Canada's next batch of economic data could offer the first clear look at how recent US tariffs are hitting the economy, according to economists at TD Bank. The firm's research arm, TD Economics, says August trade figures and September employment numbers may both show early signs of strain from the new trade barriers.
The reports land at a sensitive moment. Investors and the Bank of Canada have been trying to gauge how much the tariffs will slow growth, and these are among the first "hard" data points to reflect the new reality. But TD warns the numbers may be messier than the underlying trend, which could complicate the read.
What to watch in the trade data
The key concept in Tuesday's trade release is "front-loading." That's when exporters rush shipments into the US before tariffs take effect, to avoid paying the new duties. If that happened, August exports could look unusually strong—not because demand is booming, but because businesses pulled forward orders that would otherwise have shipped later.
That creates a tricky dynamic. A strong August trade number could be followed by a softer September, simply because the pipeline was emptied early. TD Economics says this timing effect can also skew Statistics Canada's monthly estimate of economic growth, making the economy look stronger or weaker than it really is.
For investors, the risk is misreading the signal. A one-off export surge might be mistaken for genuine momentum, or a subsequent drop might look like a collapse when it's really just a payback. The true trend in demand will only become clear over several months.
Jobs data could show early cracks
On Friday, Statistics Canada releases the September Labor Force Survey. TD Economics expects it to show hiring cooling and the unemployment rate edging higher. The reason: uncertainty about tariffs is making businesses cautious about expanding payrolls.
That would be an early sign of the labor market feeling the pinch. Even if the overall economy is still growing, a softer jobs report can weigh on consumer confidence and spending, which are key drivers of Canadian growth.
The unemployment rate is a closely watched number, and even a small uptick can shift expectations about the Bank of Canada's next move. If the data come in weak, forecasters may mark down their near-term growth estimates, even if part of the weakness is just a timing artifact.
What it means for investors
For markets, the next few releases could be choppier than the underlying economy. That's important because investors and central banks rely on trade and labor numbers to judge momentum. If they overreact to a single report, prices can move more than the fundamentals justify.
The Canadian dollar and short-dated Canadian government bond yields are particularly sensitive to shifts in expectations about the Bank of Canada's growth and rate path. When investors rethink how quickly the central bank might cut or hold rates, those assets tend to react quickly—especially when the first post-shock data land.
TD Economics' caution is a reminder that not all data moves are created equal. A strong trade print or a weak jobs number may say more about timing than about the economy's true direction. Investors should look through the noise and focus on the trend over the coming months.
This isn't just a Canadian story. Tariffs are reshaping trade flows globally, and other economies are also dealing with front-loading effects. For instance, Singapore's retail sales slowed in August as car buying dropped, a reminder that trade tensions ripple through consumer behavior. Meanwhile, Germany's services sector rebounded in September, showing that not all economies are feeling the same pressure.
For Canadian investors, the key takeaway is to expect volatility in the data and in the currency and bond markets. The Bank of Canada will be watching the same numbers, and its decisions will hinge on whether the weakness looks temporary or lasting.
As TD Economics notes, the next few "hard" data points could look choppier than the underlying economy. That's not a reason to panic, but it is a reason to pay attention to how policymakers and markets interpret the numbers.
