关税战、油价冲击与公众预期：加拿大经济如何在不确定性中突围？

Jen Jeganathan: Today, new US bans kicked in on Canadian made cheese and other dairy products, alcoholic beverages and some motorcycles. It's the latest knock in what has been a chaotic year. So given all the chaos, how's the economy doing? Well, according to STATCAN data also released today, real gross domestic product was basically unchanged in July after three months of growth. But what does that mean for the country's financial health, and how are Ontarians feeling about the future? Well, we dig into the state of our economy right now and how it could look going forward if our relationship with the US doesn't get back to normal. I'm Jen Jeganathan. This is The Rundown. Don Desjardins, Pedro Antunes, great to have you on the rundown. I know it is a busy day. The numbers have been released. So as we know, STATCAN released GDP data this morning. But we know GDP is just a snapshot of the past. Don, you are the chief economist at Deloitte Canada and released a new economic update. How is the economy doing?

Don Desjardins: Well, it's doing okay at the moment, but we do think there's going to be some rough road ahead. Certainly the new tariffs and retaliatory tariffs and bans and are going to create challenges for Canadian businesses. And we think we're probably going to see slowing in economic activity as we go through the remainder of this year.

Jen Jeganathan: All right, Pedro, from your vantage point as chief economist at signal 49 research, what do you make of Canada's economy right now? As we look at the end of September?

Pedro Antunes: Yeah. Well, it's been a rough ride, certainly the last couple of years, ever since the US administration has put on, you know, this trade war with Canada. That's been a big challenge. But there's other challenges even. And even as we face more tariffs and more tariff pressure, the the pressure around this oil price shock that the global economy is suffering through this is, you know, a, you know, having all sorts of implications for consumers, especially in this country. But, you know, I do know that on the resource side, we benefit from higher oil prices. But overall, it's a challenge for consumers. And consumers are what have been holding up really the economy thus far through this rough ride. So a lot of concern going forward. I think with respect to, to, to the challenge, the external challenges that we're facing.

Jen Jeganathan: Don, help me understand this. Inflation is running at around 3% because of those higher oil prices that Pedro has mentioned, not far from the Bank of Canada's benchmark of 2%. We've got the trade war here. Why is inflation relatively subdued?

Don Desjardins: Well, because, as Pedro said, we've gone through a period of relatively modest growth. So underneath the hood, you know, we still have excess capacity in the economy. So that's restraining the price increases we're seeing in other parts of the economy. Now, having said that, I think one of the big concerns is that these higher energy costs start to verbal through to other parts of the economy, and that we start to see businesses who are facing higher costs themselves, increase their prices. Also worried, of course, that consumers might expect increases because even though the three 3% is at the upper end of the Bank of Canada's target band, as we know, and consumers are feeling that, you know, even if it's driven by energy, they're still feeling the fact that these costs are up. And so I think worries are do we see consumers start to expect inflation to continue to rise? And that could be problematic.

Jen Jeganathan: Pedro.

Pedro Antunes: Yeah, I mean, let's go back a few years. Back in 2022, when Russia invaded Ukraine, we had a commodity price shock. It was broader than just oil prices. But oil prices were a big part of that. And that led to all of this inflationary pressure. And it took a long time for central banks to fight back. Essentially, we had we suffered through a period of very high interest rates. And just as we were seeing, you know, the light at the end of the tunnel, inflation had gone back down to for most countries to within the target bands. And we were expecting now interest rates to come down, you know, we end up with, you know, a new oil price shock. The US administration gets itself into a situation where now they don't know how to get out of. And so we have this challenge in the straight and oil prices that are likely to stay elevated. Certainly they were you know, they've averaged about 84 or $85 a barrel, I think, so far this year. They're currently running very close to $100 a barrel. So this inflationary pressure continues. The big question is not just the inflationary pressure, but what are central banks going to do. And so as we were expecting the world to lower interest rates, now we're expecting the world. And we've already seen the case of the fed. In case of Japan, the case of the European Union, interest rates kind of inching up. And while the central bank in Canada has kept rates stable, that's not really what consumers and businesses pay. It's what happens in the bond market. And that is essentially yields on treasuries. And the bond market is essentially upped. Interest rates for Canadians. And our borrowing costs are now up significantly. So the cost pressures are playing a role. And now the interest rate pressures are going to be playing a role as well.

Jen Jeganathan: All right. We'll come back sort of about future rate decisions and what that will all mean for Bank of Canada, because a lot of people are curious about that. I want to change gears. I want to talk immigration. Canada's immigration rate has fallen dramatically over the last couple of years. What impact has that had on the economy? We're talking about job availability, wages. What are we seeing?

Don Desjardins: Well, I mean, certainly what we've seen is that jobs have been created. And you look if you look at the year to August, over 200,000 jobs. Now, when I say that it's all in the services sector and largely in the health care. So so we're looking at a labour market where we have employment growing, but we don't necessarily see labour force growth significantly because of the immigration story. And so our unemployment rate has fallen about a half a percentage point over the past 4 or 5 months to 6.4%. So when we're thinking about what's it doing to our economy, well, there is the potential if we grow and if we need to see demand for labour, that can be constrained. We did look at we did a study. It's sort of interesting. It's not to be alarmist, but it's just to say we looked at, okay, what happens if the government implements all of its, you know, pro-growth plans with respect to building houses, infrastructure, getting capital, private capital to actually be investing. How would that shape up? What kind of labour demand and what we determined was about half a million jobs would be created that we didn't necessarily have workers for. And furthermore, if we see continued retirements, which is likely, you know, that could get up to two, three, 750, 000 people. So, you know, when we're talking about immigration and the impact, sometimes it's not right immediate, sometimes it does show up in certain indicators. But at the other side, we've got to think about the future and how are we going to build up this labour force we're going to need?

Jen Jeganathan: Okay, Pedro, how does wage growth look for Canadians who are employed full time right now?

Pedro Antunes: Yeah. If I could, I would like to just second a little bit of what Don said on immigration. That is a real crucial piece. I think there's so much dishevelment in the labour market right now, because what we've cut back on, on immigration side, in fact, we're trying to reduce the federal government is trying to reduce and has been successful at not not renewing work permits for essentially 460 000 people in the country in 2025. And that is the non permanent resident. This is temporary foreign workers, international students, and there's a lot of employers that really have been essentially encouraged through the pandemic, the post pandemic years to hire these folks. So they're struggling to find workers at the kind of, generally speaking, lower wage services segment. But on the other hand, there's very experienced baby boomers leaving. And I totally agree with Don on this. You know, Grow Canada, we want to invest in infrastructure. We need essentially skilled trades workers and we just don't have enough. So there's all sorts of uncertainty around the labour market, not to mention AI. Now, on the wage side, I do think we saw a period where wages were, you know, we talked about that very high inflationary period that we suffered 22, 23, 24 wages were catching up for a number of years, very uncomfortable for the Bank of Canada, because nominal wages were running at 5% even up until recently, and that is not aligned with a 2% inflation target. Right. So that is settled. I think when you talk to most employers, they're looking at wages aligning better with inflation and productivity gains. But you know, if this inflation period continues now 3%, it's not great, but it's not terrible. But if that continues, I think we are going to see wages kind of inching up perhaps, and pressuring, you know, just inflationary pressures more and more generally in Canada.

Jen Jeganathan: For talking about wages. And I think it's appropriate that we talk about some spending here. Let's talk about the Canadian consumer Don affordability. Major concern here in Canada has been for a while. How healthy is the Canadian consumer right now?

Don Desjardins: Well, you know, when you look at overall the balance sheet it's okay. But you're also looking at different cohorts in that. And some people continue to be under significant pressure. And as we've spoken about, you've got higher energy prices prospective. And in some cases, real interest rate increases in terms of funding, mortgages, etc. So when we think about the consumer, the consumer has been pulling back on savings. We've seen the savings rate go down. Now. Are expectation is that consumers are going to be a little bit more hesitant over the months ahead. And the reason really is just this pall of uncertainty that's over the economy, over job prospects. Where are we going to be selling our goods? How is this all going to evolve? And so we think that we're probably going to see consumers spend a little more slowly and start to rebuild some of their savings as we go forward.

Jen Jeganathan: Okay. This sounds like a very sad Christmas as we're heading into this, but Pedro, help me understand a little bit what are consumers leaving to the side as we as we are in this affordability crisis?

Pedro Antunes: Well, I agree with Don as well. We have seen, in fact, consumer spending held up last year, but it's because we reduced our aggregate savings by about a percent percentage point. So, you know, consumer spending in Canada, if it grows 2%, it's a normal year. If it grows above that, it's it's a good year. But essentially we grew 2% sort of in that range. But we drew down our savings to generate about half of that, that growth. So it's, you know, when you go, when you look forward now as a forecaster, I guess you have to say to yourself, you know, our consumer is going to going to, you know, build up their savings again, or are they going to continue to draw down, I think, with the interest rate challenge that we talked about earlier, I think it is going to be a pain point for consumers to be able to keep going at this pace. And I totally agree there's a divergence in terms of how households are being affected. We know that lower income households, those that are highly indebted, are having, are struggling with essentially the cost of financing, affordability issues with housing. Whereas, you know, the older cohort, that baby boom cohort, they own their homes, they got the, you know, the value of their assets have appreciated, especially if they're holding savings in the form of equities and things like this. So again, very divergent. It's not just in Canada, by the way. In the US it's very clear that it's the richer and more higher income households that are holding up consumer spending. Yeah. So I think just generally that's the big dichotomy. I think consumers are spending more on food and groceries because they have to. And that's a problem again. But generally speaking, you know, this is I think going forward, we're going to see a period of restraint here.

Jen Jeganathan: Pedro Don had mentioned businesses a little bit earlier. So let's talk about that. As we know, a trade war in the U.S. is going to create some uncertainty for businesses. How are they sort of faring? How are businesses spending right now in light of, you know, Mark Carney's efforts to bring investment here into the country as well?

Pedro Antunes: Well, I think it's been a couple of years of disastrous, you know, mostly because of that uncertainty. Businesses are sitting on their hands. I think, with both with respect to hiring and new investment in productive capital, machinery and equipment or, you know, building mines, building structures. So our business investment, in fact, we've we've got a positive sign in the last quarter because machinery and equipment picked up a little bit. But generally speaking, we are very big laggards with respect to the rest of the world, especially with respect to the US in terms of private investment in what I would call productive assets like machinery and equipment, IP, etc. I do think that the government is aiming at the right targets here. We are looking essentially to grow our economy by essentially, first of all, investing in our resources. And I think that's a positive for Canada. It generates income, it generates all sorts of profits, and it generates all sorts of supply chain effects through other businesses. So it's a good place to start, but it's going to take time. I mean, you know, we've we've how should I say, we've improved on the on the tax competitiveness already. We are expediting the review process. I think these are two really important pieces behind that.

Jen Jeganathan: A good place to start is what Pedro says. I imagine this is going to take some time to really see the benefits of some of these investments and trade deals here, but what are we seeing here with businesses? Add on what Pedro had to say.

Don Desjardins: Well, I think we're also seeing some changes to policies that have kind of hampered Canadian business investment and those being interprovincial trade barriers. I think we often speak about this, but seeing some movement on that side, the ability of labour to move across the country easily, looking at different safety regulations, can we just make a One Canada regulation? So these types of things, I think, that have worked as a deterrent to slow investment across the country, seeing movement on that, I think is very positive. Again, the Permissioning getting things done a little more rapidly because when we think about global capital as an example, you know, it is very mobile. So if a business is looking at opportunities across the globe and they say, oh, but in Canada, it's going to take me five, seven years just to get this going. I'm probably going to go somewhere else. If we can tell them, no, no, that's not it. Your return on your your investment is going to be more rapid, more in line with other countries. I think that will be a good draw.

Jen Jeganathan: All right. I want to pull up some data. This is a Deloitte chart showing 2025 and 2026 GDP by the quarter. And that's on the left right there. It's been volatile to say the least, with growth of about 3% in the second quarter of 2026. And on the right, you see growth in late 2026 of about 0.5% to a bit more than 2% over the year. What is carrying the Canadian economy next year?

Don Desjardins: Well, next year we do think that we're going to see some of these investment dollars flow. And to the extent that that helps, it restores confidence and restores consumer confidence. So to the extent that that may occur. So we're now at a stage. It's it's showtime, right? It's execution. Seeing some of these projects get off the ground and seeing some hiring associated with that. So it is the case that we're also in a world where we'll have lived with these tariffs. And in our forecast, we just leave them because we can't really very difficult to say that they're going to go or they're going to amp up. So we just sort of say, okay, as of September 9th, when we put, you know, put the model to work, okay, this is where we're staying. So we will, I think, see diversification. We will see businesses looking to diversify their supply chains saying, okay, we got to manoeuvre around this. Also looking to diversify some of their sales to other countries. Now they're, you know, all of the infrastructure bill that is required to get us to those markets is going to take some time.

Jen Jeganathan: All right. Pedro, do you agree with that?

Pedro Antunes: Yeah. Well, I mean, I we do have in our own forecast assumptions that some of these things let up. We you know, Trump has announced 50% tariffs, for example, by year end on the auto sector. We have not built that into our forecast. We assume that we are going to get some sort of trade deal. It's very hard to know what's behind the eye. How should I say the the strategies and thinking in the US administration. But, you know, I think a 50% tariff on autos would be disastrous. And we're holding up okay. So far on auto exports for Ontario. You know, it's not great. It's been a not a good news story, obviously. But I think a lot of the the how should I say, the the supply chain is, is set in such a way that much of the auto sector for manufacturing needed to bring in the product from the from Canada. In any case. So but that's not that wouldn't be the case. I think if these tariffs do come into play. So anyhow, the point being that we are expecting some easing some sort of trade deal to allow our trade to do a little bit better in 2027. The other piece is that's really important, I think is on assumptions around the Strait of Hormuz and oil prices. And we are assuming that we are going to see some sort of movement of oil through the strait, but that there will be a risk premium that stays on the price of oil. So we don't get a decline back to, say, $60 oil next year. It stays elevated, but it doesn't ramp up from where it is today. Those are important assumptions to allow for hopefully some growth next year.

Jen Jeganathan: Don, very quickly, you know there doesn't seem to be an end in sight with high oil prices. US trade wars and the tension there. How hard is your job to kind of forecast and give us an idea of what is happening in this economy, when these two issues seem to be dragging on and seem to be will be dragging on for quite a while.

Don Desjardins: I mean, what we do usually is try to develop scenarios to say, okay, this is a baseline with what we know today. How do we implement that into the forecast? And for oil prices, similar to Pedro, we have them coming down not, you know, going back to 60, but coming down from where they are today. So then we look at other cases. So what happens if the US says, oh, we don't want to be part of CUSMA anymore. What does that look like when we modelled that. I have to say it doesn't look good. No surprise. But so you know we saw that the economy would be grow about 1.5% slower than otherwise would be the case. So that you know that it isn't as the report says cataclysmic. But it's not good. And then we look at other scenarios. So what happens if we are able to diversify these types of things. And there you do see an increase and positive prospects for the economy.

Jen Jeganathan: Don Pedro, I want to thank you so much for taking the time. I know busy day for you guys both. Really appreciate you coming on The Rundown.

Don Desjardins: Thank you.

Pedro Antunes: It's a pleasure. Thank you.

Jen Jeganathan: Given the tariffs and the general economic uncertainty, it makes sense for people to be a bit pessimistic. And a whole lot of Canadians are worried about the future. So why is data showing Ontarians having a more positive outlook? Erin Kelly, great to have you on The Rundown. How are you doing?

Erin Kelly: Great. How are you?

Jen Jeganathan: I'm doing well. I want to pull up some data. This is a chart compiled using poly, your artificial intelligence system that documents economic perception rather than reality. It shows that about two thirds of Americans think that the U.S. is going down the wrong path. A bit more than half of Canadians think the same thing about Canada, but 55% of Ontarians think that Canada is on the right track. All right, Erin, help me understand here. Explain the the method here and why Ontarians seem to be more optimistic about Canada's economic future than other Canadians.

Erin Kelly: Great. Absolutely. So, first of all, how we got the data so poorly uses the same methodology as any phone survey sample. It's a randomised controlled sample of the population. So we're listening to people who are representative of each of those populations. Now the interesting thing really here is the United States, the United States, if we looked at this data last year, was very different. People were much more optimistic in the US than they are now. So very big growth in the red there. And Canadians have become more optimistic as they as we see the Prime Minister talking about how he's going to rebuild Canada and rebuild our trade, people at the moment. Now, there's a lot of nuance in this data because these are averages. But people are encouraged by what they see and they're encouraged by the credentials of our leader that he does have the he does have the creds to pull this off.

Jen Jeganathan: Well, let's go into some of that nuance. Are you able to characterise who these Ontarians and Canadians are? Perhaps, you know, age, job status, where in the province they actually live?

Erin Kelly: Yeah. So now the older Canadians are more optimistic than younger Canadians. And that's the same thing in Ontario. What is driving the optimism at the moment is people are talking about the foreign trade investments. Even people in Alberta are saying for the first time, we're seeing investment in oil and gas and new trade opportunities. And also the government saying that if there are pains in the economy, they're going to protect workers. That's very different from what we see in the United States, where people feel that if the economy tanks, they're not going to have that support from their governments. So people are encouraged to think that there will be compensation, there will be the ability to to make this transition. Now, I think this is a short term optimism. We definitely see, like I said, these are average numbers. And when you start to drill down into economic growth and things like that, we start to see more fear in the economy. So I think we need to start to see results in the next 12 months to maintain this optimism.

Jen Jeganathan: Well, with that being said, in your experience, when does that optimism begin to roll over and Ontarians and Canadians become a bit more pessimistic? For example, we've seen headlines steelmaker Stelco in Hamilton announcing layoffs of 350 workers. Ontario's unemployment rate almost 7% in August. So, as you mentioned, short term. But when does when does it roll over?

Erin Kelly: Well, I start to I look for in the population. So we would have what I would call sort of the leaders in in the negativity debate. Right now, they're at about 11.5% who are swaying people to their point of view. They're giving the statistics, but they're very good at explaining it. Still a bit mathy, but as you start to see that population grow from 11.5% to say 15 to 20%, that's when you get a wholesale change in public opinion. So we're just a little bit under that right now, probably about six months away from that tipping over into stronger pessimism. If we don't see some good news or a plan that's starting to take effect.

Jen Jeganathan: How much of Canada's optimism is related to having faith in the Prime Minister?

Erin Kelly: A lot, a lot faith in the Prime Minister. Also faith in Canadian values that we do help each other. We have a social safety net here, and it's a good social safety net, very different from in the United States, where they don't have that faith. They don't have the faith in their leader, and they don't have faith in their systems. They don't have a strong social safety system, as we do in Canada. But of course, we know that if you don't have a strong economy, you don't have the money to invest in those, in those social safety systems. So they're meant to be temporary. They're not meant to be how we operate in peacetime, if you will. So we we do need a plan to get more investment into the country, more of our exports to market. And there's a lot of fear there that, of course, Europe is a much more difficult market for us than the United States was historically.

Jen Jeganathan: You were talking about those trade ties. Help me understand. We know that Carney is trying to forge new trade ties with other countries. We've seen in this month, welcoming investors to Canada in an attempt to get them to invest in major projects here. Can we see that optimism grow with, perhaps, as we learn more details about what comes out of those?

Erin Kelly: It's mixed. So with the foreign direct investment, yes. Especially in tech and things like that, oil and gas, there's a lot of optimism with the agricultural sector. For example, there's a lot of pessimism. People are saying it's very hard to sell agricultural products into Europe. So even if you have a great arrangement and we've had a free trade agreement with Europe for some time, but you don't see a lot of our ag product moving there because of the strict the restrictions in the EU. So so it's very mixed. I'd say more optimism right now on the foreign direct investment, investing in our tech, getting our industrial base back up and running pharma, you know, a lot of interest in that building out here. And but then fear in some of our resource sectors that we're not that we still don't have the right strategy.

Jen Jeganathan: When does that goodwill for Prime Minister Mark Carney run out? What are some of those milestones that he needs to reach to sort of maintain that relative optimism?

Erin Kelly: Well, we need the announcements that counter the negative announcements, right? Like for every stelco we need. Okay, we're opening up a new pharma plant here and it's going to create these jobs. It's, it's one thing to have, have a, have a meeting of foreign direct investment. But let's start. Okay, who's investing? What, what plants are opening? How are we going to get over? We have to start addressing the fears that people are expressing. Like if the EU is a difficult market for us, how are we going to overcome it? Are those things being addressed? Not just that we're signing agreements and having meetings. So those are the the milestone things that people are looking for our leaders to address.

Jen Jeganathan: Speaking of leaders, I do want to talk about the U.S. very quickly. By the same token, do pessimistic Americans simply have less faith in President Trump right now?

Erin Kelly: Oh, yeah. He I couldn't believe the difference between 2025 and 2026. And like I said, there's I mean, there's a feeling that he doesn't know what he's doing, right? People are noticing that they're not winning the war in Iran. Inflation is going up. There doesn't seem to be a plan. Venezuela is, you know, they said was going to be the big oil and gas opportunity that's kind of imploding. So and and of course, states near the border are feeling the pinch of the war with Canada as well, the trade war. So there isn't room for there isn't a lot of space for optimism. If you're looking in the United States right now, he's trying to, you know, open up the steel plant in Iowa and say that Stelco is moving there, kind of make those links. But so far, that's not resonating.

Jen Jeganathan: Erin Kelly, it's always a pleasure to have you on the rundown. Thank you so much for this touchpoint. I look forward to chatting with you soon.

Erin Kelly: Great. Thank you.

Jen Jeganathan: How are you feeling about the economy right now? And do you think things will go back to normal when there's a new administration in the US? Let us know in the comments, or send an email to rundown at TVO.org. Until then, I will see you tomorrow.