TORONTO — A new report looking at some possible paths ahead for U.S tariffs finds that even the base case could mean a 1.5 per cent drop in long-term GDP, while a worst case could cut five per cent off growth.

The report from BMO looked at three scenarios, including a benign case that reflects current U.S. policies, which the bank figures has resulted in about a seven per cent effective tariff on Canadian goods.

The benign base case would likely mean only a moderate effect on near-term growth, while the worst-case scenario of 35 per cent tariffs on all imports from Canada — the current rate on non-CUSMA compliant goods — would likely lead to a moderate recession in the near-term as well as worsen long-term growth and inflation.

In between, a middle scenario of tariffs averaging 15 per c

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