Canada could face second-largest recession in history if trade war erupts

Canada  could face second-largest recession in history if trade war erupts.
Not a valid attachment ID.
Canadians  could face the largest non-pandemic recession in  their history in a  matter of weeks. That's the  theme of a new report from  the National Bank of Canada  (NBC), which examines the Bank of  Canada's (BoC)  model for a similar tail risk in 2019. The  conflict would  hit both  countries hard, with the  impact expected to  be much  greater. Canada would see  $1 in 16 of  its GDP disappear in a matter of weeks,  dealing an unprecedented economic blow to the  country.
Canada to lose 6% of GDP  in trade war with the United States
The six major banks are diving into the  figures reported by the BoC, which they  obtained in 2019. The central bank  has modeled the impact of the  United States imposing a 25% tariff on  Canada and  the reciprocal measures  that would be imposed. Incidentally, this is what the  new American  administration is proposing.
"The BoC estimates paint a  bleak picture for Canada: exports and investment would  be hit hard, while consumption would weaken due to  worsening labor market conditions and  unfavorable terms of trade," explains Matthieu Arseneau,  deputy chief economist at  FNB.
Source: FNB.
The bank's  figures show  that this would  cause one of the largest recessions in  Canadian history.  Projections show that real GDP  has fallen by 6%,  surpassing all  recessions except the 2020 recession. This  blow would be closer to a more traditional  recession, as the  United States will look  elsewhere to make up for  it, leading to  a significant loss of  industry. Six percent may not  seem like much to the average person, but  it is an astronomical  amount. To put this into context,  the Canadian economy could lose Nova Scotia, New Brunswick, Prince Edward Island, the Northwest Territories, Nunavut, and  the Yukon, and it wouldn't  even be a  6% loss of GDP for the country.  The US economy would also be affected, but not as much as Canada's.
The bank  warned that Canada  would not be the only loser in a trade war. "The  US also  faces challenges,  battling stagflationary pressures marked by sluggish economic growth  combined with rising inflation,"  Arseneau noted.
Not a valid attachment ID.

Markets are  becoming aware of the threats to growth. The  yield on the 10-year US Treasury  note has  risen by 100 basis points  in just a few weeks. This has led to significant uncertainty, which the bank  said should serve as a  warning signal for global trade.  "One can only hope  that this serves as a warning to Mr. Trump  of the significant negative consequences  that his aggressive protectionist agenda could impose on  American businesses and the  economy as a whole," he  added.
"

[attachment deleted by admin]