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Bank of Canada Freezes Rates as Trump’s Tariff Threat Looms Over Economy

Bank of Canada Holds Rates Steady Amid Tariff Turmoil In a widely anticipated move, the Bank of Canada has opted to maintain its benchmark interest rate at 2.75% for the third consecutive time, as trade tensions with the United States intensify ahead of an August 1 tariff deadline. Economists had unanimously predicted the hold, citing mixed economic signals: while employment remains strong, core inflation continues to hover above the Bank’s target. Governor Tiff Macklem emphasized that monetary policy cannot offset the impact of prolonged trade conflicts, reiterating the Bank’s commitment to price stability for Canadians. The decision comes as President Trump threatens sweeping tariffs on Canadian goods, including a potential 35% blanket rate and sector-specific levies on steel, aluminum, and autos. These measures have injected uncertainty into business planning and consumer confidence, with many firms scaling back hiring and investment. Despite the hold, analysts warn that further...
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US-China Trade Truce: A Step Forward, But Challenges Remain

In a significant development, the United States and China have reached a framework agreement to ease export restrictions and maintain their tariff truce. The deal, finalized after two days of intense negotiations in London, aims to remove China's export curbs on rare earth minerals and magnets while also scaling back some recent U.S. export restrictions.

U.S. Commerce Secretary Howard Lutnick described the agreement as putting "meat on the bones" of a prior consensus reached in Geneva. However, the framework still requires approval from both President Donald Trump and President Xi Jinping before implementation. If approved, it could prevent the Geneva agreement from unraveling due to dueling export controls.

Despite the progress, deep-rooted trade tensions remain unresolved. The U.S. has long criticized China's state-led, export-driven economic model, while China has resisted unilateral tariff policies imposed by Washington. The two sides have until August 10 to negotiate a more comprehensive agreement, or tariff rates will revert to significantly higher levels.

Global markets responded cautiously to the news, with investors wary of the deal's long-term viability. While the agreement signals a willingness to cooperate, experts warn that fundamental trade disagreements between the two economic giants persist.

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