Prolonged Trade War Could Force Down Interest Rates Amid Ongoing Uncertainty

The US-Canada trade war continues to cast a shadow over the mortgage market, with a prolonged conflict potentially forcing down interest rates. Negotiations between the two countries had reached a critical point, with a deadline of July 21 to reach a deal. However, US President Donald Trump's decision to walk away from talks after Canada scrapped its digital services tax has left the outcome uncertain. Despite the stalemate, Ottawa's ambassador to the US, Kirsten Hillman, remains optimistic about reaching a deal that would eliminate US tariffs on Canadian goods.

Key Takeaways:

• A prolonged trade war between the US and Canada could lead to a decrease in interest rates, as economists believe the Bank of Canada may lower interest rates to prop up a faltering economy.
• The Canadian government's decision to scrap its digital services tax has led to a resumption of talks, with Ottawa's ambassador Kirsten Hillman still believing a deal can be reached to eliminate US tariffs.
• A trade deal could lead to the Bank of Canada focusing on concerning inflation numbers and holding interest rates steady, rather than lowering them.
• The current uncertainty in the trade war's outcome has created a challenging environment for mortgage rates, making predictions difficult to forecast.
• Mortgage rates are influenced by various factors, including trade policies, inflation rates, and economic growth.
• The Bank of Canada's decisions on interest rates will have a significant impact on the Canadian mortgage market.
• A prolonged trade war could lead to a decrease in economic growth, which would further increase the likelihood of interest rate cuts by the Bank of Canada.

Statistics:

• As of July 3, the lowest available mortgage rates for each term/type and category (insured versus uninsured) were sourced by .
• The deadline for reaching a trade deal between the US and Canada was set for July 21.
• US President Donald Trump walked away from negotiations with Canada after the country scrapped its digital services tax.
• Ottawa's ambassador Kirsten Hillman remains optimistic about reaching a deal that would eliminate US tariffs on Canadian goods.
• The Bank of Canada's decisions on interest rates have a significant impact on the Canadian mortgage market.

Sources:

• No specific source is mentioned in the article.
• Globe and Mail: "Mortgage Rates Sourced by " (July 3, 2022)
• is a mortgage-rate comparison marketplace and mortgage brokerage.