Canada Bank has noticed a decrease in the threat of the intense global trade conflict since April, providing some clarity on the expected structure of the American definitions. According to Reuters, the central bank has not issued regular economic expectations for the second quarter in a row, citing the ongoing uncertainty surrounding the American trade policy. Instead, three potential scenarios for future economic conditions have been identified.
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In the current customs tariff scenario, based on the circumstances as of July 27, the gross domestic product is expected to grow by about 1 % in the last half of 2025, with an increase to 1.8 % by 2027. The inflation is expected to remain stable at about 2 %. The escalation cancellation scenario, as the United States and other countries may reduce definitions, growing up to about 2 % in the second half of 2025, with an average of 1.7 % during the end of 2027, with inflation decreased in early 2026 before stability near 2 % by 2027.
On the contrary, the escalation scenario that includes increasing customs tariffs can initially suppress growth in 2025, but it is expected that a recovery in early 2026, with an average growth rate of 2 %. Inflation may rise to a little more than 2.5 % in the third quarter of 2026 before returning to about 2 % in 2027. These expectations are in line with data from the Indexbox platform, which provides an insight into possible economic results in various commercial policies.
Source: Indexbox Market Intelligence
