Published: 2025-01-31T19:16:23.000Z
USD/CAD flows: Tariffs back on for February 1, at least for now
Senior Economist , North America
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Contradicting an earlier Reuters report that tariffs would be delayed to March 1, the White House has stated that tariffs will start on February 1, 25% on Mexico and Canada and 10% on China. It is unclear whether there will be exceptions, energy imports having previously been suggested.
The picture has the potential to change at any time but for now it looks like we should assume tariffs are coming, and if sustained that would likely push Canada into recession, and deliver a noticeable boost to US inflation. The impact on US growth is likely to be negative if not recessionary even excluding the likelihood that the higher inflation will make Fed easing less likely. If the US tariffs are met with retaliation, the hit to US growth would increase while Canada would be facing both recession and higher prices.