Canada's Economy Shows Volatile Growth Amid Trade Uncertainty

Canada's economy remains resilient despite volatile growth and uncertainty surrounding trade policy. According to an AM Best report, the country's economy weakened at the end of 2025 and into early 2026 due to weaker manufacturing activity and pressure on trade-sensitive industries.

The report notes that economic activity strengthened in second-quarter 2026, driven by stronger exports, particularly energy and other goods. However, the durability of this rebound remains uncertain given ongoing U.S. trade policy and its potential impact on exports and the overall economy.

Ann Modica, director of Credit Rating Criteria Research and Analytics at AM Best, said that 'trade relations between Canada and the United States have become strained further following a breakdown in bilateral trade negotiations.' This has led to a reversal of some earlier easing in trade tensions, leaving Canadian exporters and businesses adjusting to a more uncertain trade environment.