CIBC economist Avery Shenfeld maintains a cautiously optimistic outlook on Canada-US trade relations despite escalating rhetoric from Washington. In a recent analysis, Shenfeld argues that Canadian exports are likely to retain their current duty-free status under the USMCA framework, suggesting that much of the current tension mirrors previous high-stakes negotiations.

Shenfeld notes that the legal structure of the existing trade agreement provides multiple paths that support a stable economic outlook for Canada. Even if the tripartite review fails to reach a definitive conclusion, the deal would likely remain in place until its 2036 sunset date. Political pressure within the United States, including support from US business groups, may also prevent the administration from taking an aggressive approach to continental trade.

Market behavior suggests investors are currently aligned with Shenfeld's view rather than pricing in a significant trade war. The economist points out that if a high-tariff outcome were truly expected, markets would not be pricing in an unchanged Canadian overnight rate for the remainder of the year. However, persistent threats of withdrawal continue to dampen long-term business confidence, with Shenfeld concluding that remaining doubts will be a headwind for goods sector capital spending intended to expand Canadian industrial capacity.