Monday Market Minute | Aug 31, 2026

Canada answers with dollar-for-dollar counter-tariffs as Q2 GDP prints 3.3% — and the TSX sets a record close

What Moved

Canada's response to the Section 338 duties came on August 25. Finance Canada announced counter-tariffs at 15%, 25% and 50% on C$27.6 billion of US imports, described as dollar-for-dollar and effective September 8, alongside a C$7.5 billion support package. Saskatchewan followed on August 27 with its own 50% levy on US alcohol, also from September 8. The TSX Composite closed at a record 36,957.63 on August 25, and gold futures touched a 28-day high of $4,666 the same day.

Friday's growth data were also firm. Q2 GDP rose 3.3% annualized — just under the 3.4% consensus and well above the Bank of Canada's 2.5% July projection. Q1 was revised to +0.3% from −0.1%, retiring the spring's "technical recession" reading. Exports rose 3.6%, and June GDP grew 0.3%. The forward read was flatter: the July flash estimate came in at 0.0%, and population declined for a third consecutive quarter. Brent futures settled at $89.31 on August 28, down about 5% on the week.

TransUnion's Q2 data put the 60-day-plus mortgage delinquency rate at 0.29%, and 0.32% in Ontario. Equifax put total consumer debt at $2.68 trillion and reported that 0.77% of mortgage holders were 90 days or more behind on non-mortgage credit, with Ontario at 0.86%, up 27%.

Why It Matters

The economy entering the trade break was stronger than the spring narrative suggested, and Q2 now reads as a genuine rebound. But Q2 describes conditions before August 21. The July flash at 0.0% is the first sign of momentum fading, and none of the quarter's data yet captures the 50% duties or Canada's retaliation. A record equity close and a firm GDP print are backward-looking evidence; the tariff exchange is the forward-looking fact.

TransUnion and Equifax measure different things — mortgage arrears in one case, non-mortgage arrears among mortgage holders in the other, so they should not be combined. Read separately, mortgage delinquency remains low, while the Ontario rise in non-mortgage arrears among mortgage holders is the more telling signal of household strain. Note also that the US estimates the goods it targeted at about US$20 billion, while Canada sizes its counter-measures at C$27.6 billion; the two figures are on different bases and should not be compared directly.

Signal to Watch

The Bank of Canada decides on September 2, with the policy rate at 2.25% after six straight holds; the question is how it weighs a strong Q2 and 3% headline inflation against a trade shock that has just widened. GVR and TRREB report August housing on September 2 and 3, and the August labour force survey lands September 4. Canada's counter-tariffs take effect on September 8.