Trump's tariffs impede America's 'secret sauce,' RBC CEO says

United States President Donald Trump’s tariffs will “disproportionally affect the less fortunate” economically, says the head of Canada’s largest bank.

Royal Bank of Canada chief executive Dave McKay said the trade war stemming from Trump’s tariffs could make it “more expensive to buy a lot of stuff” and may reduce the probability of a rate cut in the U.S. in June.

“As you think about the overall kind of strategy of the U.S. government to find a way to fund tax cuts, the people who are going to pay for those tax cuts are often the ones who are going to be impacted by the tariffs,” he said at an RBC Capital Markets event on Tuesday. “If that’s a funding vehicle for the tax cuts, those tariffs impact the part of the economy that’s struggling the most, in Canada and in the U.S.”

U.S. tariffs on Canadian goods went into effect Tuesday after Trump dashed hopes of a reprieve on Monday. Canada is retaliating with $30 billion of tariffs on U.S. products, with an additional $125 billion in levies set to take hold after 21 days.

The trade war comes just as the Canadian economy has been showing glimpses of a recovery in recent months following a prolonged period of high interest rates to tackle rising prices.

Canada’s biggest banks, which often act as a barometer for the economy, posted better-than-expected results last week for the quarter ending Jan. 31. That trend, however, may have begun to change from January onwards due to the tariff narrative, McKay said.

“That negative narrative and the volatility around that narrative from January to today and to last night have had an immediate impact on the psychology of consumers, the psychology of small businesses and the psychology of large corporates in your business, and they’re