Canada Avoids Recession Amid Trump Sectoral Tariffs

The Canadian economy has avoided a forecasted recession, recording 2.6% GDP growth in the third quarter and adding 54,000 jobs in November. This resilience comes despite sectoral tariffs on steel, aluminum, autos, and lumber imposed by Donald Trump. The International Monetary Fund attributed this stability to government stimulus that helped the country weather a significant external trade shock.

The Bank of Canada maintained interest rates at 2.25% to manage the current economic climate. While the labor market remains strong, officials warned that uncertainty remains high ahead of the Canada-U.S.-Mexico Agreement review next spring. The White House has suggested the current deal could be split into separate agreements, adding further volatility to the outlook.

Private investment continues to flow into the country, highlighted by Microsoft Corporation announcing a $7.5-billion investment in Canadian artificial intelligence research on December 9. This follows a series of investments in cloud computing and data centers by the company starting in 2023.