That optimism leans heavily on CUSMA , which spares most Canadian exports from steep US tariffs, while critical sectors including autos, aluminum, and steel continue to face steep trade barriers. Deloitte estimates that 95% of Canadian shipments to the US will encounter low or zero tariffs, leaving the country better off than most peers.
Labour market softness remains a key risk with job losses of 38,500 since January, pushing unemployment to 7.1% in August. Wage growth has slipped to 3.5% this year, down from 4.9% in 2024, while slower immigration is dampening labour force expansion.
Ontario, hardest hit by US tariffs, has shed nearly 50,000 jobs, while resource-driven regions like Newfoundland and Labrador and Saskatchewan are showing more resilience.
Policy measures are expected to help though with the Bank of Canada forecast to cut its policy rate to 2.25% by year-end, improving financing conditions. At the same time, Ottawa is fast-tracking infrastructure approvals and dialing back regulatory hurdles to encourage private-sector capital spending.
“The easing of regulations, a commitment to home building, funds flowing into large capital projects and fewer interprovincial trade barriers are the steppingstones to Canada’s economic renaissance. How quickly businesses respond will be the key,” adds Desjardins.