Canada will maintain a \u201cstatus quo\u201d trade relationship with the United States in 2026, as progress on government-backed infrastructure projects helps revive sluggish investment by private businesses at home.<\/p>\n
That\u2019s according to Deloitte Canada, whose economic forecast released on Wednesday calls for gross domestic product to rise by 1.5 per cent in 2026, a deceleration from 1.7 per cent growth seen in 2025.<\/p>\n
Chief economist Dawn Desjardins says her outlook effectively rests on the assumption that Canadian companies will see current trade conditions extended with the U.S. this year.<\/p>\n
While Canada-U.S. trade negotiations have been ongoing since President Donald Trump started his second term in early 2025, Desjardins predicts this year\u2019s review of the Canada-United States-Mexico Agreement (CUSMA) will not leave Ottawa in a materially worse trade position than it has today.<\/p>\n
According to the Bank of Canada, 95 per cent of Canada\u2019s exported goods to the U.S. are CUSMA-compliant, and therefore not subject to American tariffs. This rises to 100 per cent for Canada\u2019s energy exports.<\/p>\n
\u201cWe\u2019ve really assumed a bit of a status quo in this forecast with respect to our access to the U.S. market,\u201d Desjardins told Yahoo Finance Canada in an interview. \u201cAn assumption we\u2019ve made in this forecast is that we retain our access to the U.S. relatively tariff-free, except for those industries that are already targeted under different legislation by [the Trump] administration.\u201d<\/p>\n
\u201cIt\u2019s not going to look exactly as it looks now,\u201d she added. \u201cHaving said that, in general, we think we\u2019ll still have pretty good access to the U.S. market without tariffs.\u201d<\/p>\n
High-level Canada-U.S. trade talks effectively collapsed last fall. The apparent breakdown came after an advertisement produced by Ontario\u2019s government aired on American television during the Super Bowl. It featured a clip of former president Ronald Reagan arguing against tariffs.<\/p>\n
Desjardins says her optimism on Canada-U.S. trade is grounded in strong support for CUSMA among American businesses. In December, a group representing more than 500 business organizations and chambers of commerce signed a joint letter to U.S. Trade Representative Jamieson Greer<\/a> supporting the agreement ahead of the 2026 review. <\/p>\n Deloitte\u2019s forecast for Canada\u2019s economy to grow by 1.5 per cent in 2026 represents a slight decrease from the 1.7 per cent GDP growth Deloitte predicted for this year in its report last September.<\/p>\n The accounting and consulting giant expects business investment to remain subdued for the first and second quarters of 2026, before a rebound in the back half. In addition to more clarity on the future of Canada-U.S. trade, Desjardins says progress on the federal government\u2019s slate of infrastructure plans under its new Major Projects Office (MPO) will inspire more private-sector investment.<\/p>\n \u201cThese building blocks will be sufficient to see business investment start to improve as we go through the course of the latter part of the year,\u201d she said. \u201cIt\u2019s not necessarily a shovel in the ground, but it\u2019s a clear path to seeing how these [projects] are going to go forward.\u201d<\/p>\n Prime Minister Mark Carney said in November that the first two tranches of projects approved by the MPO represent $116 billion in investments. These include plans for nuclear reactors, LNG facilities, hydroelectric projects, and mines for critical minerals.<\/p>\n \u201cMany are really buying into this idea that we need to do these investments in order to make our economy more productive,\u201d Desjardins said. \u201cCanadian companies are just waiting right now, because there\u2019s so much uncertainty on the demand side.\u201d<\/p>\n \u201cNow, in terms of really substantial increases in terms of investment, that\u2019s probably a 2027 story,\u201d she added.<\/p>\n Deloitte expects the Bank of Canada to maintain its policy rate at 2.25 per cent throughout 2026.<\/p>\n Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist<\/a>.<\/p>\n