Canada’s economy has performed better than anticipated in the face of U.S. tariff pressures, according to a new report from the International Monetary Fund. The IMF’s latest assessment says the country has weathered the trade shock more effectively than expected, thanks in part to exemptions included in the Canada–U.S.–Mexico Agreement (CUSMA).
Even with those protections, the report notes that key economic areas—including employment and business investment—have weakened. Lower commodity prices, softer global demand, slowing immigration, and continued uncertainty surrounding U.S. tariff policy have all contributed to economic drag over the past year.
Still, the IMF says Canada’s overall outlook has improved, describing risks as “more balanced” compared to earlier in 2025. Despite this shift, the organization cautioned that uncertainty will remain elevated in the months ahead.
The review also highlights the federal government’s latest budget, praising its shift toward higher public investment. The IMF says a clear debt-to-GDP anchor should remain a cornerstone of Canada’s fiscal policy and recommends maintaining a measured, flexible, and counter-cyclical approach as economic conditions evolve.