Deloitte Canada has reduced 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 ongoing Canada-U.S. trade tensions are expected to lead to a significant economic slowdown in the last quarter of this year and early next year, according to Deloitte’s chief economist, Dawn Desjardins. Desjardins highlighted that the impact of billions of dollars in U.S. tariffs and Canada’s retaliatory measures will vary across different sectors of the Canadian economy, with some sectors facing challenges while others may see growth opportunities. She also noted that the government’s fiscal support, investment initiatives, and defense spending could drive targeted growth.
Deloitte’s latest economic outlook projects a 1.6 percent GDP growth for Canada in 2027, down from the previous estimate of two percent. The firm also revised its 2026 forecast to a 0.9 percent growth rate, slightly higher than the initial estimate of 0.7 percent in June.
Desjardins expressed concerns about the uncertain business environment due to factors such as potential cost increases, trade friction with the U.S., and the possibility of higher interest rates, leading to a slower growth trajectory for the Canadian economy.
In recent developments, the Canada-U.S. trade conflict has escalated to include bans on certain Canadian products by the U.S. government. President Donald Trump’s administration has halted imports of Canadian alcohol, motorcycles, molasses, and whey products, in addition to imposing 50 percent tariffs on more Canadian goods. Trump claimed that the U.S. will emerge victorious in the trade dispute and hinted at a possible fair deal with Canada in the near future.
The prolonged economic uncertainty is affecting both consumers and businesses, leading to cautious spending behavior and slower growth expectations, according to Desjardins. Meanwhile, Statistics Canada reported flat GDP growth for July after three consecutive months of expansion, with the mining and retail sectors forecasted to offset declines in oil and gas extraction in August.
Economists are closely monitoring the impact of trade tensions on the Canadian economy and are awaiting upcoming economic indicators, such as the September jobs report and October inflation data, for insights into potential policy adjustments by the Bank of Canada. Despite the challenges posed by tariffs, the central bank has maintained its interest rates, with expectations of a gradual increase in 2027.