The Bank of Canada (BoC) has released its latest Financial Stability Report, issuing a dire warning on the effects of the trade war. In the report, the BoC states that the U.S.’s trade policy has shifted to a “dramatic protectionist” stance, adding that a long-term trade war “increases risks to financial stability.”
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Bank of Canada Releases Financial Stability Report
Furthermore, the bank notes that the near-term effects of the tariffs could include market volatility and a reduction of liquidity. In the medium term, it could lead to higher unemployment and lower growth.
“There are many uncertainties—we still do not know what tariffs will remain, whether they’ll be reduced or escalated, or how long all of this will last. That makes it particularly difficult to anticipate the risks to the financial system,” wrote the BoC.
Despite the uncertainty, the iShares MSCI Canada ETF (EWC) has remained resilient with a year-to-date return of 6.43%.
