Canada-U.S. trade talks intensify as August 19th tariff deadline nears
Canadian-U.S. trade negotiations are entering an important period, with both sides working toward a potential agreement ahead of the August 19th deadline for additional Section 338 tariffs — a 50% duty on a select group of Canadian goods, including autos, alcohol, and dairy products. Reports suggest a deal could involve Canadian concessions — including the removal of retaliatory tariffs, the return of U.S. alcohol to store shelves in participating provinces, and adjustments to dairy quotas and procurement policies — in exchange for relief on sector-specific tariffs, such as those on steel, aluminum, and autos. However, details remain scarce and an agreement has not yet been reached.
Why this matters: Should a deal be reached, it could provide markets with greater trade certainty, potentially supporting business investment and consumer confidence in the months ahead. However, should the August 19th deadline pass without an agreement, the tariffs would take effect as scheduled, and the resulting risk of escalating tensions and further retaliation could weigh on business confidence and undercut Canada’s tentative economic recovery.
U.S. inflation eases modestly at both consumer and producer levels
U.S. inflation showed modest but encouraging signs of cooling in July, with headline Consumer Price Index (CPI) inflation edging down to 3.4% year over year. Core CPI, which excludes more volatile food and energy prices, also eased slightly to 2.5%. The improvement was helped by softer services inflation, as slower wage growth and housing disinflation offset otherwise steady goods prices. Producer Price Index (PPI) data, which measures price changes received by producers, told a similar story, with headline PPI moderating to 4.7% year over year from June’s pace.
Why this matters: Concerns have been building in recent months that higher energy prices, tariffs, and strong capital expenditure tied to artificial intelligence could push price pressures to become more broad-based and persistent, potentially prompting the Fed to consider resuming rate increases to stay ahead of inflation risks. This week’s softer readings offer a more encouraging data point against that backdrop.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.04 | 0.08 | 1.38 | 2.38 | 194 |
| Canadian Bonds | -0.19 | -0.08 | 0.57 | 2.38 | 1,207 |
| Canadian Equities | 1.01 | 4.32 | 17.42 | 34.77 | 36,730 |
| U.S. Equities | 0.39 | 4.00 | 14.53 | 21.78 | 7,786 |
| International Equities | 0.59 | 2.86 | 15.28 | 23.67 | 3,263 |
| Emerging Market Equities | 2.66 | 2.23 | 22.93 | 26.73 | 1,701 |
| European Equities | -0.17 | 1.58 | 14.21 | 22.74 | 220 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | 0.46 | 1.05 | -1.08 | -0.43 | 0.72 |
| C$/Euro | 0.35 | 0.66 | 0.40 | 0.23 | 0.62 |
| C$/Pound | 0.15 | 0.62 | -1.53 | -0.49 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | 5.40 | -2.68 | 44.54 | 34.07 | 82 |
| Gold ($/oz) | 0.85 | 8.04 | -1.34 | 25.86 | 4,437 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
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