Deloitte Canada has revised its growth projection for Canada’s economy in 2027, reducing it by 20 percent due to challenging conditions faced by consumers and businesses. This adjustment in forecast coincides with a new ban imposed by the U.S. on certain Canadian imports, further exacerbating the economic outlook.
The recent escalation in the Canada-U.S. trade war is expected to lead to a significant economic slowdown towards the end of this year and early next year, according to Deloitte’s chief economist, Dawn Desjardins. The impact of billions of dollars in U.S. tariffs and Canada’s retaliatory measures will vary across different sectors of the Canadian economy, with some industries facing hardships while others may experience growth and job opportunities.
Deloitte’s updated economic forecast projects a 1.6 percent GDP growth for Canada in 2027, down from the earlier expectation of 2 percent growth. The firm also anticipates a slight improvement in Canada’s economy with a 0.9 percent growth in 2026, compared to the previous estimate of 0.7 percent.
Desjardins highlighted the current environment of uncertainty faced by Canadian companies, including higher costs, trade frictions with the U.S., and the possibility of increased interest rates. This uncertain landscape is expected to result in a slower growth trajectory for the Canadian economy.
In a separate development, the Canada-U.S. trade war escalated with the U.S. administration imposing bans on specific Canadian products, such as alcohol, motorcycles, molasses, and whey products. President Donald Trump expressed confidence in the U.S. stance, claiming that Canada has been unfair in its trade practices. Trump’s administration also announced plans for a new $15-billion steel plant in Iowa as a demonstration of the effectiveness of the tariffs on Canadian imports.
Desjardins emphasized that the ongoing economic uncertainty is affecting both consumers and businesses, leading to cautious spending behavior among Canadians and a slower pace of economic growth.
Statistics Canada reported that the GDP growth for July remained stagnant following three consecutive months of economic expansion. The agency noted that while the goods-producing industries were relatively stable, the services-producing sectors experienced mixed performance, with declines in retail and wholesale trade.
Looking ahead, economists like Andrew Grantham are closely monitoring the impact of the latest tariffs on the economy. The Bank of Canada is shifting its focus to upcoming economic data releases, such as the September jobs report and October inflation figures, as it evaluates the possibility of adjusting interest rates in the future. Despite the challenges posed by the trade war, the central bank has opted to maintain its current interest rates for the time being.
Overall, the economic landscape for Canada remains uncertain, with various factors influencing the country’s growth prospects and policy decisions in the coming months.
