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 follows the implementation of a recent American ban on specific Canadian imports.
The ongoing Canada-U.S. trade war escalation is expected to lead to a significant economic slowdown in the last quarter of this year and early 2027, according to Deloitte. Chief economist Dawn Desjardins highlighted that the impact of U.S. tariffs and Canada’s retaliatory measures will vary across different sectors of the Canadian economy, affecting some negatively while benefiting others. She also mentioned that the federal government’s financial support, investment strategies, and defense spending are positive indicators for targeted growth.
Deloitte’s latest economic forecast predicts a 1.6 percent GDP growth for Canada in 2027. This revision comes after the firm previously anticipated a two percent GDP growth in the upcoming year. The current outlook for 2026 shows a modest improvement, with Deloitte now projecting a 0.9 percent economic growth, up from the initial estimate of 0.7 percent in June.
Desjardins expressed concerns about the uncertain business environment in Canada, highlighting factors like potential cost increases, trade friction with the U.S., and the likelihood of higher interest rates contributing to the overall economic uncertainty. She anticipates a slower growth trajectory for the Canadian economy as a result.
In another development, the Canada-U.S. trade conflict intensified as the U.S. administration, led by President Donald Trump, imposed bans on various Canadian products, including alcohol, motorcycles, molasses, and whey. Trump stated that these actions were aimed at rectifying what he perceived as unfair treatment of the U.S. by Canada.
Desjardins noted that the prolonged economic uncertainty is affecting both consumers and businesses, leading to increased caution in spending and a slower pace of growth. Meanwhile, Statistics Canada reported stagnant GDP growth for July after three consecutive months of economic expansion, with the agency forecasting a 0.2 percent growth for August.
Looking ahead, economists like Andrew Grantham from CIBC are closely monitoring the impact of the latest tariffs on the economy. The Bank of Canada is focusing on upcoming economic indicators, such as the September jobs report and October’s inflation data, as it prepares for its next interest rate policy decision. While the Bank of Canada has maintained interest rates for the time being, there are speculations about potential rate hikes earlier than anticipated based on recent communications from policymakers.