This is a breaking-news story. It will be updated.
The recent round of tariffs is "absolutely manageable," said BMO CEO Darryl White. While the imposition of U.S. tariffs is "acute," the tariffs will be applied to a small percentage of exports from Canada, thus reducing the bank's lending and credit risk, White said during the company's quarterly earnings call.
BMO's attempt to reassure investors came amid a fraught period that erupted late Friday, when Canada suspended trade negotiations with the U.S., which triggered a new round of tariffs on Canadian goods.
In the days since, economists and other market-watchers have voiced concern about the possibility that the two countries will continue to escalate by imposing additional tariffs.
"While the direct economic impact appears manageable, the outcome drags out uncertainty and the breakdown in negotiations suggests current tariff rates are more likely a floor than a ceiling," analysts at Wells Fargo wrote Monday in a research note.
Moody's analyst Robert Colangelo echoed that concern about uncertainty, though he noted that the new U.S. tariffs only affect a "narrow scope" of Canadian exports.
"I think what has changed, really, is the predictability of trade policy that companies would need to continue to make investments and grow their business," Colangelo told American Banker. "That certainly has become more difficult and more challenging."
On Tuesday, Canada announced retaliatory tariffs on $27.6 billion of U.S. imports, matching the U.S. duties, as Prime Minister Mark Carney had promised. Canada said its tariffs will take effect Sept. 8.
The counter-tariffs will focus on steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics, the Canadian government said. In certain industries, such as steel and aluminum, existing counter-tariffs will increase from 25% to 50% to match U.S. rates, according to the Canadian government.
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BMO was the first of Canada's five big banks to hold its quarterly earnings call, followed later Tuesday morning by the Bank of Nova Scotia.
Scotiabank's executives also said they believe they can handle the trade war's fallout. During the Toronto-based lender's earnings call, CEO Scott Thompson said the new tariffs would only affect 5% of Canada's exports and have a "small impact" on the nation's GDP.
"I think this obviously creates uncertainty, but with the current tariffs, it's manageable," Thompson said.
TD Bank Group, Royal Bank of Canada and Canadian Imperial Bank of Commerce are scheduled to report their quarterly results on Thursday.
The U.S. and Canada have had an increasingly frosty relationship since the Trump Administration enacted widespread tariffs on scores of countries on April 2, 2025, known as "Liberation Day." Following the collapse of trade negotiations last week, Canadian officials blamed unexpected demands from the U.S., while U.S. officials said the talks fell apart due to demands from the Canadians.
BMO Chief Risk Officer Piyush Agrawal said Tuesday that the Canadian bank has a diversified loan portfolio and disciplined underwriting standards, and it has already stress-tested the areas of its loan book that are most exposed to disruptions in trade between the two longtime allies. Direct exposure is less than 1% of the bank's total loan book, with a large portion of those loans made to high-quality borrowers, he said.
BMO made no changes Tuesday to its 2026 guidance, with fourth-quarter provisions for credit losses expected to be "in line" with third-quarter results, Agrawal said. For the bank's third quarter, which ended on July 31, provisions totaled $722 million Canadian dollars, down from CAD $797 million in the year-ago quarter.
BMO also maintained its profitability targets, including its return on equity target of 15% in 2027.
"We're focused on helping our clients navigate change. That's not new," White said. "Liberation Day was 16 months ago. There's been a lot of change that has been navigated."
