{"id":13821,"date":"2026-08-14T14:53:57","date_gmt":"2026-08-14T14:53:57","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=13821"},"modified":"2026-08-14T14:53:58","modified_gmt":"2026-08-14T14:53:58","slug":"trade-deadline-looms-after-canadas-inflation-data-for-july","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/forward-guidance\/trade-deadline-looms-after-canadas-inflation-data-for-july\/","title":{"rendered":"Trade deadline looms after Canada\u2019s inflation data for July"},"content":{"rendered":"\n
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For the week of August 17th<\/sup><\/strong><\/p>\n\n\n\n

Canada’s Consumer Price Index for July on Monday is expected to show a tick higher in headline CPI, before the latest round of U.S. Section 338 tariffs are set to take effect on Wednesday.<\/p>\n\n\n\n

We expect year-over-year price growth rose to 2.9% from 2.8% in June, driven by a reacceleration in energy prices. Oil prices are still lower than peaks in April and May, but bounced higher in July as conflict in the Middle East continued to disrupt transportation through the Strait of Hormuz. Gasoline prices were on average 25% above a year ago in July\u2014up from a 20% rise in June.<\/p>\n\n\n\n

We expect pass-through from higher energy prices to broader consumer prices have remained limited. Growth in airfares remains high, but growth in \u201ccore\u201d measures\u2019 prices have remained near the 2% target. In July, we look for prices excluding food and energy products to tick up to 1.9% from 1.8% in June, and for the Bank of Canada\u2019s preferred median and trim measures to hold around similar rates. Food price growth likely edged lower, but remained above 3%.<\/p>\n\n\n\n

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Latest U.S. tariff threats are significant but manageable for Canada<\/strong><\/p>\n\n\n\n

A more important development is U.S. Section 338 tariffs targeting about 5% of Canada’s exports, set to take effect on August 19.<\/p>\n\n\n\n

The deadline has fast-tracked trade talks between Canada and the U.S., but the odds of a full resolution of all trade irritants before Wednesday remain low. For the U.S. economy, the impact will be negligible as the targeted products represent a small (0.5%), and highly substitutable share of U.S. imports from the world.<\/p>\n\n\n\n

For Canada, as we\u2019ve covered here<\/a> and in our latest forecast update, the impact will be bigger, but still manageable. We estimate the new U.S. tariffs target 0.4% of Canada\u2019s gross domestic product and jobs.<\/p>\n\n\n\n

The economy wide impact may be small, but reduced foreign demand for these products would still hurt production and jobs in key manufacturing industries\u2014notably apparel and electrical equipment and appliances manufacturing\u2014mirroring effects from past U.S. Section 232 tariffs.<\/p>\n\n\n\n

Overall, even with the new tariffs in place, 80% of Canada’s exports to the U.S. remain duty free under CUSMA exemptions. This should ultimately limit the impact of tariff headwinds on the Canadian economy, which is expected to continue to strengthen over the second half of this year.<\/p>\n\n\n\n