How has the U.S.-China trade war de-escalation impacted our forecasts?
The U.S. administration reducing tariffs on Chinese imports from a staggering 145% to 30% marked a significant breakthrough in the ongoing trade war. But, the average effective U.S. tariff rate still sits at 13%— and fundamental trade headwinds haven't disappeared.
In this episode of the 10-Minute Take, RBC's Economics Claire Fan and Carrie Freestone take you through how our forecasts for U.S. core inflation, consumer spending and growth have changed with the reduction of Chinese tariffs. They also tackle:
• How an unwinding of tariffs on Chinese imports will impact our outlooks for U.S. core inflation, consumer spending, and growth.
• How this policy shift factors into the U.S. Federal Reserve’s interest rate decisions for 2025.
• Whether Canada's economic outlook will be impacted by U.S.-China trade developments.
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11:16
Trade war backlash: Where are Canadians vacationing now?
The trade war is changing travel plans. As tensions simmer, Canadians’ trips to the U.S. dropped substantially in early 2025 compared to last year.
But, vacations weren’t cancelled altogether—Canadians are just going somewhere else. And, this trend of travelling less to the U.S. isn't unique to Canada – arrivals to the U.S. from other countries have also slumped this year.
In this episode of the 10-Minute Take, RBC economists Claire Fan and Carrie Freestone explore:
• How travel patterns have changed in 2025 to reflect broader trade tensions.
• Whether tourism within Canada will rise to offset international declines.
• How these trends may impact the services sector’s outlook and trade deficits.
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8:08
Forecasting in volatile times: Are tariffs a game changer for growth and inflation?
Full-blown reciprocal U.S. tariffs are on pause for 90 days, but sizeable 10% tariffs imposed on most countries on April 5 remains in place, and it, along with steep tariffs on imports from China, could have significant implications for the country’s inflation and growth.
The U.S. trade-weighted average tariff rate is currently at its highest since the 1930s, but, in a twist of fate, Canada has emerged as one of the least impacted countries, thanks to USMCA exemptions.
RBC Economics has updated forecasts for the U.S. and Canada to reflect these developments. In this episode of the 10-Minute Take, Claire Fan and Carrie Freestone attempt to answer these questions:
· How will tariffs influence inflation and GDP growth in the U.S. and Canada?
· Will either country see a recession in the coming year?
· What could future policy from the Bank of Canada and Federal Reserve look like?
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11:19
Are services immune to tariffs in the trade war?
More attention is being focused on how Canada can better diversify trade to alternative sources as U.S. tariffs and threats continue to escalate.
In the goods trade, Canada's geographical proximity to the U.S. makes it difficult to diversify away from the U.S. But, that is much less of a constraint for services.
In this episode of the 10-Minute Take, economists Claire Fan and Carrie Freestone dig into:
• How much services Canada trades and with who?
• Is Canada is well positioned to leverage services for broader trade diversification?
• What are the headwinds facing services amid the ongoing trade war?
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9:43
Have the impact of tariffs shown up in the jobs market yet?
Consumers and businesses on both sides of the border have been paralyzed with uncertainty related to trade. Confidence has tanked and we've also witnessed a notable deterioration in other “soft” sentiment data in recent months.
The extent that recent trade policies have impacted hard data is unclear but matters more for central bank decisions. In this week’s episode, RBC Economics’ Claire Fan and Carrie Freestone break down how trade turbulence is impacting labour markets in Canada and the U.S., and what to expect next in the ongoing trade war.
Macroeconomics for everybody! The (new) 10-Minute Take podcast from RBC Economics will explain (in simple terms) what the latest economic data means and why you should care. It's everything you wanted to know but were too shy to ask -- in less than 10 minutes.
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