Canada-U.S. trade conflict escalates further with fresh round of tariffs
Canada’s retaliatory tariffs took effect during the week, imposing duties of 15% to 50% on C$28 billion of U.S. goods across 629 product categories. The U.S. responded within a day, removing previously applied tariffs on products such as cement, sugar, and fishing rods, while introducing new duties on dairy, alcoholic beverages, metal and paper products, and outboard motors — adjustments that left the overall dollar value of U.S. tariffs roughly unchanged. U.S. President Trump also raised the prospect of excluding Canadian firms from a government procurement program covering roughly US$50 billion in annual purchases, though the timing and scale of any such move remain unclear.
Why this matters: The back-and-forth adds to a growing sense of policy uncertainty, which has already weighed on business investment and left exporters facing a less certain planning horizon as the standoff drags on. The additional threat to procurement access opens a new front in the dispute, though the direct economic impact is likely limited given the small share of U.S. government purchases coming from Canadian firms.
U.S. inflation firms on higher energy costs ahead of Federal Reserve (Fed) decision
U.S. inflation held at 3.4% year over year in August, matching both economist expectations and July’s reading. On a monthly basis, however, consumer prices rose 0.4%, up from a 0.1% increase in July, driven largely by higher energy costs — gasoline prices climbed 3.9% during the month, accounting for more than a third of the overall increase. Core inflation, which excludes food and energy, rose 0.3% for the month, though the annual core rate eased slightly to 2.4% from 2.5%.
Why this matters: The report arrives just days before the Fed’s next policy meeting and is likely to factor into the central bank’s deliberations. While the annual headline rate held steady, the pickup in monthly price growth and firmer energy costs may reinforce concerns that inflation is proving more persistent than policymakers had hoped, even as the modest easing in the annual core inflation rate offers a partially offsetting signal.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.04 | 0.06 | 1.56 | 2.32 | 194 |
| Canadian Bonds | -1.08 | -1.23 | -0.79 | -0.90 | 1,190 |
| Canadian Equities | -2.18 | -1.49 | 14.31 | 24.25 | 35,697 |
| U.S. Equities | -0.78 | -0.32 | 12.75 | 17.58 | 7,657 |
| International Equities | -1.38 | -1.12 | 13.06 | 19.29 | 3194 |
| Emerging Market Equities | -0.23 | 0.20 | 24.58 | 34.28 | 1,722 |
| European Equities | -1.68 | -1.80 | 10.92 | 18.65 | 214 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | -0.25 | -0.12 | -1.06 | -0.28 | 0.72 |
| C$/Euro | -0.11 | 0.03 | 0.18 | 0.86 | 0.62 |
| C$/Pound | -0.32 | 0.06 | -1.44 | 0.08 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | 9.37 | 16.66 | 75.68 | 62.95 | 100 |
| Gold ($/oz) | -1.51 | -1.62 | -1.97 | 15.45 | 4,409 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), 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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