{"id":78322,"date":"2026-09-11T12:01:58","date_gmt":"2026-09-11T12:01:58","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/09\/11\/posthaste-canadas-credit-rating-could-be-the-next-casualty-in-trumps-trade-war\/"},"modified":"2026-09-11T12:01:58","modified_gmt":"2026-09-11T12:01:58","slug":"posthaste-canadas-credit-rating-could-be-the-next-casualty-in-trumps-trade-war","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/09\/11\/posthaste-canadas-credit-rating-could-be-the-next-casualty-in-trumps-trade-war\/","title":{"rendered":"Posthaste: Canada&#039;s credit rating could be the next casualty in Trump&#039;s trade war"},"content":{"rendered":"<p> \n<br \/><iframe loading=\"lazy\" title=\"Donald Trump raises stakes of trade war with Canada\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/h9q4i4Xn06M?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><img decoding=\"async\" alt=\"\" data-has-syndication-rights=\"1\" data-license-id=\"\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2023\/01\/fp-posthaste-LOGO-01132023.jpg\" title=\"\" \/><\/p>\n<p> Canada\u2019s AA+ rating can withstand the most recent volleys in the trade war with the United States, but further escalation would put pressure on the credit profiles of both federal and provincial governments, Fitch Ratings warned this week. <\/p>\n<p> Canada imposed tariffs on $27.6 billion worth of U.S. goods on Tuesday, matching dollar for dollar the Section 338 duties that U.S. President Donald Trump launched on Aug. 22 after trade talks collapsed. <\/p>\n<p> In response, Trump slapped a ban on a range of goods from alcohol to motorcycles to dairy products, aluminum and furniture to take effect Sept. 29. <\/p>\n<p> As it stands now, U.S. tariffs cover about 5 per cent of Canadian exports to the United States while Canadian tariffs cover for about 7 per cent of U.S. exports to Canada, said Fitch in a report this week. <\/p>\n<p> \u201cFurther escalation could test Canada\u2019s resilience to the measures,\u201d it warned. <\/p>\n<p> The tariff impact will vary across the country, hitting Ontario and Quebec, both of which Fitch rates AA-\u200c\/stable, the hardest. British Columbia, rated AA-\u200c\/negative, is also vulnerable because of its forestry and metals industries. <\/p>\n<p> In a trade war, the numbers weigh heavily in favour of the Americans. Canada sells about 75 per cent of its exports to the United States, equal to almost 20 per cent of the country\u2019s gross domestic product. <\/p>\n<p> The United States sells only 15 per cent of its exports to Canada, about 1 per cent of its GDP.  <\/p>\n<p> \u201cCanada therefore faces much larger trade exposure,\u201d said the Fitch team led by director Joshua Grundleger. \u201cEven so, political considerations may limit how much this asymmetry strengthens the U.S. negotiating position.\u201d <\/p>\n<p> Unlike earlier tariffs, the Section 338 penalties apply regardless of compliance to the Canada-United-States-Mexico-Agreement (CUSMA), showing that the U.S. can bypass that trade deal with other legal authorities. <\/p>\n<p> However, Section 338 has never been used this way before and has not been tested in court, Fitch points out. <\/p>\n<p> \u201cThat could invite challenges and weaken the durability of any tariff regime built on it,\u201d said the report. <\/p>\n<p> Nathan Janzen, assistant chief economist at Royal Bank of Canada , said the United States\u2019 latest response to Canada\u2019s retaliatory tariffs \u201cmay sound alarming, but they represent a relatively minor escalation in the trade war.\u201d <\/p>\n<p> \u201cThe real risk remains further escalation into a tit-for-tat trade war covering a much larger share of trade \u2014 something that hasn\u2019t occurred with this latest development yet,\u201d he said. <\/p>\n<p> What are the risks of further escalation? <\/p>\n<p> Trump has promised to double tariffs on autos and parts to 50 per cent starting Jan. 1, 2027. This escalation would hurt both countries because the auto industry is heavily integrated, but it would weigh more heavily on Canada\u2019s growth and external balances, said Fitch. <\/p>\n<p> It could also complicate North American trade talks between the U.S., Canada and Mexico. <\/p>\n<p> Fitch said further escalation in metals is possible as well because of the trade tensions surrounding steel and aluminum. <\/p>\n<p> But it\u2019s not like the United States has nothing to lose. <\/p>\n<p> Tariffs will fuel inflation in both countries, but the U.S. is in a more precarious situation on this front than Canada. <\/p>\n<p> Fitch said in the U.S. more pressure from tariffs weakens the case for Federal Reserve rate cuts and works against efforts to curb the rise in Treasury yields, which have soared to disturbing heights lately. <\/p>\n<p> In Canada lower underlying inflation gives the Bank of Canada more flexibility. <\/p>\n<p> The rating agency said it would be monitoring whether courts uphold Section 338, whether Canada reduces its dependence on U.S. trade and how political events \u2014 such as the U.S. midterm elections and Alberta\u2019s referendum on separation in October \u2014 unfold. <\/p>\n<hr \/>\n<p> <em><strong>Sign up here to get Posthaste delivered straight to your inbox.<\/strong><\/em> <\/p>\n<hr \/>\n<p> <strong><img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-1758646\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2019\/02\/subhead_leading.png\" width=\"838\" \/><\/strong> <\/p>\n<p><img decoding=\"async\" alt=\"\" data-has-syndication-rights=\"1\" data-license-id=\"\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2026\/09\/EV-chart.jpg\" title=\"\" \/><\/p>\n<p> More than one in four new vehicles in Canada now uses an alternative-fuel platform, says BMO Capital Markets chart for today \u2014 with hybrids leading the charge. <\/p>\n<p> Hybrid vehicles are most popular in Quebec, where registrations are up almost 45 per cent year to date. They are up 19 per cent in Ontario and 6.5 per cent in British Columbia. <\/p>\n<p> Battery electric vehicles also saw a 26-per-cent bounce thanks to the return of federal purchase incentives. <\/p>\n<p><img decoding=\"async\" alt=\"\" data-has-syndication-rights=\"1\" data-license-id=\"\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/07\/subhead-1.jpg\" title=\"\"><\/p>\n<ul>\n<li><strong>Today\u2019s Data:<\/strong> United States inflation numbers<\/li>\n<li><strong>Earnings:<\/strong> The Kroger Co.<\/li>\n<\/ul>\n<hr \/>\n<p><img decoding=\"async\" alt=\"\" data-has-syndication-rights=\"1\" data-license-id=\"\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2026\/02\/banner.jpg\" title=\"\" \/><img decoding=\"async\" alt=\"\" data-has-syndication-rights=\"1\" data-license-id=\"\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2026\/09\/chart-0911-ph.jpg\" title=\"\" \/><\/p>\n<figure class=\"embedded-image\"><\/figure>\n<hr \/>\n<p> <strong><img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-3080181\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/07\/subhead_reads.jpeg\" width=\"838\" \/><\/strong> <\/p>\n<ul>\n<li>Trump is angry about the loonie \u2018imbalance\u2019: But what does he mean and what can he do about it?<\/li>\n<li>What you need to know about Bombardier and how it became a trade war flashpoint <\/li>\n<li>Alberta declares a race with the U.S. on carbon storage, as Canada\u2019s biggest project opens<\/li>\n<\/ul>\n<hr \/>\n<p> <img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-2059284\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2020\/04\/subhead_personal_finance_2.png\" width=\"838\" \/> <\/p>\n<p> A reader is about to receive an inheritance of about $18,000 from her mother and wonders how best to use the gift. Credit counsellor Mary Castillo suggests using the money to clear debt, keep a modest safety cushion and set aside a small amount in her mother\u2019s memory, but first she advises the reader to take a pause. Find out more <\/p>\n<hr \/>\n<p> <span><\/span><img decoding=\"async\" alt=\"\" data-has-syndication-rights=\"1\" data-license-id=\"\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/11\/FP-West-Energy-Insider-Logo.png\" title=\"\" \/> Interested in energy? The subscriber-only FP West: Energy Insider newsletter brings you exclusive reporting and in-depth analysis on one of the country\u2019s most important sectors. Sign up here. <\/p>\n<hr \/>\n<div class=\"x_elementToProof\"><span>Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at <\/span>wealth@postmedia.com<span><\/span><span> with your contact info and the gist of your problem and we\u2019ll find some experts to help you out while writing a Family Finance story about it (we\u2019ll keep your name out of it, of course).<\/span><\/div>\n<hr \/>\n<h2>McLister on mortgages<\/h2>\n<p> Want to learn more about mortgages? Mortgage strategist Robert McLister\u2019s Financial Post column  can help navigate the complex sector, from the latest trends to financing opportunities you won\u2019t want to miss. Plus check his mortgage rate page for Canada\u2019s lowest national mortgage rates, updated daily. <\/p>\n<hr \/>\n<h2>Financial Post on YouTube<\/h2>\n<p> Visit the Financial Post\u2019s YouTube channel for interviews with Canada\u2019s leading experts in business, economics, housing, the energy sector and more. <\/p>\n<hr \/>\n<p> <em>Today\u2019s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff and Bloomberg.<\/em> <\/p>\n<p> Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com . <\/p>\n<hr \/>\n<ul class=\"related_links\">\n<li>Despite trade war, \u2018Elbows up\u2019 has its limits<\/li>\n<li>Tariff &#8216;double whammy&#8217; headed straight for these Canadian businesses, report says<\/li>\n<\/ul>\n<p> <em><strong>Bookmark our website and support our journalism:<\/strong> Don\u2019t miss the business news you need to know \u2014 add financialpost.com to your bookmarks and sign up for our newsletters here<\/em> <\/p>\n<p><\/img><br \/>\n<br \/>\n<br \/>Posthaste: Canada&#039;s credit rating could be the next casualty in Trump&#039;s trade war<\/a><br \/>\n<br \/>2026-09-11 12:01:58<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canada\u2019s AA+ rating can withstand the most recent volleys in the trade war with the United States, but further escalation would put pressure on the credit profiles of both federal&#8230;<\/p>\n","protected":false},"author":2,"featured_media":78323,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-78322","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/78322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=78322"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/78322\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/78323"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=78322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=78322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=78322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}