The shock absorber effect of Donald Trump’s tariffs on wholesale and wholesale sales in Canada is taking economists to warn that growth forecasts are in danger and, worse, that the numbers could presage the beginning of a recession.
Manufacturing sales and wholesalers, excluding oil, fell 2.8 percent and 2.3 percent, respectively, in April as of March, according to the data of Statistics Canada published on Friday. Analysts surveyed by Bloomberg expected manufacturing sales to fall by two percent and wholesale sales in 0.9 percent.
“The respondents of the respondents highlighted the impact of the recent rates imposed by the United States in the manufacturing sector of Canada,” Statistics Canada said in a press release.
The manufacturers said they were experiencing price increases, as well as the increase in raw material costs, shipping and labor. A third said the demand for its products had changed.
Trump tariffs include 25 percent tariffs on goods that do not comply with the Canadá-Mexico agreement, 25 percent in foreign manufacturing vehicles and 50 percent in steel and aluminum.
Economists said the sales data put forecasts of the Gross Domestic Product (GDP) in the sights.
“The implications for April and the GDP of the second quarter are the risks of direct recession and are well alive and well,” David Rosenberg, economist and founder of Rosenberg Research & Associates Inc. said in a note.
Andrew Grantham, an economist from CIBC Capital Markets, said the data suggests that GDP growth will be degraded from a first “surprisingly positive” estimate of 0.1 percent, and could be the prelude to the growth of the second quarter of “flat monitoring.”
The GDP growth of the first quarter reached 2.2 percent, far ahead of estimates for 1.7 percent.
In the manufacturing front, oil and coal, sales of vehicles and primary metals, such as aluminum, contributed more to the April decline.
Excluding oil and coal, manufacturing sales fell 1.8 percent in April since March and have dropped 2.7 percent year after year.
“Add insult to the injury was the contraction of 6.8 percent month to month in new manufacturing orders,” Rosenberg said.
The orders have fallen in two of the last three months, he said, adding that the orders of “Durable Products of Large Tickets” tired 10.5 percent in April, “the most acute sliding in almost three years.”
Rosenberg said that these data are “key because the new orders are, after all, a main indicator and mother’s milk for future demand.”
On the wholesale front, sales fell into six of the seven subsections, which represents 81.6 percent of the total.
Motor vehicles and pieces led the decrease in April, falling 6.5 percent, a turn in U from March, said Statistics Canada.
As the rate of the rate was launched, Ontario and Quebec were indicated as among the provinces most vulnerable to Trump’s rates, something that the latest manufacturing data and wholesalers supported.
Ontario manufacturing sales fell 2.4 percent in April, or $ 31 billion, representing the highest decrease in dollars since March 2024. Quebec hired the second more in one dollar, $ 17.5 billion, the fourth consecutive monthly fall.
Ontario also registered the greatest decrease in wholesale sales in terms of dollars, since the sector contracted $ 910 million, a 2.1 percent decrease.
Rosenberg said the data even more questioning the recent decision of the Bank of Canada to maintain interest rates for the second consecutive time at 2.75 percent in its announcement on June 4.
“The way the Bank of Canada can sit aside as a casual observer is a good question as the defiliation production gap is further expanded,” he said.
• Email: gmvsuhanic@postmedia.com
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