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 comes following the implementation of a new ban by the United States on certain Canadian imports.
The trade tensions between Canada and the U.S. are expected to lead to a significant economic slowdown in the last quarter of this year and the early months of 2027, according to Deloitte. Chief economist Dawn Desjardins highlighted that the impact of the trade war’s escalation, including U.S. tariffs and Canada’s retaliatory measures, will vary across sectors, with some facing difficulties while others may see growth and job opportunities. She also noted that government support, investment initiatives, and defense spending could contribute positively to targeted growth.
Deloitte’s latest economic forecast predicts a GDP growth rate of 1.6 percent for Canada in 2027, down from the earlier projection of 2 percent made in late June. The firm currently anticipates a 0.9 percent growth in Canada’s economy for 2026, a slight improvement from the previous estimate of 0.7 percent.
Desjardins expressed concerns about the uncertain business environment, citing factors such as potential cost increases, trade friction with the U.S., and rising interest rates. This uncertainty is likely to lead to a slower growth trajectory for the economy.
The Canada-U.S. trade war escalated on Tuesday with the U.S. imposing bans on specific Canadian products, including alcohol, motorcycles, molasses, and whey products. President Donald Trump emphasized his administration’s stance, stating that the U.S. will emerge victorious in the trade dispute and predicting a fair deal to be reached with Canada.
Economic uncertainty is affecting both consumers and businesses, leading to a cautious approach towards spending and a slower pace of growth in Canada. Statistics Canada reported flat GDP growth for July, following three consecutive months of expansion, with the services-producing industries remaining steady while the goods-producing sector saw fluctuations.
Looking ahead, economists like Andrew Grantham are closely monitoring the impact of the recent tariffs and anticipate the September jobs report and October inflation data to provide further insights. The Bank of Canada is expected to maintain interest rates until the end of 2026, with a possibility of earlier rate hikes based on evolving economic conditions.
Overall, the economic outlook for Canada remains uncertain amid ongoing trade tensions and the need for a balanced recovery across various sectors.