As tariffs loomed, Canada’s economy grew 2.2% in the first quarter

A rush to get ahead of Canada’s looming tariff dispute with the United States powered economic growth in the first quarter, Statistics Canada said Friday.

Real gross domestic product rose 2.2 per cent annualized in the three-month period, the agency reported, up a tick from 2.1 per cent in the fourth quarter.

Annualized real GDP figures for the final quarter of 2024 were revised down by half a percentage point, StatCan said, and other quarters from last year were also adjusted in Friday’s release.

The first quarter figures topped StatCan’s flash estimate for annualized growth of 1.5 per cent and beat calls for 1.7 per cent from a Reuters poll of economists.

Threats of tariffs from the United States suffused the first quarter for Canada’s economy, particularly for the trade-sensitive automotive industry and steel and aluminum sectors.

Those import taxes and Canada’s retaliatory tariffs were initially applied in early March, though each have since faced a variety of adjustments and exemptions.

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StatCan said that fears around the looming trade war inspired both Canadian importers and exporters to rush to get ahead of tariffs.

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Goods exports were up 1.6 per cent in the first quarter, StatCan said, driven by increased shipments of passenger vehicles and industrial machinery and parts. Non-farm businesses were also building up their inventories, reversing withdrawals from the previous quarter and pushing GDP higher.

Hampering growth was the uptick in imports and a slowdown in housing resale activity.

Ownership transfer costs, which represent resales, were down 18.6 per cent quarterly – the largest drop in roughly three years.

Rates of household spending and saving were both slowing meanwhile in the first quarter amid weaker income gains, the agency said.

Figures for March show growth of 0.1 per cent in real GDP, rebounding from a slight contraction in February, amid a boost in mining, quarrying and oil and gas extraction.

StatCan’s advance estimates see the economy also growing 0.1 per cent in April despite what it expects was a fourth consecutive monthly decline in the manufacturing industry.

The Bank of Canada will be parsing the GDP figures closely ahead of its interest rate announcement set for June 4.