Expert says Canada’s economy is “barely growing” while policy, energy, and US trade risks mount
Canada’s economy is “barely growing” even though it faces some of the lowest effective US tariffs in the world, National Bank chief economist Stefane Marion warned, according to BNN Bloomberg.
That gap between benign headline conditions and weak real activity is fast becoming a core risk for capital.
Marion told a Calgary audience that federal legislation to speed up nationally important infrastructure projects is not enough.
He said Ottawa must go further in cutting regulations that are scaring away investment, and he urged Ontario and Quebec to commit to using Alberta natural gas to power their manufacturing sectors.
In his view, competitiveness now hinges on faster approvals, clearer rules and a more integrated energy strategy.
National Bank chief executive Laurent Ferreira backed that concern.
He said the federal government has struck the right tone in handling recent trade and geopolitical shocks, but must “go further and move faster” to “meet the moment.”
Ferreira identified “complacency and delays caused by bureaucratic uncertainty” as key risks, and warned that “blind opposition” to reindustrialization and defence spending could leave Canada in a “precarious state.”
Monetary policy is holding the line for now.
The Bank of Canada is widely expected to keep its key rate at 2.25 percent, at the lower end of the neutral range, after governor Tiff Macklem previously said borrowing costs are “about the right level” and should stay on hold if the outlook remains stable, according to Reuters.
A large majority of economists now expect no rate moves through 2026, with only modest tightening possible late that year.
At the same time, Macklem has made it clear that the forecast is fragile.
In an interview with BNN Bloomberg, he said there is “unusual potential for a new shock, a new disruption,” pointing to elevated geopolitical risk and US trade policy.
He highlighted US President Donald Trump’s repeated tariff threats toward Canada and the latest review of the United States‑Mexico‑Canada Agreement (USMCA) as obvious downside risks to the Bank’s projections for modest growth in 2026 and 2027.
Macklem said officials “are feeling like there are more things that can go wrong around that forecast. That forecast is more vulnerable.”
Traders and economists have read his tone as tilting slightly toward the need to support growth, even though money markets still price no cuts through 2026 and a higher chance of a hike in the final quarter.
That disconnect between the Bank’s emphasis on risk and the market’s assumption of stability adds another source of uncertainty for portfolio and asset allocation decisions.
On trade, Prime Minister Mark Carney has tried to frame Trump’s rhetoric as positioning ahead of USMCA talks.
The Wall Street Journal reported that Carney described the tariff threats as “prepositioning” before Washington leads a “robust review” of the pact later this year.
The same reporting noted that Canada’s economy is already struggling under US tariffs of up to 50 percent on sectors such as steel, aluminum, autos and forest products, even though about 80 percent of Canadian exports to the US still enter duty free under USMCA.
The Wall Street Journal also said analysts expect the US to use Canada’s decision to reduce tariffs on some China‑made electric vehicles as leverage.
Under a Canada‑China arrangement, roughly 49,000 EVs can enter Canada at about a 6 percent tariff, well below the 100 percent duty imposed in 2024.
If Washington treats that carve‑out as a precedent, analysts see scope for tougher US positions on autos, batteries, subsidies and broader tariff threats.
Energy policy sits in the middle of this.
According to the Fraser Institute, the Trump administration has already met major oil companies to push for at least US$100bn in investment to restart Venezuela’s oil production after Nicolás Maduro’s ouster.
In response, Prime Minister Carney has pointed to Ottawa’s Memorandum of Understanding with Alberta as a guardrail for Canada’s energy competitiveness.
The Fraser Institute argues that the Ottawa‑Alberta deal adds uncertainty because it is “long on promises yet short on concrete commitments.”
On pipelines, the think‑tank said Alberta’s goal of a new line from the oilsands to British Columbia’s coast does not gain any clear path to approval.
Instead, the deal only creates a committee to define conditions Alberta must meet before it can even apply to the federal Major Projects Office, effectively adding another bureaucratic layer at a time when investors want clarity.
Existing rules still weigh on decisions.
The Fraser Institute pointed to federal Bill C‑48, which bans large oil tankers from ports along BC’s northwest coast, undermining the case for a Pacific‑bound pipeline from Alberta while leaving tanker traffic to and from US terminals in Alaska untouched.
Under the deal, Ottawa only promises to adjust Bill C‑48 if a pipeline first attracts private investors and then secures fast‑track approval, a sequence the institute described as a “chicken‑or‑egg” problem.
On climate costs, the Fraser Institute said scrapping the sector‑specific CO2 cap is positive for investment, but Alberta must in return implement a methane‑reduction framework expected to cost industry billions and secure a binding agreement on large‑scale carbon capture and sequestration.
Scaling that could cost about $65bn split between government and industry, and the deal signals a rise in Alberta’s industrial carbon tax to around $130 per tonne of CO2, up from $95.
The institute warned that higher costs could push capital toward jurisdictions with looser rules, including the US and possibly a resurgent Venezuela.
National Bank of Canada chief executive Laurent Ferreira told a Calgary business audience that Ottawa has the right tone on recent trade and geopolitical shocks but needs to “go further and move faster” to “meet the moment.”
He warned that the main risks are “complacency and delays caused by bureaucratic uncertainty,” and that “blind opposition” to reindustrialization and defence spending could leave Canada in a “precarious state.”
National Bank chief economist Stefane Marion underlined the growth challenge, saying that even with the lowest effective US tariffs globally, Canada’s economy is “barely growing.”
He argued that federal legislation designed to speed up infrastructure projects in the national interest is “not enough” and that Ottawa must do more to remove regulations that are scaring away investment.
Marion is also advocating for Ontario and Quebec to commit to using Alberta natural gas to fuel their manufacturing sectors, according to BNN Bloomberg, tying Western energy more directly to Central Canada’s industrial base.
At the same time, Ottawa is trying to build new diversification pillars beyond the United States.
As part of Canada’s mission to double non‑US exports over the next decade, the Prime Minister recently visited the United Arab Emirates to deepen trade ties, according to law firm Dentons.
Following that visit, Canada signed a new Foreign Investment Promotion and Protection Agreement (FIPA) with the UAE on November 20, 2025, after negotiations that began in 2016.
Dentons reports that the FIPA sets baseline protections for qualifying Canadian and UAE investors, including minimum standard of treatment, national treatment, most‑favoured‑nation obligations and protections against expropriation, including compensation.
In general, those provisions are meant to promote non‑discriminatory treatment of covered investors.
The agreement also includes an investor‑state dispute settlement mechanism, with an optional expedited process for claims up to $10m, and a state‑to‑state dispute process.
It is signed but not yet in force, and Dentons said Canadian and UAE investors may want to review their structures to ensure they can benefit once it takes effect.
Canada and the UAE also plan to launch talks on a Comprehensive Economic Partnership Agreement to expand the relationship more broadly.
