Canada’s 10-year government bond yield fell to about 3.62% after touching a more than two-year high of 3.76% on August 21. Renewed trade tensions with the US increased concern about Canada’s economic outlook after Canada imposed retaliatory tariffs of 15%-50% on roughly $20 billion of annual US imports, including metals, agricultural goods and motorcycles. The measures followed an increase in US tariffs after trade talks broke down. US President Donald Trump said tariffs on Canadian cars, trucks, automotive parts and steel would rise to 50% from January 1, 2027, alongside new duties on several other goods. The heightened trade risks led markets to reduce expectations for a Bank of Canada rate hike this year, even as elevated energy prices added to inflationary pressures.