08:37 AM EDT, 06/03/2025 (MT Newswires) -- The Q1 quarterly gross domestic product estimates revealed that Canada had topped the United States on a year-over-year growth basis for the first time in more than two years, said Bank of Montreal (BMO).

After struggling heavily with high interest rates, the Canadian economy was heading higher late last year and into early

2025, with GDP up 2.3% year over year, noted the bank. That's both above the 10-year median growth rate of just over 2% and topped the U.S. Q1 pace of 2.1% year over year.

Even on final domestic demand, Canada's yearly growth rate of 2.8% is running a touch above the U.S. despite a quarterly dip in Canada, pointed out BMO.

"Alas," the relative growth outperformance doesn't look

set to last long, added the bank. The good news is that the U.S. looks poised to perk back up, as the early read on Q2 is

surprisingly positive -- as imports have pulled back to

normal.

The Atlanta Fed is currently tracking Q2 growth of 4.6%, although BMO doubts it will be close to that high.

The less great news is that Canada looks poised to slow after benefiting from tariff front-running in Q1, according to the bank. The proposed higher 50% U.S. tariff on metals is yet another new negative, as it hits Canada harder than any other economy.