Canada survived Year 1 of the second Trump presidency mostly intact economically, and fully intact sovereignly. What about Year 2? For this series, The Globe asked dozens of economists, analysts and investors to pick a chart they think will be important in 2026. Explore some of the other topics in the index below.
All the world’s a trade
Beata Caranci, chief economist, TD Bank
With U.S.-imposed tariffs a moving target, trade diversion and the search for new markets have dominated the mindset of exporters around the world. This will evolve even more in 2026. In a short period, China’s most tech-exposed exports have found new homes with the country’s Asian trading partners, while its total exports hit a record high in November, with broad gains across continents and countries.
Canadian businesses are also succeeding in rotating their export markets faster than many analysts expected. Tapping into 27 trading partners, Canadian firms have recovered nearly $11-billion of the $18.5-billion loss to the United States. However, the nature of trade has shifted, leaving industries in the winner and loser column. About one-third of the gain stems from oil exports, with the next biggest gain in jet engines and aircraft. In contrast, the steel, aluminum, auto and lumber industries are hard hit due to crippling U.S. Section 232 tariffs running as high as 50 per cent. These industries suffered a net loss of $8.8-billion relative to 2024. This is the nature of the structural rotation that’s under way in Canada. And it’s why Bank of Canada Governor Tiff Macklem drives home the distinction between cyclical and structural shifts in the economy, and the limitation that the singular tool of lower interest rates faces in solving all that ails Canada.
Crude reality
Kent Fellows, assistant professor, University of Calgary, and fellow-in-residence at the C.D. Howe Institute
In the past year, political interest in a new West Coast oil and gas pipeline has increased dramatically. While the economic role of the sector is extremely clear in Alberta (where one out of every four dollars of government revenue comes from resource royalties), it’s often less clear from a federal perspective.
But Canada is a trading nation, and oil and gas exports play an outsized role. With oil and gas in the mix, we maintain a reasonable balance between exports and imports. Without it, we don’t.
This is important, because persistent trade imbalances have implications for our exchange rates. Put simply, when we export more, we can afford to import more. When we export less, we can’t afford to import as much. It doesn’t have to be oil and gas, but if it isn’t, it has to be something, and our usual trade partner to the south has been unpredictable as of late.
Undervalued
Marc Lee, senior economist, Canadian Centre for Policy Alternatives
Over the past quarter century, Canada’s export profile has shifted back to the so-called staples economy led by oil and gas exports. Higher-value-added sectors (machinery, electronics, automotive, aerospace and other transportation equipment, and consumer goods) comprised 55 per cent of merchandise trade exports in 1999 but only 36 per cent in 2025, whereas primary sectors (forestry, energy, mining, agriculture and seafood) were responsible for 38 per cent of exports in 1999 and 55 per cent in 2025 (and in boom years such as 2022, as much as 63 per cent of exports).
Canada’s response so far to U.S. President Donald Trump’s trade war has been to double down on oil and gas and mining. The bigger challenge for Canada is to develop a comprehensive economic strategy that adds value to our resources through advanced manufacturing and technology.
Friends with benefits (but for how long?)
Stephen Tapp, CEO, Centre for the Study of Living Standards
Way back in 1994, Mexico joined Canada and the U.S. to expand their bilateral trade pact into the North American Free Trade Agreement (NAFTA). Through the 1990s, North American firms increasingly used the agreement to export goods essentially tariff-free into the U.S. market.
Over the past two decades, preference use dipped somewhat — not because NAFTA was failing, but because the U.S. lowered tariffs on the rest of the world, reducing the relative value of claiming NAFTA benefits.
But look at the massive spike in 2025: The revamped USMCA clearly demonstrated its value, helping shield most North American trade from U.S. President Trump’s volatile tariff actions.
Looking ahead to the 2026 renewal, if the U.S. threatens to withdraw – or actually walks away – Canada and Mexico would face another major trade shock, causing more disruption across the North American economy.
Here’s hoping common sense ultimately prevails and continental trade continues largely unimpeded.
The digital divide
Danielle Goldfarb, senior fellow, Munk School of Global Affairs and Public Policy
Despite tariffs on physical products dominating headlines, the fastest-growing imports in all regions of the world are digitally delivered services.
The rise in digital activities and rapid AI advances present opportunities to grow Canada’s trade in services that were previously only delivered locally or did not exist at all.
Conventional trade barriers such as distance, language and company size are reduced thanks to cloud computing, seamless translation and general-purpose AI tools, opening up opportunities in Canada’s traditional markets and in underexplored fast-growth markets. These advances also open up trade in new types of services, such as algorithmic auditing, synthetic data creation and Canada’s world-class AI model development expertise.
The chart shows that Canadian digital services trade has grown much more rapidly than goods and other commercial services, but it has now plateaued.
As we monitor Canada’s economic resilience in 2026, it will be critical not only to track traditional trade in manufactures, resources and services, but also whether Canadian firms are capturing this rapidly growing global demand for digital services.
Goods news
Avery Shenfeld, chief economist, CIBC Capital Markets
The trade war not only generated a hit to Canada’s export growth, but there were concerns that it could also add to inflation. While Canada has dropped most of its retaliatory tariffs, goods we buy from the U.S. face higher production costs, as American businesses are paying more for imported materials and parts subject to tariffs. But while import price data can be choppy, recent numbers show calm waters in Canada’s consumer goods import prices.
Vehicle makers may be trying to hold the line on pricing given the softness in Canadian income growth. Canada also imports the majority of its non-auto consumer goods, and a significant share of its vehicles, from outside the U.S. European and Asian manufacturers facing tariff challenges for their shipments to the U.S. could be ending up with excess capacity, and reasons to try to move more goods to open markets such as Canada by keeping prices competitive.
Abroad appeal
Rory Johnston, founder, Commodity Context
Canadian oil producers have long depended on a single market for crude oil exports. While a clear vulnerability, it wasn’t considered a top concern until Donald Trump threatened and subsequently levied across-the-board tariffs on Canada and Mexico. A goods exemption under the United States-Mexico-Canada Agreement (USMCA) ultimately spared Canada’s energy trade, but it reminded Canadian exporters of a core truth: Export security is derived from broad(er) market access.
Quite relatedly, Canadian exporters are finally venturing further abroad, specifically to Asia. This export diversification was facilitated first by the re-exportation of surplus Canadian heavy crude out of the U.S. Gulf Coast and then the completion of the Trans Mountain Expansion Project in mid-2024. Sales to non-U.S. destinations hit an all-time high this past October, and nearly half of those non-U.S. exports landed in China, especially via Trans Mountain from the West Coast.
Now USMCA, now you don’t
Tony Stillo, Oxford Economics
Renegotiation of the USMCA will be pivotal for Canada’s prospects next year and beyond. Our current baseline forecast assumes most U.S. tariffs on Canada will be removed by the third quarter of 2026. Still, we anticipate that lower, 10-per-cent targeted U.S. tariffs will remain permanently for steel and aluminium products, protectionist levies that weren’t in place prior to President Trump’s second term. This means the prevailing 6.3-per-cent U.S. effective tariff rate on Canadian goods will drop to around 1 per cent and kick off a recovery in trade that helps support stronger economic growth.
But this sanguine expectation for the USMCA’s renegotiation is looking increasingly tenuous. An ever-more-likely scenario is that the USMCA is not extended (or replaced by separate bilateral trade deals with permanent sectoral tariffs). and the current 6.3-per-cent U.S. tariff rate on Canada remains in perpetuity. In either case, GDP growth here would be slower next year and the year after, and put the economy on a long-lasting lower path.
However, a worst-case scenario – in which there’s no USMCA deal, current tariffs remain and USMCA compliance exemptions for most Canadian goods are closed – would see the U.S. effective tariff rate on Canada ratchet up to much more than 15 per cent. This would permanently reduce the size of the Canadian economy, since it would take a very long time, if ever, to meaningfully reorient our trade to non-U.S. markets.
The best case would see a return to a near-zero overall U.S. tariff rate on Canada. We think this is the least likely scenario and it would only provide a small lift to Canada’s economic growth compared to our current baseline.
Downtime at the docks
Stephany Laverty, senior policy analyst, Canada West Foundation
Canada is a trade-dependent nation, and recent shifts in U.S. trade policy have pushed Ottawa to double non-U.S. trade over the next decade. However, if we’re going to trade with countries other than the U.S., we need to increase the efficiency of our supply chains, particularly our ports.
In the World Bank’s Container Port Index (which measures the time between a container ship’s arrival and its departure), no major Canadian port ranked above 348 out of 405 international ports in 2023. If Canadian businesses can’t deliver goods in an efficient and timely manner, markets will find other suppliers.
Canada doesn’t regularly measure arrival and departure times, but it does measure dwell times – the time between a container being unloaded at a port and being loaded onto a train or truck, a proxy for overall port efficiency. Though dwell times have declined from their pandemic peaks, in 2024 they were still about two days higher than in 2017. If we want to double international exports, we need to increase port efficiency by building more infrastructure, and finding better ways to negotiate deals between unions and ports.
Balancing act
Brett House, professor, Economics Division, Columbia Business School
Headlines cheered September’s narrow international trade surplus, but Canadians should welcome substantial trade deficits in the years ahead. The trade balance makes up the bulk of the current account, the top line in Canada’s balance of payments. It’s an accounting truism that current account deficits get mirrored by net investment inflows in the capital and financial account – the “balance” in a country’s balance of payments. November’s federal budget aims to unlock $1-trillion in new investment over the next five years.
Even if Canada’s pension funds keep more of their assets at home, a substantial share of this capital will need to come from abroad – and will necessarily be accompanied by larger trade deficits. These trade deficits will be a tangible sign of confidence in Canada as a top global target for international investors. The onus will be on us to put these capital inflows to productive uses.
Asia-bound
Mark Parsons, chief economist, and Rob Roach, deputy chief economist, ATB Financial
How does Canada become an energy superpower? It looks overseas. Canada has been selling its oil and gas almost exclusively to one international market: the U.S. This not only limits export opportunities; it means we’re captive to a single international market. It has resulted in Canadian oil and gas trading at significant, and volatile, discounts to international prices.
The good news is that there’s been a structural shift in recent years, with more Canadian propane, liquefied natural gas and oil finding its way to the lucrative Asian market. In May, 2024, the Trans Mountain Expansion Project entered commercial operation, increasing the pipeline’s capacity from 300,000 to 890,000 barrels of oil per day. That’s been accompanied by a significant spike in Canada’s oil exports to Asia, going from zero before the expansion to an average of more than $660-million per month in 2025. That’s still only a fraction of the $10.8-billion per month sold to the U.S., but it’s a remarkable turnaround.
Canadian exports to Asia could go even higher – much higher. Trans Mountain has talked about expanding by another 300,000 to 400,000 barrels per day, and the recent Memorandum of Understanding between Alberta and Canada contemplates a West Coast pipeline with potentially a million additional barrels per day of capacity.
Energy flow
Meredith Lilly, professor of international trade, Carleton University
The Carney government has committed to doubling Canada’s exports to non-U.S. destinations over the next decade. As we seek to reduce reliance on the U.S., Canadians need to understand what trade diversification means in practice, including limits of the strategy. For example, some of Canada’s top exports to the U.S. (vehicles and parts) have no ready market elsewhere. Instead, energy products dominate Canadian exports to U.S. and non-U.S. destinations. Yet the energy sector is positioned for rapid export growth in Asia and Europe in the coming years, in part due to new pipelines opening markets for Canadian crude and LNG products. Policy makers need to pay close attention to the sectors in which non-U.S. exports can grow and support their success, while also recognizing the reality that the U.S. will remain the top market for many sectors.
Illustration by Matthew Billington
2026 in charts: The full series
The economy and investment, in 14 points
What’s ahead for the job market and household spending
A housing-market horoscope for Canadians
Five charts to help follow fiscal and monetary policy
Stablecoins, AI and more trends on the market’s mind
Seven policy points to remember as Carney presses Canada to build big
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