The Bank of Canada on Wednesday cut its benchmark rate for a sixth straight time, and warned of a significant shock to the economy from a U.S.-Canada trade conflict with tariffs of up to 25%.

The Bank of Canada on Wednesday trimmed its key policy rate by 25 basis points to 3%, cut growth forecasts and warned Canadians that a tariff war triggered by the United States could cause major economic damage.

“A long-lasting and broad-based trade conflict would badly hurt economic activity in Canada. At the same time, the higher cost of imported goods will put direct upward pressure on inflation,” Bank of Canada Governor Tiff Macklem said in a prepared opening statement on Wednesday.

The central bank announced its sixth cut in a row since June, as looming U.S. tariffs add uncertainty to the economic outlook.

The Bank of Canada is almost certain to trim its key policy rate by 25 basis points on Wednesday as a slew of factors, from potential cross-border tariffs to a reduced population target, keep the outlook for the economy muted.

In its first cut of 2025, the Bank of Canada (BoC) lowered its key interest rate by 25 basis points. On Wednesday, the country’s central bank announced it had reduced the policy rate from 3.25% to 3%.

The gap in interest rate policies between Canada and the U.S. widened further as the Bank of Canada cut its key lending rate by a quarter-point on Wednesday, while the U.S. Federal Reserve held rates steady.

The Bank of Canada will most likely trim its key benchmark rate by 25 basis points this week and is widely expected to offer an analysis on the impact of potential U.S. tariffs, economists and analysts said.