Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomePMN BusinessTrump's Latest Tariffs Cast Doubt on Canada Investment RevivalPresident Donald Trump’s latest trade threat against Canada carries a stark reminder for businesses weighing expansion in the northern nation — tariff-free access to the US is far from guaranteed.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.9qm7xa0nipj(dn)j8kd(hubf_media_dl_1.png Statistics Canada(Bloomberg) — President Donald Trump’s latest trade threat against Canada carries a stark reminder for businesses weighing expansion in the northern nation — tariff-free access to the US is far from guaranteed.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorOn Monday, the Trump administration said it would add a new 50% tariff on Canadian packaging products, textiles, horticultural items and other goods, representing about 5% of its exports to the US. The levies are expected to come into effect around Aug. 19.The US imposed the tariffs because of what it described as unfair treatment of American alcohol, cars and dairy. Earlier this month, the US declined to extend its trade agreement, known as USMCA, with Canada and Mexico. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againPrime Minister Mark Carney said he spoke with Trump on Tuesday and “we agreed to intensify negotiations in the coming weeks and the team and myself look forward to doing that.”The new tariffs, and Trump’s willingness to use new tools to bash one of its largest trading partners, adds another layer of uncertainty facing Canadian firms — a potential setback for an economy that’s been struggling for years to boost investment. It’s particularly bad timing for the country’s central bank, which was starting to see green shoots for capital spending. Last week, Bank of Canada Governor Tiff Macklem struck an optimistic tone, saying businesses were adapting to the ongoing trade turmoil. Senior Deputy Governor Carolyn Rogers said Carney’s progress on major projects — including a proposed oil pipeline to the west coast — may be helping business sentiment. But the latest US tariff threats raise doubts about whether Canadian companies that depend on the US market will be able to fully adjust to the unpredictable nature of the trade war, or whether they’ll opt to wait before they invest.The “back and forth, up and down” trade landscape makes for “a difficult business environment for Canada,” Jeremy Kronick, chief executive officer of the C.D. Howe Institute, a Canadian economic think tank, said in an interview.“Even if we strike a deal tomorrow, are we sure it’s a deal — or is it a deal only until it’s not a deal?”Trump has backed away from tariff escalation before, or has carved out significant exemptions for goods shipped under the US-Mexico-Canada Agreement. This time, the administration says products on the new tariff list will be hit by levies regardless of whether the companies shipping them are compliant with the trade agreement.The Bank of Canada held interest rates at 2.25% last week for a sixth consecutive meeting. It has been focused on the potential inflation risk posed by the war in Iran and higher energy prices.For Robert Kavcic, an economist at Bank of Montreal, the combination of subdued core inflation and more tariffs mean that rate hikes from the central bank would “need to be considered very, very, carefully.”“Worsening trade relations with the US could even open the door to easing again,” he wrote in a report to investors.Capital spending and productivity have languished in Canada for years. Business investment excluding residential structures has been broadly flat over the last three years and remains down 9.5% compared with 2014 levels.The economic damage from the new tariffs, should they come to pass, would be “substantial,” according to Randall Bartlett, deputy chief economist with Desjardins Group.“Reduced exports is a clear channel, but lower business investment as a result of sustained trade uncertainty will surely also contribute to weaker growth,” he said, adding that would likely also put downward pressure on underlying inflation.Canada’s economy is set to rebound in the second quarter amid a spike in oil production, potentially breaking a half-year of stagnation brought on by tariff damage and slowing population growth.Earlier this year, Statistics Canada reported that real gross domestic product contracted for two consecutive quarters, satisfying one condition of a recession, though most economists and the central bank have rejected that label.—With assistance from Mario Baker Ramirez. 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