Market News
Canada’s economy faces trade, inflation, and AI risks, but rates likely stay low: former BoC deputy governor
BY Andrew Rankin
Uncertainty surrounding the renegotiation of the Canada–United States–Mexico Agreement (CUSMA) is the single biggest risk facing this country’s economy in 2026, says former Bank of Canada deputy governor Paul Beaudry, adding that trade instability could derail a still-fragile recovery.
“It’s really hard to predict what this U.S. administration wants and what it is ready to do,” he said.
Canada has so far avoided the steep tariffs imposed on other U.S. trading partners, but Beaudry said that may change.
“We’re relatively in a good situation and we kind of want to stay there, and that’s not assured,” he said.
The mandatory review of CUSMA will intensify next year as U.S. President Donald Trump continues his push to reshape global trade and shift key industries to the U.S. and away from Canada and Mexico, among other countries.
The U.S. held public consultations on CUSMA in September, and the Trump administration is expected to submit a report detailing the changes it wants to Congress early next year. The formal review begins in July, though Dominic LeBlanc, the federal minister responsible for Canada–U.S. trade, is expected to visit Washington in January to start talks with his U.S. counterparts.
