The Bank of Canada’s explainer, dated Sept. 24, 2026, reports that U.S. tariffs introduced in early 2025 have increased costs for purchasers of Canadian products. The central bank says businesses may react by switching suppliers or relocating production, which could lower demand for Canadian exports and weigh on investment and employment.
According to the Bank, Canadian firms are responding through technology investment, supplier changes and by seeking customers beyond the U.S. Some resource sectors — agriculture, minerals and energy — often find alternative buyers more readily than manufacturers, the research notes. The Bank identifies the automotive sector, steel, aluminum and lumber as having been hit hard.
The Bank also states that CUSMA’s protections have limited harm for many trade-related industries, but ongoing uncertainty about the agreement continues to complicate business decisions. The explainer adds that stable inflation can help support adjustment but cannot fully offset these structural changes. The document is educational and does not announce an interest-rate decision, a numerical growth forecast or new tariffs.
