The United States is proposing a new 10-per-cent tariff on Canada and other trading partners in an attempt to rebuild a tariff regime that was struck down by the U.S. Supreme Court earlier this year, but economists say it will not significantly change Canada’s economic outlook because most exports will still be exempted.
In a press release late Tuesday, the U.S. Trade Representative’s Office (USTR) said it is proposing tariffs between 10 to 12.5 per cent on 60 countries it claims are failing to prevent the import of products made with forced labour. Canada was identified as one of six countries or regions that “have failed to effectively enforce a forced labor import prohibition,” which would subject it to 10 per cent tariffs. The other five on the list are Mexico, Ecuador, the European Union, Indonesia and Pakistan.
However, a report from the U.S. Federal Register said products that are compliant with the Canada-U.S.-Mexico Agreement (CUSMA) will not be subject to the tariffs. This reflects the same exemptions Canadian and Mexican products had enjoyed during the earlier tariff regime. The tariffs also do not come into effect right away, and could change following a public comment and review period.
Prime Minister Mark Carney said Wednesday morning that the tariffs will not have an impact on the “vast, vast, vast majority of Canadian trade,” and promised to propose legislation to tighten regulations around products using forced labour in the country’s supply chains before the House of Commons rises for its summer break. “We support the overall objective (of eliminating forced labour),” Carney told reporters.
The USTR’s announcement came hours after the Organisation for Economic Co-operation and Development forecast moderate growth for Canada. According to an outlook released Wednesday, growth in gross domestic product is expected to reach 1.2 per cent in 2026 and 1.7 per cent in 2027 as the economy “recovers from the 2025 trade‑related slowdown triggered by higher U.S. tariffs” and business investments gradually recover.
The OECD’s outlook is similar to the Bank of Canada’s April forecast, when officials projected economic growth to accelerate from 1.2 per cent in 2026 to 1.6 per cent in 2027. Both predated Statistics Canada’s first-quarter GDP data published last Friday, which showed the economy had experienced two quarters of negative real annualized growth, the technical definition of recession.
“Their forecast is a bit dated and high,” said Nathan Janzen, assistant chief economist at the Royal Bank of Canada. “If you incorporate the first-quarter GDP data, it will probably be (lower).” Janzen concurred that Tuesday’s tariff announcement will not affect that economic outlook due to the exemptions, but said that does not diminish the economic uncertainty facing the country.
