According to the agency, ‘the strong increase in the effective US tariff of Canadian imports so far mainly affected the feeling, but there are already initial signs of impact on economic activity’
Fitch Ratings said on Monday (19), that the economy of walking to a recession in 2025, in the face of a “significant drop in trust” caused by the increase in rates on Canadian products. According to the risk classification agency, “the strong increase in the effective US tariff of Canadian imports so far has mainly affected the feeling, but there are already initial signs of impact on economic activity.” The agency points out that commercial ties between the two countries “were in doubt” with Washington’s new stance, which caused a negative reaction from Canadian entrepreneurs.
Business confidence indicators plummeted, with the PMI index composed falling at the lowest level since June 2020 and the business barometer of the Canadian Federation of Independent Companies (CFIB) also retreating sharply, the institution recalls. “The substantial fall at CFIB barometer is consistent with a strong GDP contraction,” said Jessica Hinds, director of Fitch Ratings. In April, Fitch reduced the growth projections of Canadian GDP to 2025 and 2026 to 0.1% and 0.5%, respectively. According to the agency, this implies a 1.5% contraction in GDP throughout this year, which would configure “a light recession by historical standards.”
Consumers’ feeling also worsened, with increased unemployment by feeding concerns about occupational safety. The eviction rate rose to 6.9% in April, the highest level since June 2021, with a negative prominence for the industrial region of the automotive sector, ponders the Fitch. Canadian exports to the US fell for the second month in a row in March, despite a temporary increase in vehicle shipments before the tariffs are entry into force, the institution adds.
*With information from Estadão Content
Posted by Fernando Dias
