US tariffs could trigger deep recession – Bank of Canada

Bank of Canada on Wednesday said inflation in Canada would spike and the country would enter a deep recession if US tariffs trigger a global trade war.

The central bank, while citing the high level of uncertainty, did not issue its regular quarterly economic forecasts.

The apex bank instead provided two scenarios as to what might happen.

DAILY POST reports that in the first scenario, most tariffs are negotiated away, and Canadian and global growth weaken temporarily.

Canadian inflation falls to 1.5% for a year and then returns to the bank’s 2% target.

In the second scenario, the tariffs prompt a long-lasting global trade war.

Canada enters a significant recession, inflation spikes above 3% in mid-2026 before returning to 2%.

The apex bank stressed that many other scenarios were possible, estimating that annualized first quarter GDP was 1.8%, down from the 2.0% it forecast in late January.

US tariffs could trigger deep recession – Bank of Canada



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