OTTAWA — Trade tensions dominated Canadian business headlines in 2025, yet financial markets largely brushed aside economic uncertainty, with stocks reaching record highs. As 2026 begins, trade remains front and centre, but the year ahead is also expected to test Ottawa’s plans for economic reform and long-term growth.
Here are five key issues to watch in Canadian business in 2026:
1. Trade Remains a Central Concern
Trade disputes driven by U.S. President Donald Trump and his tariff policies defined much of 2025 and are expected to continue shaping the business landscape in 2026. The Canada–United States–Mexico Agreement (CUSMA) is scheduled for formal review, keeping uncertainty elevated.
Ahead of negotiations, the United States has signalled it wants increased access to Canada’s dairy market. Canada is also under pressure to repeal the Online Streaming Act and the Online News Act, and to lift provincial bans on the distribution of U.S. alcohol.
Despite the rhetoric, Katherine Judge, a senior economist at CIBC, said she believes Trump ultimately sees value in the trade agreement.
“We may retain some tariffs in sectors that are already in place, like autos and lumber, but we do believe President Trump sees merit in it,” Judge said. She added there may be an incentive for Washington to conclude talks before U.S. midterm elections, as tariff costs increasingly show up in consumer prices.
2. Nation-Building Projects Face a Reality Check
Prime Minister Mark Carney has emphasized large-scale nation-building projects, and 2026 will be a test of whether those plans move beyond announcements.
The federal government has reached agreements with Alberta to support a new pipeline and with Ontario to advance critical mineral development in the Ring of Fire region. The challenge now will be translating those commitments into construction and reducing Canada’s economic reliance on the United States.
3. Markets May Cool, but Growth Potential Remains
The S&P/TSX Composite Index posted record highs in 2025, driven by strong financial stocks, rising gold prices, and the continued success of Shopify. Enthusiasm around artificial intelligence and the infrastructure needed to support it also lifted U.S. markets.
Macan Nia, co-chief investment strategist at Manulife Investments, said he does not expect similarly strong returns in 2026, but believes there is still room for gains.
“The drivers that pushed returns into the mid-20 per cent range are still in place,” Nia said, adding that higher valuations could limit upside. He also downplayed comparisons to the dot-com bubble, noting that a slowdown in AI spending would not necessarily trigger a broader recession.
4. Housing Seen as a Transition Story
Canada’s housing market showed signs of life late in 2025 after a prolonged slump, but uncertainty remains. Judge said 2026 is likely to be a transition year, with trade-related concerns still weighing on buyer confidence.
“We don’t think we’ll see a sustained pickup until the second half of the year,” she said, with stronger conditions expected in 2027.
The federal government has pledged to increase housing supply, particularly rental units. While construction activity has picked up, Judge noted the scale of pent-up demand means progress will take time.
5. Auto Industry Talks Loom Large
Labour negotiations between Unifor and major U.S. automakers are set for 2026, against a backdrop of growing uncertainty. While workers secured gains in the 2023 bargaining round, Trump’s push to expand U.S. auto production could put Canadian plants at risk.
The talks follow Stellantis’s decision to move planned Jeep Compass production from Brampton, Ont., to Illinois, although the company has added a third shift at its Windsor assembly plant. No replacement production has been announced for the Brampton facility.
General Motors has also reduced operations in Ontario, cutting a third shift at its Oshawa plant and ending production of its BrightDrop electric delivery van at the CAMI Assembly plant in Ingersoll. The automaker cited slower-than-expected growth in electric vehicle demand, along with regulatory changes and the loss of U.S. tax credits.
Unifor national president Lana Payne said the union faces significant uncertainty heading into negotiations but remains focused on protecting Canadian jobs.
“We have to continue to make progress for working people despite the challenges in front of us,” she said.