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As bad as it was, however, economists say it could have been much worse.Ìý

Before Wednesday’s announcement, many believed Canada would be one of the hardest hit countries by Trump’s tariffs. Instead, it was one of the least impacted.

While Canada and Mexico were largely spared from “reciprocal” tariffs, other nations got steep levies, including China (34 per cent), the European Union (20 per cent), and Vietnam (46Ìýper cent).Ìý

Tariffs onÌýCanadian cars and auto parts, along with levies onÌýaluminum and steel, are still in place and are predicted to devastate those industries. AlreadyÌý6,000ÌýCanadian autoworkers have received layoff notices.

Still, some economists believe Canada may have gained an advantage relative to other harder-hit countriesÌýthat could soften the blow on consumers and businessesÌý— and perhaps, paradoxically, even make our trading relationship with the U.S. stronger.

“It’s created this comparative advantage for Canada, it’s created opportunities,” said Bradley Saunders, economist at research firm Capital Economics, explaining that Americans now have an incentive to buy more from Canada, as our average tariff rate is significantly lower than those imposed on other countries.Ìý

“Because everyone has been hurt to varying degrees, if you’re hurt less, you’re one of the people with better outcomes.”

For example, as long as Canadian goods are compliant with the Canada-United States-Mexico Agreement (CUSMA), the average tariff rate a U.S. consumer can expect on an imported item of furniture will be almost 50 per cent higher than on furniture imported from Canada, saidÌýSaunders.

“The hit to Canadian exports to the U.S. won’t be as large. Businesses won’t be as deterred from investing in Canada,” he added.Ìý

Outlook still gloomy

Nevertheless, the Canadian economic forecast is gloomy, as Trump’s tariffs pound international markets and slow global trade.

Canada “will get potentially a larger share of a shrinking pie. And that’s not necessarily a good outcome,”Ìýsaid RBC economist Nathan Janzen.Ìý

This week, to 60 per cent, up from 40 per cent before Trump’s announcement. JPMorganÌýsaid it’s possible, though less likely, that the U.S. enters a recession and the rest of the world is spared from one.

A team of economists at TD Bank expects the Canadian economy will shed 100,000 jobs in the next six months and inflation will surge above three per cent by summer.ÌýTD is forecasting a “technical” recession in 2025, meaning two consecutive quarters of negative growth.ÌýEconomists typically use this term to describe a milder downturn.Ìý

On Friday,ÌýStatistics Canada reported the economy lost 33,000 jobs in MarchÌý— the biggest loss since January 2022Ìý— while the unemployment rateÌýrose to 6.7 per cent,Ìýup from 6.6 per cent in February.

“Tariff uncertainty is playing through the economy and it’s already causing consumers and businesses to behave differently,” TD economist James Orlando told the Star. “Behaving differently means less spending, less investment, which means less growth.”Ìý

In a note to clients on Friday, Orlando said Canadians are taking longer to find work and that full-time jobs in the “cyclically sensitive” private sector are driving losses.Ìý

This past week, auto manufacturerÌýStellantis said it would be shutting down its Windsor assembly plant for two weeks starting April 7, putting up to 4,500 people out of work.Ìý

Rate cutsÌýto slow

Despite the prospect of slower economic growth, economists say the Bank of Canada isn’t likely to cut its key rate below two per centÌýthis year.

The rate is currently at 2.75 per cent and the bank has repeatedly said it cannot offset the destructive impacts of a trade war while controlling inflation, which is expected to rise again with retaliatory tariffs.Ìý Ìý

TD expects the central bank to lower interest rates by another 50 basis points, to 2.25 per cent, in 2025. “If this was like a typical recession where inflation was falling and GDP was negative, we would have the Bank of Canada cutting further,” said Orlando.Ìý

Capital Economics is forecasting the Bank of Canada will cut three more timesÌý— by 25 basis points eachÌý— by the end of the year, although at a slower pace than previously expected. Rather than delivering three consecutive cuts, Saunders believes the bank will cut every other meeting.Ìý

Still, given weak March jobs data, markets have raised the odds of another rate cut by the central bank on April 16.Ìý

A path forwardÌý

Many experts agree that, because it was largely spared on “Liberation Day,” Canada was given an advantageÌýin a game that became impossible to win after Trump launched an attack onÌýinternational trade.

Some, including Prime Minister Mark Carney, say the best path forward is further trade diversification so we’re less reliant on America. In a speech this week, Carney suggested creating a new coalition of “like-minded” countries that support free trade and global co-operation without the U.S.Ìý

Others believe that Trump has left the door open to make amends with Canada and strengthen ties.Ìý

The result may be surprising: Despite a growing “Buy Canadian” movement and simmering rage coast to coast, Canada may end up closer to the U.S.Ìý— economically speaking — than it was before.

“People are talking about diversifying our economic engine away from the U.S. I think the opposite will happen,” saidÌýBenjamin Tal, deputy chief economist at CIBC.

“I think that when the fog clearsÌý— and it will eventuallyÌý— we will find ourselves in a situation in which our reliance on the U.S. actually will grow.”Ìý