Canada’s economy in the first quarter of 2025 did better than we expected. New forecasts, including joint projections from AASHTO and ARTBA, see that growth possibly grinding nearly to a halt for the remainder of 2023. July 7, 2025 On this day, The Conference Board, the widely-respected economic think tank, dropped its newest boom-bust report. They predicted national GDP growth of 1.5 percent for the year. This could not be more welcome as trade disputes fuel uncertainty in every corner of our economy and depress business investment.
Cory Renner, the Conference Board’s associate director of economic forecasting, noted that the economy has been off to a strong start for the year. That momentum is quickly running out. In this past year, the unpredictability caused by ongoing trade disputes, no less with our closest ally and trading partner, Canada, has plagued many industries. Consequently, businesses will continue to experience increased headwinds that will stifle growth in the years ahead.
Trade Disputes and Their Impact
Yet the cumulative effect of the ongoing trade disputes has rendered a volatile and confusing landscape for Canadian businesses. Lingering uncertainty over the Canada-U.S. trade relationship persists in weighing on spending. Hundreds of businesses have reported fear of making new investments or opening new lines of business because of confusion in the status of trade policies.
Additionally, private nonresidential fixed investment is likely to take a hit as firms embrace more risk averse postures in their corporate behavior. Renner cautioned that these challenges are expected to continue to suppress overall economic growth for the remainder of the year. That slower level of investment means fewer jobs created and is a short-term economic boost that limits our long-term economic potential.
Adapting to New Markets
Canadian exporters are facing new pressures of declining exports to the U.S. They are fully engaged creating new opportunities in emerging markets. This pivot has found surprising traction, as companies invest and look toward new industries to drive innovation. Renner said that the revenue from these emerging markets has been insufficient. It’s not enough to make up for the loss in exports to their historic regional partner.
The adaptation process can be labor intensive for exporters who need to work to comply with varying regulations and consumer preferences in new, often uncharted, waters. Although some sectors can prosper by diversifying their markets, most are still at risk from the effects of current trade disputes.
Looking Ahead
As the report continues, the Canadian economy’s outlook is cloudy at best. This combination of excellent first quarter performance combined with fading momentum creates the perfect storm of questions about just how optimistic we should be about future growth. As trade disputes continue to threaten growth, businesses and policymakers will need to stay focused on finding sensible solutions to these challenges.
