Deloitte Canada cuts GDP forecast by 20% as tariffs grip economy amid

Deloitte Canada has shaved 20 per cent off its growth forecast for Canada’s economy in 2027, citing increasingly tough conditions for consumers and businesses.

The accounting firm’s latest outlook comes as a new American ban on select Canadian imports took effect on Tuesday.

Deloitte sees the fallout of recent escalations in the Canada-U.S. trade war causing a sharp economic slowdown in the final quarter of this year and into early 2027. 

Chief economist Dawn Desjardins says the weight of billions of dollars in U.S. tariffs and Canada’s reciprocal measures will not fall evenly across the Canadian economy, hitting some sectors hard, while others prosper. At the same time, the federal government’s fiscal supports, investment initiatives and defence spending are positive signals for targeted growth, she said.

“For some, it’s a little bit like the Earth is moving under their feet — and not in a positive way. While in other sectors, I think we can anticipate growth and job creation,” Desjardins told CBC News in an interview prior to the report’s release on Tuesday.

Deloitte’s latest economic outlook for Canada calls for GDP to grow 1.6 per cent in 2027. In late June, the firm said it expected two per cent GDP growth next year.

Deloitte currently sees Canada’s economy growing by 0.9 per cent in 2026 — a slight improvement from its June estimate of 0.7 per cent.

“It’s so uncertain when we think about all the factors the Canadian companies are facing, whether it’s the prospect of higher costs, the prospect of more friction with our largest trading partner or perhaps even higher interest rates. All these factors are just creating a very uncertain environment,” Desjardins said. 

“As a result, we do think that the economy probably is going to be on a slower growth trajectory.”

Canada’s economic growth flat in July

On Tuesday, Statistics Canada reported that GDP for July was flat from the previous month.

“The goods-producing industries grouping was essentially unchanged in July, as increases in construction and utilities were offset by declines in the other sectors,” the agency stated.

“The services-producing industries aggregate was essentially flat, as increases across several sectors were offset by declines in retail trade and wholesale trade.”

Andrew Grantham, a senior economist at CIBC, says the flat July figure was no surprise, as the economy cooled down from a hot reading in the second quarter. Like Desjardins, he’s now looking ahead to what happens as the latest tariffs start to bite.

“Given the escalation of U.S. trade uncertainty towards the end of August, today’s data will likely be viewed as old news,” he wrote in a research note after the data was released.

For the Bank of Canada, Grantham says the focus now shifts to the September…