Canada’s economy contracted sharply in the second quarter as exports fell due to U.S. President Donald Trump’s tariffs, the government reported Friday.
The world’s ninth largest economy shrank at an annual rate of 1.6 per cent compared to the first quarter, said Statistics Canada. It was the first decline in the Canadian GDP in seven quarters.
Statistics Canada also revised downward its estimate of first quarter growth, from an annual rate of 2.2 per cent to 2.0 per cent.
Tariffs imposed by the Trump administration on Canadian goods as part of its sweeping global levies slowed exports dramatically, the agency said.
Specifically, Canadian exports plummeted by 7.5 per cent in the second quarter, after rising by 1.4 per cent in the first quarter.
Because of the tariffs, international exports of passenger cars and light trucks plummeted 24.7 per cent in the second quarter.
Exports of industrial machinery, equipment and parts fell by 18.5 per cent while travel services dropped 11.1 per cent, Statistics Canada said.
The contraction of the economy could raise the chances that the Bank of Canada will lower interest rates in September.
In its last three meetings the central bank has kept its benchmark interest steady at 2.75 per cent.
