1159 ET - Capital Economics predicts Canada GDP could fall 3% and the Canadian dollar decline by 10% in the event President-elect Donald Trump slaps a 25% tariff on all Canadian imports. Stephen Brown, an economist at the forecasting firm, says CAD would need to weaken even further--USDCAD at 1.78, from its current 1.44 level--to totally offset the 25% tariff hit. Brown believes the Bank of Canada would not allow CAD to weaken that much, due to the impact on inflation. Conversely, Canada could withstand the fallout from the universal 10% tariff that Trump has championed, Brown says, as that levy would apply across the globe. A 25% tariff for Canada, though, would likely force US buyers to replace Canadian goods and services with substitutes from elsewhere. (paul.vieira@wsj.com; @paulvieira)
(END) Dow Jones Newswires
January 09, 2025 11:59 ET (16:59 GMT)
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