“A long-lasting and broad-based trade conflict would badly hurt economic activity in Canada. At the same time, the higher cost of imported goods will put direct upward pressure on inflation,” Bank of Canada Governor Tiff Macklem said in a prepared opening statement on Wednesday.

The potential for U.S. tariffs is clouding the economic outlook for the Bank of Canada as it delivered another interest rate cut, reducing its policy rate by a quarter-percentage point to three per cent.