Canadian sectors already reeling from United States tariffs now have to contend with a hit from Canadian counter-levies, possibly resulting in a “double tariff shock,” says a new report by Desjardins Group.

“Our analysis confirms that several manufacturing sectors will face a double shock,” Florence Jean-Jacobs, principal economist at Desjardins, said in the report on Sept. 8, the day Canadian counter-tariffs on $28-billion worth of the U.S. imports came into effect.

The measures were in response to additional U.S. duties targeting a similar dollar value of exports from Canada that were imposed on Aug. 22, after trade talks between the two countries broke down.

Canada’s manufacturing sector, already targeted by earlier and ongoing U.S. tariffs on autos, steel and aluminum and pulp and paper, continues to be the most vulnerable to the escalating trade war .

Several new sub-industries have been affected by the new 50 per cent U.S. tariffs under Section 338, including chemicals, machinery, electrical, computer and electronic products, plastics and rubber, textiles and alcoholic beverages.

The report said electrical, equipment, appliances and components worth $12.8 billion in annual exports to the U.S., textiles, clothing and related products worth $3.3 billion and computer and electronic products worth $11.5 billion are predicted to take a hit on both tariff fronts.

Jean-Jacobs said the tariff “double whammy” will also affect plastics and rubber products worth $18.1 billion, furniture and related products worth $4.8 billion and alcoholic beverages worth $1.3 billion, though the latter sector is mostly vulnerable due to glass and metal containers it needs.

The list of affected products in other sectors that had previously been targeted by the U.S. is expanded under Sector 338 as well. For example, plywood, more machinery and jewelry and sporting goods — such as hockey sticks — were added to miscellaneous manufacturing.

On the Canadian side, the counter-tariffs were aimed at U.S. exports, including steel and aluminum, dairy products, household appliances, agricultural equipment, pulp and paper, plastics and electronics.

Jean-Jacobs said “very few” food items fell under the retaliatory tariffs, though some products will be hit, including whey powder, granulated milk and cream, honey and molasses, as well as mixes and doughs used in bakery production. But she said businesses ought to be able to source those products from domestic producers.

It won’t be quite so easy for others, however.

“For certain imports, the tariffs that take effect today will have more damaging consequences, because they apply to inputs that are widely used by Canadian businesses,” Jean-Jacobs said.

The wholesale and retail trade could also suffer as consumers shy away from items on the shelves sporting price increases of 25 per cent to 50 per cent, which could force companies to cut back on a wide range of U.S. products, such as personal and household goods, machinery and equipment and various consumer goods like fabrics, clothing, jewelry, sporting goods and beauty products.

Jean-Jacobs also said the construction sector could suffer given that counter-tariffs apply to “key inputs” such as heating, ventilation and air conditioning equipment, forged and stamped metal products, lighting and other household equipment and motors, turbines and power transmission equipment, some of which comes from specialized manufacturers.

“Resulting disruptions could delay projects and increase costs,” she said.

It’s not all bad news. Jean-Jacobs said counter-tariffs could protect some Canadian industries, such as steel. It already faced 50 per cent U.S. tariffs prior to Aug. 22, so demand had fallen off. As a result, production slowed, but capacity still remains, so Canadian importers could switch to domestic producers unless they required specialty items only produced on the other side of the border or are affected by the shipping distances between Canada’s east and west coasts.

Jean-Jacobs said companies in the double-tariff crosshairs will have their work cut out for them when looking to diversify in Canada and abroad while also looking for alternative suppliers.

“Despite the turmoil, the current situation presents an opportunity to take further steps toward a less U.S.-dependent economy and greater economic resilience,” she said.

• Posthaste: Small exporters say they need Canada’s trade war to end ASAP
• Posthaste: Canada is 'lowering itself' with retaliatory tariffs that will only bite back, report says

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• Bank of Nova Scotia holds its 27th annual financials summit.
• Today’s Data: U.S. mortgage applications, weekly employment change
• Earnings: Transcontinental Inc., D2L Inc., American Eagle Outfitters

• CPP research says global pension giants find gaps in Canada’s ‘investibility’ ahead of summit
• Canada’s tax policy is rotting from underneath. Here’s how to fix it in the upcoming budget
• Consolidation in one of Alberta’s hottest oil plays: Tamarack, Headwater merge in $10-billion deal

The Department of Finance has run a string of stakeholder meetings and consultations over the summer ahead of the next budget. The government’s language frames the coming budget around growth, trade diversification, investment, competition and what it calls economic sovereignty. Read between the lines: Finance wants big ideas, and it wants them to sound bold. But Kim Moody argues that Canada’s tax system needs more than just catch-phrase changes, it needs systemic reform. Read more.

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McLister on mortgages

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Prime Minister Mark Carney hopes to attract billions of dollars from large global institutional investors at the Canada Investment Summit next week, but his government will have to remedy a situation in which some fund managers find their most sought-after assets — including energy and transportation — hardest to invest in at scale, according to the research arm of Canada’s largest pension fund.

CPP Investments Insights Institute, housed within the Canadian Pension Plan Investment Board , a co-host of the summit, based its conclusions on input from 65 global institutional investors in 20 countries managing about US$47 trillion and it laid out a playbook for the Canadian government in a pair of reports published Tuesday.

“Global capital is looking for opportunity, but opportunity alone does not make a market investible,” Naomi Powell, director of the institute, said. “Trust and predictable rules build confidence, but capital ultimately moves to opportunities with sufficient scale, profitable structures and a credible path to execution.”

Canada is vying for large funds’ global allocations against a field that includes Japan, the United Kingdom and Germany, and it often loses out when fund managers weigh factors such as scale, regulatory fragmentation and a track record of policy reversals.

“Investors are prepared to price commercial risk. They are far less willing to accept uncertainty that cannot be measured or allocated,” the report said. “Weak risk-adjusted returns, policy reversal, regulatory fragmentation and insufficient scale consistently emerge as the principal reasons capital fails to deploy.”

Market opportunity is the main driver of allocation, but the report said Japan, which has commitments for governance reform, improving capital discipline and attractive valuations, stands out when it comes to being selected by the largest global allocators and U.S.-based asset managers.

Canada fared better with smaller institutions and investors already familiar with the country that are committed to retaining or growing their allocation.

The research said global investors value Canada’s political stability, regulatory predictability and openness to long-term capital, according to the research, and see opportunity in the same sectors that will shape the global economy as the government does: energy , infrastructure , critical minerals , digital systems and artificial intelligence .

However, institutional investors that manage US$200 billion to more than US$500 billion — comparable in size to Canada’s largest Maple 8 pensions funds — rank Canada lower than smaller funds when it comes to “investibility” for a variety of reasons.

“Among investors attracted to Canadian energy, 59 per cent cite risk-return considerations, alongside policy-reversal risk, regulatory fragmentation and scale or liquidity constraints” as barriers, the report said. “These factors most often discourage large-scale capital investment across developed markets among investors attracted to Canadian energy.”

Transportation faces an even sharper squeeze and critical minerals follow the same pattern, according to the report.

“Investors continue to cite regulatory complexity and permitting timelines as factors affecting investment decisions in Canada’s energy and critical minerals sectors,” the report said. “Multiple approval processes, jurisdictional overlap and uncertainty around consultation and environmental requirements can contribute to longer project timelines and reduced investment certainty.”

Heavily touted digital and AI infrastructure, meanwhile, faces the most acute shortage of investment opportunities at sufficient scale in Canada.

“This is ultimately an execution problem, not a demand problem: investors recognize the assets, but remain uncertain whether projects can be developed efficiently and packaged at a scale that supports major institutional allocations,” the report said.

Infrastructure is high on the list of desirable investments for large institutional investors, according to CPP Investments’ research, which highlighted other attributes, such as government partnership, risk-sharing arrangements, tax reform and reduced red tape, that the funds seek when they invest.

“Projects must have clear commercial models,” the report said, adding that risks must be allocated among the parties and approvals must move at a pace that matches the opportunity.

For example, the report said a multibillion-dollar nuclear power development in the U.K. drew attention because a pension fund — Caisse de dépôt et placement du Québec — joined as the major institutional investor alongside the U.K. government.

That project was attractive for the Canadian-based global investor because it was designed with several key attributes: regulated revenue during construction, long-term stability guarantees of key economic terms, targeted government protection for exceptional risks and a single coherent government negotiating position.

Importantly, the project was ready to go before investor entry, according to the researchers.

They also said Canada has investor trust and has made a clear commitment to increasing institutional investment, but that alone does not move capital.

“Institutional investors also require opportunities with sufficient scale, credible revenues, appropriate risk allocation and a clear path to execution,” it said. “They need projects and platforms they can underwrite and return to repeatedly.”

The Canada Investment Summit on Sept. 14-15 in Toronto is being billed as a first-of-its-kind gathering for the country, bringing together leading global investors, Canadian CEOs and public-sector representatives to try to accelerate new investment into Canada.

Carney’s government has laid out an ambitious plan to deploy funds to catalyze $1 trillion in total investment in Canada over the next five years. The federal government said the Canada Investment Summit, which is being mounted in partnerships with the Public Sector Pension Investment Board (PSP Investments) and CPPIB, will serve as “a premier platform to showcase Canada as a compelling investment destination and a trusted convener of global capital.”

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• Email: bshecter@nationalpost.com

The relationship between the United States and Canada runs deep and is steeped in history. We are neighbours, friends and share similar values, but it’s actually much deeper than that. In many ways, we are like cousins.

And like all families, we don’t agree on everything. Sometimes our cousins do things that don’t make sense, like impose tariffs on Canadian products. But we can’t lose sight of the big picture.

Today, our cousin’s leader, U.S. President Donald Trump, is making a mistake. The tariffs he is imposing will not only hurt Canadian workers and businesses, but they will hurt American workers and businesses as well. Hard working people on both sides of the border who are just trying to get by will be affected.

These tariffs are shortsighted and harmful, but we cannot control what happens in Washington so we have to focus on what we can control. For me, that means taking steps to protect Nova Scotia.

That means supporting companies in their search for new customers in new markets , efforts that are working. In 2025, exports to France, Denmark, Spain and Italy combined were 37 per cent higher than in 2024, representing $67 million of additional exports.

That also means continuing to make it easier for Canadian companies to do more business in other parts of the country. Interprovincial trade sounds easy but has been remarkably difficult. Every time we make progress, another issue pops up . But we remain undeterred, because we cannot expect the U.S. to do for us what we will not do for each other.

And, of course, that means becoming more self-reliant. Complacency allowed us to become too dependent on others. Here is just one shocking example: today, virtually every unit of natural gas used in Nova Scotia comes through the U.S. Think about that. It is a massive vulnerability. But it doesn’t have to be this way. Nova Scotia actually sits on enough natural gas to power the entire Maritimes for 80 years at current demand levels. Developing this resource means the potential for more affordable energy and greater energy security.

Importing someone else’s energy forever is not a strategy.

But onshore natural gas is just the beginning. We also have vast potential resources of offshore natural gas and oil. All told, Nova Scotia has up to 150 trillion cubic feet of potential natural gas and about 49 billion barrels of potential oil. We can’t just sit on them. Nova Scotians and Canadians need us to get to work developing this extraordinary opportunity, and we are.

As staggering as the natural gas and oil numbers are, Nova Scotia also has enough offshore wind to produce more than 60 gigawatts of clean energy, enough to meet nearly a quarter of Canada’s electricity needs. Said another way, that’s in the neighbourhood of all the electricity used in the province of Ontario.

Developing the first five gigawatts of offshore wind and the necessary transmission infrastructure requires roughly $50 billion in investment, a figure roughly the size of Nova Scotia’s entire economy. But we are ready to do our part to make sure that Canada is an energy superpower.

We are also ready to produce and supply the raw materials that Canada and the world need. Nobody can build affordable housing, hospitals, schools, roads or anything without raw materials. Canada can either import them from foreign countries with lower environmental standards or we can mine them safely here, keeping more of the economic benefit at home and ensuring better paycheques for Canadians.

Over the past year, major mining projects have continued to advance across Nova Scotia. The Goldboro gold project and Antrim gypsum mine received key approvals, while the Touquoy gold mine, Little Narrows gypsum mine and Scotia mine have received full provincial approval to restart. These are not isolated announcements, they are momentum.

• Opinion: Anger with Trump won’t solve our economic problems
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We are not just talking about becoming more self reliant some day. We are doing it now.

Moments of great uncertainty often become moments of great possibility. This is such a moment.

Canada was built by people who didn’t agree on everything, but they agreed on enough to find common ground and get things done. Now is the time to find that common ground and get things done.

In Nova Scotia, we are moving forward just like we always have.

If you have the capital, the expertise and the ambition to build something, come join us. I’ll welcome you with open arms.

But come ready to think big because, as the Prime Minister says, Canada has everything we need. Now we need to use it.

Tim Houston is the Premier of Nova Scotia

Investors have increased their bets the Bank of Canada will hike interest rates in December and beyond, with rates peaking at three per cent, after the central bank on Wednesday announced a seventh consecutive hold at 2.25 per cent.

Bets for a December hike of 25 basis points rose to nearly 90 per cent on Wednesday via the overnight swaps market — used by investors and financial institutions to manage short-term interest rate risks — up from about 60 per cent the day before the rate announcement.

Bets for hikes in 2027 increased, too, with investors going all in on one 25-basis-point hike in January and some betting on as many as three hikes by mid-year.

“That seems excessive to me,” Royce Mendes, managing director and head of macro strategy at Desjardins Group , said. “There is a necessary amount of tightening that will eventually be justified by the data, but I would say the level implied by market pricing seems excessive.”

But he said swap investors don’t have it completely wrong.

Mendes is calling for 50 basis points of rate hikes in the first half of next year based on Desjardins’ assessment that the Bank of Canada is more worried about i nflation leaking into other parts of the economy after the U.S. war on Iran recently entered its seventh month.

“With regard to the U.S.-Canada trade war, policymakers offered only a lukewarm assessment of the prospects for monetary easing,” he said. “It would likely take severe economic stress for rate cuts to materialize.”

After the U.S. started its war on Iran in late February, swap investors hiked bets for rate increases on the premise that Canada would face another wall of inflation.

Mendes said those calls were premature.

Now, in addition to rising inflation concerns, bets for the U.S. Federal Reserve to hike interest rates have risen to 65 per cent for a 25-basis-point hike at its next meeting on Sept. 16 from about 35 per cent prior to new Fed chair Kevin Warsh speaking at the Jackson Hole central bankers meeting at the end of last week.

Investors are betting 100 per cent on one hike at the December meeting and a 55 per cent chance of a second increase.

“The (Bank of Canada outlook) has a lot to do with what’s happened to pricing for the Fed,” Mendes said.

Economist Derek Holt, vice-president and head of capital markets economics at Bank of Nova Scotia, said he doesn’t think swap markets are off-base either. Indeed, they might even be behind the curve.

A rate hike will be in play at the Bank of Canada’s Oct. 28 meeting, given the central bank’s latest Monetary Policy Report (MPR) will be released at the same time, he said in a note on Wednesday.

Holt said Bank of Canada governor Tiff Macklem suggested during a press conference Wednesday that the next call will be guided by the MPR’s forecasts.

“The (Bank of Canada) statement and presser made clear that their two per cent inflation goal is sacrosanct, that inflation is too high, and that upside risks have increased and that this will be the Bank of Canada’s ‘beacon’ for future policy adjustments,” he said.

Scotiabank expects the Bank of Canada to hike rates to 2.75 per cent by year-end and to three per cent in 2027.

Markets are currently pricing in just over a 40 per cent chance of a rate hike in October.

• Posthaste: Are we on the verge of a home-buying tidal wave?
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• Today’s Data: Canada quarterly labour productivity, international merchandise trade for July. U.S. trade balance, Challenger job cuts, initial and continuing jobless claims, ISM services index
• Earnings: BRP Inc., VersaBank, Lululemon Athletica Inc., Dayforce Inc.

• Canada wants to build more homes, but its water and sewer systems aren’t ready
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This couple living in Nova Scotia find themselves at an inflection point. Judy is already retired and loves it and Tom wonders if their $1.16 million investment portfolio could allow him to call it quits, too, at 61. Read on for Family Finance’s suggestions on how the couple can reach their goal of $120,000 in annual aftertax income.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com .

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Canada’s economy unexpectedly lost 42,000 jobs in August, leading economists to say the Bank of Canada and Canadians in general may have celebrated previous positive growth reports too early.

As a result, many economists expect the Bank of Canada to keep rates at 2.25 per cent , something it did this week for the seventh time in a row.

Here’s what economists have to say about the latest jobs numbers and what policymakers might do next.

Cool August after a ‘hot’ July: CIBC

The labour market cooled down in August after a “hot” July, Andrew Grantham, an economist at Canadian Imperial Bank of Commerce , said, as it gave back more than half of the jobs it gained that month.

The 42,000-job decline was below market expectations of an increase of 15,000.

“Today’s print seems to tally with other evidence (exports, monthly gross domestic product) that the economy is slowing again in quarter three following a strong second quarter and with heightened uncertainty regarding U.S. trade ,” he said in a note on Friday.

As a result, CIBC continues to expect the Bank of Canada to hold interest rates even as policymakers expressed greater concern over the inflation outlook this week.

‘Premature’ hawkishness: Capital Economics

The decline in jobs in August pushes back against the idea that the economy has decisively turned a corner and leaves the Bank of Canada’s hawkish shift this week — when it announced a hold on interest rates, but also talked about a potential increase if the future if the war on Iran continues — look somewhat premature, Thomas Ryan, an economist from Capital Economics , said.

But he said the magnitude of the job loss isn’t as bad as it looks.

“Hiring had been stronger than the underlying economy would have suggested over the summer, partly because of an unusually strong season for youth workers,” he said in a note on Friday.

He said the weakness in the numbers was entirely concentrated in services, which may reflect some payback following the Fifa World Cup.

Bank of Canada to remain on sidelines: Oxford Economics

The decline in the number of jobs was much weaker than consensus, but it was roughly in line with Oxford Economics Ltd.’s estimates.

“We expect the economy will continue struggling to create jobs in the near term as mounting headwinds from new U.S.-Canada tariffs,” Tony Stillo, director of Canada economics at Oxford Economics, said in a note on Friday.

“Greater uncertainty from a flare-up in the trade war and the ongoing Iran conflict and a shrinking population weigh on hiring.”

He expects the Bank of Canada to remain on the sidelines as far as interest rates are concerned for the rest of 2026 and most of 2027.

‘Outlook murky’: RSM Canada

The trend in the jobs numbers over the past year has tended to show decreasing unemployment one month followed by moderate job gains, RSM Canada economist Tu Nguyen said, but August had an unexpected downturn.

“The outlook is murky due to uncertainty surrounding Canada-U.S. trade tension,” she said in a note on Friday. “While the data do not show when in August the job losses occur, it is reasonable to infer that at least some of that took place toward the end of the month, after the trade talk collapse on Aug. 21.”

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She said the longer the two countries go without returning to the negotiating table, the more hesitant businesses might be in hiring, so more job losses are expected in September due to the latest tariffs from the U.S. on select Canadian imports.

Canadian businesses are adjusting to the new tariffs imposed by the U.S. and the economy has been chugging along, but she said “it is undeniable that businesses” that rely on trade in the U.S. have been and will continue to be hit harder despite diversification efforts.

• Email: nkarim@postmedia.com

Many small Canadian exporters will be in financial trouble if the trade war with the United States extends into the holiday season, with Canada set to impose $27.6 billion in counter-tariffs on dozens of U.S. imports, including dairy, appliances and electronics.

The Canadian Federation of Independent Business (CFIB) said most of its members are in favour of the government measures against the U.S., but many won’t last long if the tariffs and counter-tariffs remain in place for an extended period.

Nearly 20 per cent of small exporters and 11 per cent of small importers will stop being financially viable if the trade war lasts three months or more, the association said.

“We cannot allow small-business owners to become cannon fodder in the trade war,” CFIB president Dan Kelly said in a news release . “If we’re going to retaliate, then we need to make sure government supports protect the small businesses being put on the front lines of the trade war.”

Canada’s trade war with the U.S. has sharply escalated in recent weeks, with both countries accusing the other of walking away from trade negotiations after the Canada-U.S.-Mexico Agreement (CUSMA) was put up for review.

Since then, U.S. President Donald Trump has unveiled up to 50 per cent tariffs on several Canadian products, including electronics, furniture, milk, alcohol and hockey equipment. Canada’s retaliatory tariffs take effect just after midnight on Tuesday.

Canadian businesses are already feeling the heat, with 26 per cent of owners saying the U.S. tariffs have had major negative impacts on their operations, while 28 per cent say the countermeasures will have similar consequences.

The CFIB is urging the federal government to impose a Small Business Tariff Relief (SBTR) program, which would allow up to $70,000 in tariff relief. It’s also pushing for a small-business tax cut and a mechanism to speed up changes to counter-tariffs if they have a major negative impact on Canadian industries.

“We’re talking about people who are being asked to put their entire livelihoods on the line so that Canada can push back,” Jasmin Guénette, CFIB vice-president of national affairs, said. “The government needs to move with urgency and get relief measures in place as they continue to work towards a stable, long-lasting trade deal.”

• Canada imposes tariffs up to 50% on U.S., risking wider trade war
• Canada is 'lowering itself' with retaliatory tariffs that will only bite back, report says

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Canada’s economy shed 42,0000 jobs in August, but its unemployment rate remained unchanged for the month at 6.4 per cent.

Employment declines were spread across several industries, including the public sector, natural resources and utilities. Manufacturing was the only sector to record significant gains in the month, adding 22,000 jobs.

On a year-over-year basis, the economy added 217,000 in August an increase of about one per cent.

Read more here.

• 12:01 a.m.: Canada imposes $20 billion in counter tariffs against the U.S.
• Today’s Data: U.S. NFIB Business Optimism Index, U.S. used car prices
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• Canada’s unemployment rate remains at 6.4% as economy sees broad-based declines
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While it’s typically more prudent to wait on accepting Canada Pension Plan and Old Age Security benefits, there are scenarios where someone may want to accept the money sooner. Those with chronic health issues may to take advantage early, for example. Read more.

Interested in energy? The subscriber-only FP West: Energy Insider newsletter brings you exclusive reporting and in-depth analysis on one of the country’s most important sectors. Sign up here.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Ben Cousins with additional reporting from Financial Post staff and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com .

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This week, FP Video looks at the resemblance between Canada’s latest push to build out nuclear energy and the cola wars of the 1980’s, oil refineries making record high profits off diesel fuel , and will the boom in data centre construction in Alberta and Saskatchewan be a boom or bust?

How Canada’s nuclear race is a lot like the cola wars

Canada’s nuclear revival has sparked a marketing battle between two major suppliers. And there are some parallels to an epic dustup in a different industry from a generation ago: the cola wars between Coca-Cola and Pepsi. In the latest marketing matchup, AtkinsRéalis is promoting homegrown CANDU reactors, while Cameco and Brookfield are behind Westinghouse’s AP1000. Watch to find out more about the fight for dominance in Canada’s nuclear industry.

Canadian refineries have never made so much off diesel as ‘Crackageddon’ mounts

Refineries have never made so much from diesel. The gap between what they pay for a barrel of oil and what they get back for the refined fuel is at record highs.

Data centre rush in Alberta and Saskatchewan: Boom or burden?

Alberta and Saskatchewan are now considering roughly 70 possible data centre projects and grid requests. Governments see investment, jobs and Canadian computing capacity. Residents are demanding answers about power, water, farmland and consultation. We look at new rules and ask: how many proposals will actually get built?

• As housing prices fall, is it better to buy or to rent? Kelley Keehn does the math
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Canada will wind up hurting itself with its latest counter-tariffs based on the outcome of retaliatory duties levied nearly 100 years ago, says the Montreal Economic Institute (MEI).

Canada is set to unleash on Sept. 8 $28-billion worth of tariffs ranging from 15 per cent to 50 per cent on imports from the United States. The federal government said the goods targeted will mirror the list of Canadian products hit with 50 per cent tariffs imposed by President Donald Trump on Aug. 22 after trade talks between the two sides broke down.

Ottawa said the Canadian countermeasures will focus on sectors — including steel , dairy, appliances, agricultural equipment, pulp and paper and electronics — “that are most impacted by U.S. tariffs .”

However, the MEI doesn’t think much of Canada’s counterpunch.

“Lowering ourselves to Trump-style protectionism won’t help us protect free trade,” Vincent Geloso, senior economist at the MEI and author of a report released on Thursday, said in a release.

The MEI said retaliatory tariffs will harm Canada in a couple of ways.

First, they will increase the cost of imports, resulting in negative economic consequences, including reducing the competitiveness of some exports.

They will also slow growth because they will hinder competitive pressure and any possible gains from scale and specialization.

Counter-tariffs also encourage interest groups to spend money on lobbying to keep the levies in place, diverting resources away from efforts to improve productivity , which is “a far larger drag” on growth, the MEI said.

“Not only are counter-tariffs generally harmful, with major downsides, but the supposed upsides as a policy tool for influencing the trade policies of other nations are tiny, if not nonexistent, for small economies like Canada’s,” it said.

As proof, the MEI looked back to the 1930s when the U.S. instituted Smoot-Hawley tariffs. Canada’s government at the time said it would impose retaliatory tariffs and it ultimately did, affecting 30 per cent of exports from the U.S. with the average tariff increasing around 20 per cent.

Canada eventually repealed its tariffs and a new Democratic government in the U.S. in 1932 changed trade policy with the Reciprocal Trade Agreements Act.

“At no point did the Canadian counter-tariffs have any discernible effect on American trade policy,” the MEI said.

Royal Bank of Canada also said retaliatory tariffs will raise prices for Canadians, but there is a “nuance” when it comes to counter-tariffs because Canada imports more of the items on the U.S. hit list than it exports.

That means Canadian companies could potentially redirect some of their buys to domestic suppliers, though the more likely outcome is increased costs for companies on both sides of the border since their supply chains are highly integrated.

“But there is likely more potential for trade flows to reorient within North America to avoid increased tariff costs with these measures than some of the other sector-specific tariffs imposed to date,” RBC said in a note after trade negotiations ended on Aug. 21.

Despite warnings of hardship, Canadians are mostly onside with Prime Minister Mark Carney ‘s playbook, with 62 per cent supporting the counter-tariffs, calling them “right under the circumstances,” according to a recent poll by the Angus Reid Institute. Three in four people also backed Carney’s decision to call off talks.

Nearly two in 10 said they were very worried or somewhat worried about their jobs given the latest developments on the trade front, but 64 per cent indicated they think Canada will come out stronger from this challenge.

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Canada’s trade surplus sharply narrowed to $769 million in July from $4.2 billion in June, driven by a decrease in gold exports to the United States.

Total exports decreased 2.3 per cent in July, the first decline in six months, according to Statistics Canada on Thursday. Exports of metallic and non-metallic mineral products were one of the categories that posted the largest declines — 8.5 per cent — due to lower purchases of Canadian-held gold by foreign residents and lower gold shipments to the United States. — Paula Tran, Financial Post

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High income U.S. citizens living in Canada and dual residents beware: two tax court decisions imply that you could face an effective marginal tax rate of more than 57 per cent on any investment income you earn under the U.S. net investment income tax. Read tax expert Jamie Golombek’s column here to find out more.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

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Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.

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Mark Thompson’s concrete business in northern New York has almost exclusively relied on cement from Canada for nearly half a century.

Jefferson Concrete Corp., located in Watertown, about 30 kilometres from the Canadian border at the eastern end of Lake Ontario, uses roughly 4,000 tonnes of cement a year to manufacture everything from septic tanks and sewer infrastructure to bridge beams . Most of that cement comes from Ontario, with a smaller amount of specialty material imported from Montreal.

Now, those imports face a 50 per cent United States tariff as cement is among a broad range of Canadian products covering about US$20 billion in annual trade hit by the new duties.

The new tariffs pose a potentially costly problem for Thompson and others in parts of the U.S. that are heavily dependent on Canadian cement and don’t have enough nearby domestic production to easily replace it.

The vice-president and co-owner of Jefferson Concrete expects he’ll have to eat much of the additional cost since about a third of his company’s next year’s work has already been quoted, including municipal sewer and bridge projects priced before the tariff took effect.

“I can’t pass this cost on,” he said. “I’ve got to absorb it.”

But despite the size of the tariff, Thompson isn’t planning to switch to U.S. cement.

He looked at buying from a producer in Pennsylvania, the closest practical domestic alternative he found, but shipping cement is expensive, especially over hundreds of kilometres. After doing the math, he realized the costs of tariffed Canadian cement and cement shipped from Pennsylvania are essentially the same.

“We’re going to continue to get it right from Bath, Ontario,” he said, referring to the Amrize Ltd. cement plant that supplies most of his business.

Other companies may end up doing something similar since Canada exported about 3.9 million tonnes of Portland cement to the U.S. in 2023, worth roughly US$437 million, according to United Nations trade data.

A fifth of the cement consumed in the U.S. last year was imported, according to the National Precast Concrete Association, with Canada supplying roughly five per cent of those imports.

But those figures mask a much greater dependence on Canadian cement closer to the border, said Nick Rhoad, chief executive of the association, which represents nearly 700 companies involved in manufacturing and supplying precast concrete products .

“There is not enough capacity in the Northeast United States to replenish the need,” he said.

Rhoad said Canadian cement is particularly important to four regions of the U.S. since it accounts for almost half of the cement used in New York and New England and 42 per cent in Montana and North Dakota. It also fills about 20 per cent of the needs in the Pacific Northwest and 18 per cent in the eastern Great Lakes.

Replacing that supply won’t happen quickly. He said developing enough new domestic production would require significant investment and years of permitting and construction .

As a result, he said the tariff is already causing concern among members that rely on Canadian cement, particularly those with projects priced before the new duty took effect.

Furthermore, the effect of the tariffs isn’t just about cement, he said, because higher material costs could ripple through construction, raising costs or delaying housing, infrastructure and energy projects and, ultimately, affecting construction jobs.

Rhoad said the industry has been raising its concerns about the tariff with Congress and the office of the U.S. Trade Representative.

But cost isn’t the only reason Thompson prefers Canadian cement. He has been using it for decades and knows how it performs in the company’s concrete mixes.

“We’ve been in the comfort zone for many, many years with these people,” he said. “I’m an old farm kid, so when the old cow is milking good, I try not to mess with it.”

Thompson also worries his company and others could be put at a disadvantage against competitors farther south that already use U.S. cement and aren’t exposed to the same additional cost.

Cement is Jefferson Concrete’s largest day-to-day production expense, he said, so absorbing a significant increase in costs will eat into the profitability of a company that employs 54 people.

“I’ve got 54 employees, so I’ve got 54 families that I’m responsible for,” he said.

The tariff comes after several years of sharply rising construction material costs and could be particularly significant in New York, where Canada is a major supplier of cement, Mike Elmendorf, chief executive of the Associated General Contractors of New York State, said.

He said contractors also face the problem of not knowing what tariffs will be in place months from now, when projects being priced today will be under construction.

A contractor that builds a 50 per cent tariff into a bid could lose the job to a lower bidder if the tariff disappears, Elmendorf said, but a company that doesn’t account for it could be stuck with the expense if it remains.

One large New York City contractor recently asked Elmendorf how it was supposed to bid in such an environment.

“Short of consulting an astrologer or a psychic, there’s not a great answer,” he said.

Thompson said the trade war isn’t just affecting the construction business.

He grew up on a farm near the St. Lawrence River, where he remembers falling asleep listening to shipping traffic on the Seaway and trains across the river in Canada. He later married a Canadian and has spent almost 50 years living and doing business in a region where communities on either side of the border are closely intertwined.

That relationship has noticeably changed since the U.S. began its trade war, he said. Southbound traffic across the border has sharply fallen, hurting businesses in northern New York that depend on Canadian visitors and commerce.

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“I’m really passionate about our U.S.-Canadian relationships,” he said. “We need to get it fixed. Our area desperately needs it.”

Thompson said he understands some of the anger in Canada after months of antagonism from the U.S., including talk of annexation.

“I don’t blame these people,” he said. “I’m not sure I’d feel any differently if I were on that side of the river listening to this foolishness.”

As for cement, Thompson doesn’t believe the product itself was necessarily singled out. He sees it as one part of a much larger trade dispute that has engulfed a relationship built over decades.

“We’re just rolled into a bundle of a big-ass mess,” he said.

• Email: arankin@postmedia.com

The Canadian economy shed 42,000 jobs, but the unemployment rate remained unchanged at 6.4 per cent in August after it declined by a total of 0.5 percentage points in May, June and July.

Employment declines were spread across several industries, including the public sector, natural resources , utilities and business, building and other support services.

Manufacturing was the only sector to record significant employment gains in August, adding around 22,000 jobs, or a 1.2 per cent increase month to month. However, employment in this sector didn’t change much year over year, as August’s increase offset decreases seen earlier in 2026.

On a year-over-year basis, the economy gained around 217,000 jobs in August, or a one per cent increase. The majority of that growth was concentrated in health care and social assistance, information, culture and recreation, and transportation and warehousing.

Economists largely expected Canada would add around 15,000 jobs in August, not lose jobs.

Rishi Sondhi, an economist at TD Economics, said the report was pretty soft, but the year-over-year growth in employment is an indicator that the labour market has been resilient despite economic uncertainty from U.S. tariffs and trade tensions.

“There was a meaningful drop in employment (in August), but when you zoom out a little bit, the trends are still favourable,” he said. “Some giveback after a string of robust gains was to be expected.”

However, he said the new U.S. tariffs could elevate uncertainty and keep weighing on hiring.

Claire Fan, a senior economist at RBC Economics, said broader population changes need to be accounted for when analyzing the Labour Force Survey data.

Canada’s labour force shrunk by 37,000 people in August due to lower immigration numbers and an aging population and has added a net 27,100 jobs so far this year.

She said this means August’s soft employment data was above break-even employment — an estimate of how much job growth the economy needs to have every month to make sure the unemployment rate doesn’t increase or decrease — because the labour force is smaller and the economy doesn’t need as many new jobs to keep the unemployment rate stable.

“Largely, the broader labour market continues to hold onto some of the strength that we’ve seen earlier in the year,” she said. “The unemployment rate is, by historical standards, still elevated and it doesn’t indicate that the labour market is strong, but the trends are more important.”

The latest jobs report came after U.S. President Donald Trump implemented Section 338 tariffs on $28-billion worth of Canadian goods after trade talks between American and Canadian negotiators fell apart. Canadian dollar-to-dollar counter-tariffs on $27.6 billion of comparable U.S. goods will come into effect on Tuesday.

Fan said any employment changes as a result of the Section 338 tariffs will show up in the September jobs report since the levies were implemented after Statistics Canada’s survey week.

“Even then, our expectations are that the tariffs, much like the ones we’ve seen before, are going to have a really pronounced and narrow impact on the job market because they just simply don’t impact the majority of Canadian jobs,” she said. “We estimate that around 0.4 per cent of total employment is directly involved in producing the goods that are on the U.S. tariff list.”

Sondhi and Fan both said it is too early to tell whether the August slowdown is indicative of slower economic growth in the third quarter. Total hours worked were up 0.6 per cent month over month in August, following a 0.2 per cent increase in July and a 0.6 per cent jump in May.

“The best gauge from the labor market report is the hours worked measure, and by that measure, there’s actually a lot of momentum that was carried over into the third quarter,” Fan said.

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Sondhi said Canadian economic growth may have slowed in the third quarter since flash estimates suggest real gross domestic product was flat in July.

“The balance of indicators so far suggests that growth was at least positive in (the third quarter), especially when you look at the July prints and the increase in total hours worked in July and August,” he said.

• Email: ptran@postmedia.com