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. The accounting firm’s updated forecast coincides with a recent American ban on specific Canadian imports.
The escalation in the Canada-U.S. trade conflict is expected to lead to a significant economic slowdown in the final quarter of this year and the beginning of 2027, according to Deloitte. Chief economist Dawn Desjardins highlighted that the impact of billions of dollars in U.S. tariffs and Canada’s retaliatory actions will affect various sectors differently, potentially leading to disparities in growth and job creation.
Deloitte’s current economic outlook anticipates a 1.6 percent GDP growth for Canada in 2027, down from the previous expectation of 2 percent growth. The firm also adjusted its 2026 forecast to a 0.9 percent economic expansion, showing a slight improvement from the earlier estimate of 0.7 percent.
Desjardins emphasized the uncertainty facing Canadian companies, including factors such as increased costs, trade friction with the U.S., and potential interest rate hikes, creating an unstable business environment and suggesting a slower growth trajectory for the economy.
On the trade front, the U.S. administration under President Donald Trump has imposed bans on certain Canadian products, including alcohol, motorcycles, molasses, and whey. Trump expressed confidence in the U.S. stance, claiming that Canada has treated the U.S. unfairly and predicting a favorable deal outcome in the near future.
The ongoing economic uncertainty is impacting both consumers and businesses, leading to cautious spending behavior among Canadians and a slower pace of economic growth, as noted by Desjardins.
Statistics Canada reported flat GDP growth for July, following three consecutive months of expansion, with the agency projecting a 0.2 percent growth in August. Economists like Andrew Grantham foresee the impact of recent tariffs on the economy, with a focus shifting to upcoming job reports and inflation data.
The Bank of Canada, while acknowledging the challenges posed by Canada-U.S. tariffs, is aiming for a broad economic recovery and maintaining interest rates for the time being. Analysts suggest the central bank may consider rate hikes sooner than anticipated, given the evolving economic landscape.
