Canadian banks are not being harmed by the effects of new U.S. tariffs that impact some of their customers, and the banks may even find new opportunities, Reuters reported Tuesday (Aug. 25).
Bank of Montreal (BMO) and Bank of Nova Scotia (Scotiabank) reported earnings Tuesday that beat quarterly profit estimates, according to the report.
The banks’ CEOs said they are working with their clients on liquidity investment decisions, supply chain adjustments and market diversification, per the report.
BMO CEO Darryl White said that the bank’s clients have “adjusted very well” to the impact of trade negotiations and tariffs and that “there may be some opportunities in the challenge that we’ve got in front of us,” according to the report.
The report said that in July, the Canadian economy added “far more” jobs than expected, and the unemployment rate dropped to a two-year low.
The Wall Street Journal reported Tuesday that both BMO and Scotiabank reported stronger-than-expected earnings in the latest quarter and that executives from both banks said that their clients are ready to navigate the challenging trade environment.
The report quoted White saying that while the trade-related sectors and domestic affordability in both Canada and the U.S. are facing a headwind, Canada has real advantages in the form of “a stable financial system, abundant resources, world class talent and a platform to export globally through the world’s most comprehensive set of free trade agreements.”
Bloomberg reported Tuesday that the shares of both BMO and Scotiabank rose Tuesday, with Scotiabank’s reaching a record high, as the banks reported better-than-expected results across their businesses.
CEOs of both banks said that their clients and Canada’s economy appear able to manage the latest U.S. tariffs and that government support for the sectors impacted by the tariffs should help mitigate the effects.
Reuters reported Tuesday that the trade war between Canada and the U.S. intensified Tuesday when Canada announced new tariffs on about $20 billion worth of U.S. annual imports. The tariffs impose duties of 15%, 25% and 50% across about 700 products.
The move followed the U.S. announcement on Saturday (Aug. 22) that 50% tariffs were imposed on $20 billion worth of Canadian imports, according to the report.
