Deloitte cuts Canada’s 2027 GDP outlook as trade war bite deepens

Deloitte Canada has cut its 2027 GDP growth forecast by about 20 per cent, to 1.6 per cent from 2.0 per cent in June, warning that escalating Canada–U.S. trade measures will slow the economy sharply into early next year just as Washington’s ban on select Canadian imports took effect Tuesday.

Chief economist Dawn Desjardins said billions of dollars in U.S. tariffs and Canada’s reciprocal duties will not hit evenly — some sectors will feel the ground shift under them while others still hire — even as federal fiscal supports, investment programs and defence spending cushion pockets of growth. Deloitte now sees 2026 growth at 0.9 per cent, a touch above its June 0.7 per cent call, but expects a much slower trajectory as higher costs, friction with Canada’s largest trading partner and rate uncertainty push households to save more and spend less.

The outlook landed alongside Statistics Canada data showing July GDP essentially flat after three months of expansion, with goods and services both little changed as construction gains offset other declines and retail and wholesale slipped. CIBC’s Andrew Grantham called the July print old news given late-August trade escalations; markets now watch the Oct. 9 jobs report, Oct. 19 inflation data and the Bank of Canada’s Oct. 28 rate decision. For retailers, manufacturers and logistics firms already pricing tariff risk into 2027 budgets, Deloitte’s revision is another reason to keep capital spending cautious until a durable bilateral deal appears.

Trump told reporters Monday he expects Ottawa to seek a “fair deal” within weeks; Canadian Trade Minister Dominic LeBlanc has said Canada will keep talking but will not sign a bad agreement. Until that impasse breaks, Deloitte’s slower path is the baseline many Canadian CFOs will model.