Canada’s economy continues to expand, despite Trump’s 25% tariff threat

Canada’s economy continued to grow in the final months of 2024, despite potential 25% tariffs threatened by President Donald Trump.

Statistics Canada reported that the country’s gross domestic product rose by 0.6% in the fourth quarter, beating the 0.5% increase in the previous quarter.

Household spending was a key driver, posting a 1.4% quarterly jump. 

That is the strongest gain since the second quarter of 2022. 

Over 2024, household spending grew 2.4%, with Canadians investing in new trucks, vans, and SUVs, and spending more on rent, telecommunications, and financial services.

The construction sector also picked up. 

Residential construction climbed by 3.9% in the fourth quarter, marking the largest quarterly increase since early 2021. 

Meanwhile, exports of goods and services rose by 1.8% in the same period, bolstering overall growth.

Despite those gains, some economists warn that Trump’s impending tariffs could hit the export sector hard next week. 

Exports rose by 0.6% in 2024 overall, led by crude oil, bitumen, travel services, and pharmaceutical products, but experts fear those gains could be wiped out if tariffs go into effect.

The GDP estimates arrive only days before the US plans to impose 25% tariffs on Canadian products. 

Bank of Canada Governor Tiff Macklem said the impact would be “devastating” if Washington follows through with tariffs.

“In the pandemic, we had a steep recession followed by a rapid recovery as the economy reopened,” said Macklem. 

“This time, if tariffs are long-lasting and broad-based, there won’t be a bounceback.”

Macklem added that Canada might make up some of the ground eventually, but any recovery would be slow to materialize if the tariffs are in place for a significant period of time. 

For now, the country’s economy continues to show resilience in the face of uncertainty.