Canada's Economy Faces Uncertain Future Amid Tariff Tensions

Canada's GDP rose by 0.4% in January due to increased cross-border trade to evade U.S. tariffs. Despite strong growth aided by interest rate cuts, potential U.S. tariff impacts pose risks. Manufacturing and mining led growth, but future prospects appear shaky as retaliatory tariffs loom.

Canada's economy demonstrated significant resilience as the nation's Gross Domestic Product (GDP) climbed 0.4% in January, continuing a positive trajectory. Economists attributed this growth partly to heightened demand in cross-border trade as companies sought to navigate the emerging threat of U.S. tariffs.

The robust economic performance has been supported by consecutive interest rate cuts that fueled consumer spending and investment, leading to more than 2% annualized growth in the past two quarters. However, the Bank of Canada highlighted a disparity between the promising statistical data and surveys signaling cautious sentiment among businesses and consumers.

With new U.S. tariffs set to impact a broader range of goods, experts warn of potential setbacks to Canadian economic growth. As February's growth appeared to stagnate, concerns heightened over the future, especially with upcoming policy decisions amid evolving global trade policies.

(With inputs from agencies.)