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.

The Bank of Canada cut its benchmark lending rate by 25 basis points to three per cent in a move that was widely expected by investors and economists, but what comes next is up in the air given the looming trade war with the United States.

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%.

Trump said in an Oval Office signing ceremony on Monday that his administration will impose a 25% tax on goods from Canada and Mexico that may come as soon as February 1 – a move that could raise prices for American consumers.

General Motors, the largest producer of cars in Mexico, won’t provide details on how it would react if President Trump imposes 25 percent tariffs from the two countries.

Mexico President Claudia Sheinbaum said on Wednesday she does not believe the United States will impose tariffs on Saturday as President Donald Trump has pledged, but said her administration has its own response plan in place if needed.