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MNI BRIEF: Canada Budget Office Says Trade War Cuts Output 2%

Policy NewsCanadaBriefStoryNorth America

MNI (LONDON) - Canada's parliamentary budget office says a U.S. trade war would permanently reduce the country's output by 2%, a lower estimate than the central bank's view of a 2.5% hit. 

The budget office scenario assumes tariff revenue is recycled back into the economy via transfers to households and government spending, and "the impact could also be higher or lower depending on the eventual severity of the trade actions and Canada’s response," according to the report. (See: MNI INTERVIEW: BOC To Drop Rates In Trade War: Homebuilders)

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MNI (LONDON) - Canada's parliamentary budget office says a U.S. trade war would permanently reduce the country's output by 2%, a lower estimate than the central bank's view of a 2.5% hit. 

The budget office scenario assumes tariff revenue is recycled back into the economy via transfers to households and government spending, and "the impact could also be higher or lower depending on the eventual severity of the trade actions and Canada’s response," according to the report. (See: MNI INTERVIEW: BOC To Drop Rates In Trade War: Homebuilders)