# Canada’s Real GDP Rebounds as Tariff Risk Complicates Policy Choices

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/23757
Published: 2026-09-24T14:23:47.000Z
Updated: 2026-09-24T14:23:47.000Z

Canada’s real GDP increased 0.8% quarter over quarter in the second quarter, but tariff uncertainty and rising energy costs are creating opposing pressures for the Bank of Canada’s policy decisions.

Bank of Canada Governor Tiff Macklem delivered the remarks in Halifax on Sept. 21 at about 11:20 a.m. ET (15:20 UTC), describing an economy adapting to trade tensions, artificial-intelligence adoption and demographic change.

Second-quarter exports rose 3.6%, including a 27% increase in passenger-car and light-truck exports. Macklem said non-energy exports climbed 14.5% to their highest level since early 2025, while business investment grew at an annualized 8.8% rate.

The second-quarter expansion followed a 0.1% first-quarter real GDP growth rate. Products affected by the latest U.S. tariffs represent about 5% of Canada’s goods exports to the United States, Macklem said. If those tariffs remain in place, fourth-quarter growth could be roughly halved to below 1%.

Inflation is adding a separate complication. Canada’s Consumer Price Index rose 3% year over year in August, while the measure excluding gasoline increased 2.4%. Macklem said higher energy prices could keep inflation above the Bank of Canada’s 2% target even as trade uncertainty weighs on demand.

“Our beacon is our 2% inflation target,” Macklem said.

The Bank of Canada held its target for the overnight rate at 2.25% on Sept. 2. Its Bank Rate was 2.50%, and its deposit rate was 2.20%.

Macklem said businesses were changing suppliers, seeking customers outside the United States and using artificial intelligence to automate routine work. About 19.2% of Canadian businesses used artificial intelligence to produce goods or deliver services during the previous 12 months, up from 6.1% two years earlier.

Canada’s labor market weakened in August. The unemployment rate reached 6.4%, and employment fell by 42,000 after a cumulative increase of 181,000 from April through July.

Macklem framed the adjustment as a process of reassessing economic shocks, making near-term changes and pursuing longer-term transformations designed to raise productivity.