09:13 AM EDT, 07/30/2025 (MT Newswires) -- It remains in the early days, but the effects of United States tariffs have been leaving a mark on Canadian economic data, said TD.

Cutting through volatility caused by the front-running tariffs, Canadian exports to the U.S. are generally underperforming in the most tariff-targeted industries, particularly steel and autos, wrote the bank in a note to clients.

Likewise, real gross domestic product and employment by industry are showing notable performance divergences in trade-exposed sectors versus lesser-exposed service industries, stated TD .

The bank's research has uncovered some evidence of tariff impacts in industries where exposure is the highest, notably steel and other industries targeted by the U.S. under Section 232. Looking ahead, forecasters and the Bank of Canada will be laser-focused on whether these effects are deepening, and perhaps more importantly, bleeding through to industries with little exposure.

The analysis is limited by the relatively short timeframe examined, added the bank. However, TD argues that the biggest data gap is currently around investment.

Capital spending is the one area that is likely to be the most adversely affected by tariff uncertainty. This is concerning since these capital spending trends ultimately dictate the path of output, trade and employment over the longer run.

The BoC's BOS highlighted that uncertainty is causing firms to hold off new investment plans, instead focusing on routine maintenance. For harder data, TD will need to await Q2 GDP data at the end of August and public and private investment intentions in early 2026.

Finally, confidence in Canada's export sector is unlikely to promptly turn even if there is a trade deal reached with the U.S. in the coming weeks, according to the bank. Perhaps the best opportunity for a near-term confidence boost is the upcoming fall federal budget that could lay out an economic roadmap for Canada's economic transformation.