TORONTO - The Conference Board of Canada has issued a warning regarding the potential economic impacts of U.S. tariff pressures, forecasting significant job losses and a contraction in the economy in the upcoming quarter. The research organization estimates that if the tariffs, along with Canadian countermeasures, remain in effect throughout the second quarter of 2025, the Canadian economy may shrink by 5.4 percent on an annualized basis, resulting in approximately 160,000 job losses.

The report highlights that manufacturing will bear the brunt of these job losses, with automotive exports projected to plummet by over 50 percent, leading to an overall decline in real exports of about one-third. This situation reflects the severe repercussions that trade actions can have on key industries and employment levels across the country.

Moreover, the Conference Board anticipates that these trade tensions will exert upward pressure on inflation, predicting it could rise to 2.9 percent during the same quarter. However, the report also notes that a decrease in consumer confidence is expected to mitigate some of the pricing pressures associated with inflationary trends.

Looking forward, while there remains considerable uncertainty about the future of tariffs, the Conference Board forecasts a potential turnaround. It anticipates that the tariffs may be lifted by the start of the third quarter, which could catalyze a notable economic expansion of 3.9 percent and lead to a rebound in hiring activities.

In terms of long-term projections, the Conference Board's outlook for the entire year of 2025 has been adjusted downward. The economy is now expected to grow by only 0.9 percent, a significant reduction from the previously forecasted growth rate of 1.5 percent, which was made prior to the escalation of tariff threats.

This report underscores the intricate relationship between trade policies and economic performance, illustrating how tariff impositions can ripple through various sectors and ultimately affect both employment and inflation. The findings emphasize the importance of monitoring trade negotiations and policies closely, as they hold substantial implications for the Canadian economy in the immediate future and beyond.