Deloitte Canada has revised its growth projection for Canada’s economy in 2027, reducing it by 20 percent due to challenging conditions affecting consumers and businesses. This adjustment follows the implementation of a new American ban on specific Canadian imports.
The escalating trade tensions between Canada and the U.S. are expected to lead to a significant economic slowdown towards the end of this year and into early 2027, according to Deloitte’s chief economist Dawn Desjardins. She highlighted that the impact of the trade war, involving billions of dollars in U.S. tariffs and Canada’s countermeasures, will vary across different sectors of the Canadian economy.
Despite the challenges, Desjardins noted positive signals for targeted growth stemming from the federal government’s fiscal support, investment initiatives, and defense spending. Deloitte’s latest economic forecast for Canada predicts a GDP growth of 1.6 percent in 2027, down from the previous estimate of 2 percent. The firm also anticipates a slight improvement in Canada’s economy, with a growth rate of 0.9 percent in 2026 compared to the earlier estimate of 0.7 percent.
The ongoing uncertainty in the economic landscape is affecting both consumers and businesses, leading to a cautious approach towards spending and a slower pace of growth. Meanwhile, the Canada-U.S. trade war has intensified, transitioning from tariffs to bans on certain products such as alcohol, motorcycles, molasses, and whey items.
President Donald Trump’s administration’s actions have further fueled the trade tensions, with Trump expressing confidence in the U.S.’s position in the negotiations. The impact of these developments on the economy is being closely monitored, with a focus on upcoming economic indicators such as job reports and inflation data.
Statistics Canada reported stagnant GDP growth in July following three months of expansion, with the goods-producing and services-producing industries showing mixed performance. Economists are closely watching for the effects of the latest tariffs and trade policies on the economy, with expectations of potential rate hikes by the Bank of Canada in the future.