CIBC economist Avery Shenfeld believes Canadian exports will likely keep their duty-free status even as Washington ramps up trade talk. He says most goods heading to the U.S. should avoid new tariffs, forming the basis of the bank’s economic outlook.
Shenfeld points out that the current tension is similar to the earlier USMCA negotiations. He notes that public complaints from the White House are familiar and shouldn’t be taken as a sign of real changes.
The USMCA agreement has legal mechanisms that support a stable outlook for Canada. Even if a review doesn’t give clear results, the deal is expected to stay in place until it expires in 2036.
Political pressures in the U.S. also make it unlikely that the government will take extreme measures. Shenfeld mentions that business groups in the U.S. support extending the trade deal, which adds weight to keeping tariffs unchanged.
Investor behavior reflects this confidence. Markets are pricing in an unchanged Canadian interest rate for the year, suggesting they don’t expect a big trade conflict.
Still, Shenfeld warns that the ongoing threats of withdrawal create uncertainty. While exports may continue to grow, these doubts could hold back investment in Canada’s industrial sector and slow the expansion of production capacity.