US Trade Frictions Obscure A Strengthening Growth Outlook in Canada, Macquarie Says

07:25 AM EDT, 08/26/2026 (MT Newswires) -- US trade policy has compounded Canada's longstanding economic challenges, but the underlying growth outlook is beginning to improve, according to Macquarie Group in a note. After more than a decade of weak performance, Canada has trailed the US and other G7 economies in real gross domestic product per capita, largely due to sluggish productivity growth, wrote David Doyle, head of economics at Macquarie, in Tuesday's note. "Despite a lost decade, Canada retains several sources of advantage, including fiscal space, natural resources, strong institutions and reputation, workforce and immigration history," added Doyle. US tariffs on Canadian steel, aluminum, autos, lumber and other exports have weighed on growth since early 2025, said Macquarie. With goods exports to the US equal to 17% of GDP, prolonged trade tensions pose a significant risk, while the latest 50% Section 338 tariffs add further uncertainty. "Despite the headwinds on this front, there were encouraging developments that suggest export growth could increase ahead should trade tensions de-escalate," said the economist. Macquarie expects Canada's economy to remain resilient, supported by improving cyclical momentum and structural developments that could boost medium- and long-term growth.