A new report looking at some possible paths ahead for U.S tariffs finds that even the base case could mean a 1.5 percent drop in long-term GDP, while a worst case could cut five percent off growth.
The report from BMO looked at three scenarios, including a benign case that reflects current U.S. policies, which the bank figures has resulted in about a seven percent effective tariff on Canadian goods.
The benign base case would likely mean only a moderate effect on near-term growth, while the worst-case scenario of 35 percent tariffs on all imports from Canada—the current rate on non-CUSMA compliant goods—would likely lead to a moderate recession in the near-term as well as worsen long-term growth and inflation….