What’s In This Email

• BoC expected to cut interest rates despite economic growth

• Canada to impose 100% tariff on China-made EVs

• Your Virgo season playlist

• 6 concerts to fall in love with in September

• Notable Spotlight: Farmer’s Market @ Evergreen Brickworks

• Notable Plug 🔌

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BoC Expected to Cut Interest Rates Despite Unexpected Economic Growth

Economists anticipate that the Bank of Canada (BoC) will cut interest rates next week, even though the economy showed stronger-than-expected growth in the second quarter. The decision comes as the central bank navigates mixed economic signals.

Key Takeaways

• Economic Growth Exceeds Expectations: Statistics Canada reported that the economy grew at an annualized rate of 2.1% in Q2, surpassing the BoC's forecasts. However, GDP per capita continued to decline for the fifth consecutive quarter, highlighting stagnant standards of living.

• Interest Rate Cuts Expected: Despite the growth, economists, including those at CIBC and Desjardins, expect the BoC to cut its key policy rate by 0.25 percentage points next week, marking the third consecutive rate cut. The current key interest rate stands at 4.5%.

• Weak Economic Momentum: While Q2 growth was modestly better than expected, economic momentum waned towards the end of the quarter, with GDP remaining flat in June and July. This weak momentum is a key factor in the expectation of further rate cuts.

• Sectoral Weaknesses: The Q2 growth was largely driven by government spending, with declines in exports, residential construction, and household spending on goods. Economists predict continued weakness in these areas into Q3.

• Labour Market Concerns: Canada's unemployment rate has risen to 6.4%, significantly impacting youth and recent immigrants. Despite rising wages, high interest rates have dampened household spending.

• Inflation and Wages: Inflation slowed to 2.5% in July, while wages continued to climb, increasing by 5.2% year-over-year. Households are saving more, potentially in preparation for upcoming mortgage renewals.

Why this matters: The anticipated rate cut by the BoC reflects a cautious approach to sustaining economic recovery amid signs of underlying weakness. With the labour market showing signs of stress and consumer spending restrained, the central bank's decision will be crucial in balancing economic growth with inflation control. As the BoC monitors these indicators, the potential for further rate cuts remains on the horizon, influencing both consumer behaviour and business planning.


Read the full article here.

Canada to Impose 100% Tariff on China-Made Electric Vehicles

In a significant move echoing actions by the US and the European Union, Canada has announced a 100% tariff on imports of electric vehicles (EVs) manufactured in China. The decision forms part of a broader effort to protect its automotive sector and address concerns about unfair trade practices.

Key Takeaways

• Tariffs on Chinese EVs and Metals: Starting October 1, Canada will impose a 100% tariff on China-made EVs, and from October 15, a 25% duty on Chinese steel and aluminum imports. These measures are in response to alleged Chinese government subsidies that give its car manufacturers an edge over global competitors.

• Western Alliance Against Chinese Trade Practices: The tariffs are part of a coordinated effort among Western countries to challenge China's trade practices. The US has already quadrupled its tariffs on Chinese EVs to 100%, and the EU has announced duties of up to 36.3%.

• China's Response: China has condemned the tariffs, calling them "trade protectionism" and arguing that they violate World Trade Organization rules. Beijing has urged Canada to reconsider its actions, claiming they undermine global economic systems.

• Impact on Major Car Makers: The tariffs will affect companies like Tesla, which produces vehicles in its Shanghai factory. Tesla is expected to lobby the Canadian government for tariff relief or may shift its Canadian imports to factories in the US or Europe to avoid the tariffs.

• Broader Trade Implications: While Chinese EV brands are not yet widespread in Canada, companies like BYD are beginning to enter the market. The tariffs could influence their strategies and market presence. Meanwhile, Canada is looking to bolster its own EV industry through deals with major European car manufacturers.

Why this matters: Canada's decision to impose steep tariffs on Chinese EVs underscores ongoing global tensions over trade practices and the strategic importance of the automotive sector. As the global race to dominate the EV market intensifies, these measures could reshape trade dynamics and influence market strategies for both Canadian and foreign car makers. For Canada, this move is part of a broader strategy to secure a significant role in the burgeoning global EV industry.

Read the full article here.

Farmer’s Market at Evergreen Brickworks

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taking a trip to evergreen brickworks in toronto! one of the biggest & best markets in the city🫶🏼🫶🏼 @ChocoSol Traders #FoodTikTok #toronto... See more

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🧠 Today We Learned: that in fashion, Labour Day is (or was) considered the last day when it was acceptable to wear white or seersucker. The tradition lies with the migration of wealthy 19th century New Yorkers back from their summer home Newport Mansions and the accompanying change back from summer clothes.

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