The tit-for-tat tariffs imposed by Canada and the United States will trim Canadian exports and imports by 0.6 percent and boost inflation by about 0.1 percentage point, the Bank of Canada said on Wednesday.

The tariffs, along with related uncertainty about U.S. trade policy that hangs over Canada’s export-driven economy, will subtract about 2/3 percent from GDP by the end of 2020, the central bank said in its quarterly monetary policy report.

“The size and timing of the effects (of the U.S. tariffs) will depend on multiple factors, including the capacity of Canadian exporters to absorb the tariff costs or to pass them on to their U.S. customers,” the bank said.

The U.S. tariffs on C$16.6 billion of Canadian steel and aluminum imports - about 2.5 percent of total Canadian exports - will cut the level of real Canadian exports by C$3.6 billion, or about 0.6 percent, the bank said...

This was excerpted from the 11 July 2018 edition of Reuters Canada.