Deloitte Canada has revised down its growth projection for Canada’s economy in 2027 by 20 percent due to challenging conditions faced by consumers and businesses. This adjustment comes in light of a recent ban imposed by the U.S. on certain Canadian imports. The trade tensions between the two countries are expected to lead to a significant economic slowdown in the last quarter of this year and the beginning of 2027.
Chief economist Dawn Desjardins highlighted that the impact of the ongoing Canada-U.S. trade dispute, involving billions of dollars in tariffs and countermeasures, will affect different sectors of the Canadian economy unequally. While some industries will face difficulties, others are poised for growth and job creation. Desjardins emphasized that the government’s financial support, investment programs, and defense spending are positive indicators for targeted economic expansion.
Deloitte’s latest economic forecast anticipates a 1.6 percent growth in GDP for Canada in 2027, down from the previous estimate of 2 percent made in late June. The firm also revised its 2026 growth projection to 0.9 percent, a slight improvement from the initial forecast of 0.7 percent in June.
Desjardins expressed concerns about the uncertainty prevailing in the business environment, including potential cost increases, trade friction with the U.S., and the likelihood of higher interest rates. This uncertainty is expected to result in a slower growth trajectory for the Canadian economy.
In response to the U.S. ban on certain Canadian imports, President Donald Trump declared confidence in the effectiveness of his trade policies, stating that Canada will eventually concede to a fair deal. Trump’s announcement of a new steel plant in Iowa was seen as a success of his tariff strategy, coinciding with news of job cuts at a steel mill in Hamilton, Ontario.
The prolonged economic uncertainty is impacting both consumers and businesses, leading to cautious spending habits among Canadians. This cautious approach is expected to contribute to a slower pace of economic growth.
In separate news, Statistics Canada reported that GDP growth in July remained stagnant compared to the previous month, following three months of consecutive expansion. The report highlighted that while construction and utilities saw growth, other sectors experienced declines. Looking ahead, the agency forecasts a 0.2 percent growth for August, with the mining and retail industries offsetting reductions in oil and gas extraction.
Economists like Andrew Grantham from CIBC noted that the flat July GDP figure was anticipated as the economy cooled down from a strong performance in the second quarter. With a focus on the impact of recent tariffs, economists are awaiting the release of the September jobs report and October’s inflation data, which will influence the Bank of Canada’s upcoming interest rate decision scheduled for October 28. The central bank is expected to maintain interest rates through the end of 2026, with a gradual increase likely in 2027 according to RBC economist Abbey Xu.