Canada's central bank cut its key lending rate to 2.25% today, saying that while the global economy has shown resilience in response to President Donald Trump's trade war, "the impact is becoming more evident."
The cut by a quarter of a point marked the second consecutive rate reduction by the Bank of Canada, after a quarter-point cut in September.
Since Trump returned to office, Canada's central bank has been closely watching the impacts of his protectionist trade policies. These have hit specific Canadian industries like car, steel and aluminum hard.
The bank said Canada's economy had contracted by 1.6% in the second quarter "reflecting a drop in exports and weak business investment amid heightened uncertainty."
"US trade actions and related uncertainty are having severe effects on targeted sectors including autos, steel, aluminum, and lumber. As a result, GDP growth is expected to be weak in the second half of the year," it added.
The Bank of Canada noted that US trade policies "remain unpredictable" - a reality underscored by Trump's surprise decision to end bilateral trade talks over an anti-tariff ad produced by the province of Ontario's government that ran on US networks.
