File: A wad of Canadian dollars. AFP/Nicholas Kamm
MONTREAL - Canada's economy contracted sharply in the second quarter as exports fell due to US President Donald Trump's tariffs.
The world's ninth-largest economy shrank at annual rate of 1.6 percent compared to the first quarter, said Statistics Canada. It was the first decline in the Canadian GDP in seven quarters.
Statistics Canada also revised downward its estimate of first-quarter growth, from an annual rate of 2.2 percent to 2.0 percent.
Tariffs imposed by the Trump administration on Canadian goods as part of its sweeping global levies slowed exports dramatically, the agency said.
Specifically, Canadian exports plummeted by 7.5 percent in the second quarter, after rising by 1.4 percent in the first quarter.
Because of the US tariffs, international exports of passenger cars and light trucks plummeted 24.7 percent in the second quarter.
Exports of industrial machinery, equipment and parts fell by 18.5 percent while travel services dropped 11.1 percent, Statistics Canada said.
The contraction of the economy could raise the chances that the Bank of Canada will lower interest rates in September.
In its last three meetings the central bank has kept its benchmark interest steady at 2.75 percent.