Ontario’s economy is entering a slowdown that’s expected to last through 2020, according to a forecast from Central 1 Credit Union (Central 1) published on Tuesday.

Central 1’s latest forecast sees a downshift in the province’s economy through 2020 due to a variety of factors, including softer consumer spending, weaker residential investment, and slower population growth.

U.S. trade restrictions have the potential to inflict  “considerable damage” on the provincial economy,  the credit union cautions in a news release.

According to the report, the U.S. accounts for 82% of Ontario’s goods exports, particularly concentrated in the auto sector and related manufacturing.

“Ontario’s export market is highly dependent on the U.S., and U.S. trade restrictions have the potential to result in an industry recession and weaker provincial growth,” says Edgard Navarrete, regional economist with Central 1, in a statement.  “An outright recession in Ontario’s economy is possible if trade tensions turn into a global trade war.”

“The negative economic impact from a trade war would be global growth recession at a minimum, or quite likely an outright recession,” the report states. “Financial and currency markets would undergo major swings and realignments.”

Even without a trade war, the real gross domestic product (GDP) growth is expected to slow to 2.1% in 2018, down from an estimated 2.8% in 2017. GDP growth is forecast to slip under 2% annually in 2019 and 2020. “Ontario’s economy is entering a slower growth phase, which is expected to last through 2020,” the report states.

“This outlook to 2020 is subject to considerable uncertainty in light of current trade issues playing out in North America and elsewhere,” adds Navarrete. “This forecast presumes the status quo in trade policy and in provincial government fiscal and economic policy. We can expect changes under the new provincial government which haven’t been formalized yet.”

While trade remains a critical risk, the report characterizes a trade war as the “extreme outcome” and  “sane policy outcomes are possible”.

“It can take many months from an initial threat to the actual imposition of tariffs and the political cycle could provide a dose of reality to the futility of such actions and prompt a policy re-orientation in attaining better trade outcomes,” the report states.