07:45 AM EDT, 08/01/2025 (MT Newswires) -- In Canada on Friday, new auto sales likely pulled back in July, while the S&P Global Manufacturing PMI should hold in negative territory in July, said Bank of Montreal.

The Canadian dollar (CAD or loonie) is slightly weaker ($1.3873) against a generally firmer US dollar (USD) early Friday, noted the bank.

The White House's Executive Order to modify the reciprocal tariff rates went out late Thursday, taking effect on Aug. 7, pointed out BMO. Most countries -- those that run trade deficits with the United States -- were left with a 10% minimum baseline duty, but 69 regions, including the seven that have already signed trade deals, were stuck with levies ranging between 15% -- the majority of countries and 41% for Syria.

Lesotho's rate was cut to 15% from originally 50%, which might save its textile industry and economy, but Switzerland landed at a "hefty" 39%.

As threatened earlier, Canada's "fentanyl" rate went up from 25% to 35%, though this still applies only to goods that are non-compliant with the USMCA. The Bank of Canada assumes 100% of energy products and 95% of other goods are compliant based on trade data and discussions with businesses.

So, the increase will raise the average effective tariff rate for Canadian shipments to the U.S. only slightly -- likely in the 5%-to-7% range, stated BMO. Most Canadian industries remain shielded from the duties, apart from autos, steel and aluminum.

It was hoped that the country might get a lower auto duty than 25%, as per the European Union and Japan's 15% rate, though this is effectively cut in half given the exemption for U.S. content. Still, the 35% overall duty ramps up the risk if Canada doesn't successfully renegotiate the USMCA.

Meantime, Mexico's "fentanyl" rate will remain at 25% and the country was given a three-month extension to try and get a better deal.

The U.S. average effective tariff rate on imports could rise a few percentage points to around the 20% range. That's still low enough to avoid a recession, but the economic toll will likely mount in the second half of the year, via higher prices and less consumer spending power, and some compression of business profit margins as they absorb some of the tax, added BMO.