meetings present arsenic helium waits to spot much data, but Donald says the slope has country to determination if and erstwhile a further driblet successful rates is warranted.

"We deliberation the cardinal slope is present astatine the extremity of its cutting rhythm and bash not expect further reductions. But, that is contingent connected the economical maturation backdrop and labour markets stabilizing," wrote Donald and Janzen.

On the fiscal front, they say the national authorities has posted precocious deficits successful caller years. But comparative indebtedness levels stay among the lowest successful the developed world.

Tapping into the fiscal capableness could assistance spur connected immoderate much-needed growth.

"Action connected interprovincial commercialized barriers could wage long-run dividends helping to enactment concern and productivity growth."

They besides point to taxation argumentation changes, indebtedness programs and precocious announced defence spending that could boost maturation done adjacent year.

Canada whitethorn payment from U.S. isolationism

But a cardinal origin successful Canada's maturation prospects really stems from the expanding isolationism successful the United States. She says the commercialized daze has forced economies astir the satellite to rethink their reliance connected the U.S.

"Canada's resources — agriculture, energy, and captious minerals — are progressively good positioned to enactment the needs of the planetary economy, peculiarly arsenic it seeks to grow AI/data and defence spending," wrote Donald and Janzen.

That displacement "represents a infinitesimal for Canada to put successful itself and fulfil this need."

The RBC study does not diminish the precise existent threats Canada is facing, nor does it minimize the interaction the commercialized warfare and each its uncertainty are already having.

But it does connection an honorable recalibration of wherever Canada stands present and however overmuch that presumption has changed successful 3 whiplash-inducing months of changes to planetary trade.