Trade tensions will continue to dominate Canadian economic outlook in 2026: expert

Tariffs, investments, trade, and the housing market will be some of the hot topics for B.C.’s economy in 2026, Central 1 Credit Union chief economist Bryan Yu tells 1130 NewsRadio.

He says the evolving trade relationship with the U.S. amid tariff threats by President Donald Trump will dominate discussions around the economy.

“There are going to be hard hit areas by forestry, steel, and auto,” Yu explained.

“Although I think that is going to continue. The concern is that with renegotiation, there could be some other sectors that are also on the radar again, and that could be agriculture for Canada.”

Yu is referring to the upcoming scheduled review of the Canada–United States–Mexico–Mexico Agreement (CUSMA) – the deal governing free trade between Canada, the US, and Mexico. 

“That would be kind of one of the areas of concern, but we do expect at this point that it’s kind of a status quo type environment where most goods will stay tariff-free across the border,” he explained.

Trump has repeatedly criticized the trade agreement, even though it was he who negotiated it during his first term in the Oval Office.

Since the trade agreement is expiring in the new year, the three countries need to draft a new deal. 

Yu says that similar issues and other economic challenges, such as affordability and the ongoing war between Russia and Ukraine, will lead to economic uncertainty around the globe in 2026.

Another area experts will keep an eye on – especially in B.C. – is the housing market.

Yu expects that interest rates will hold steady until about the summer before some possible increases by the end of the year.

Yu has, however, one good news for the new year. He expects a boost in investment in B.C., although he notes the full scope of those investments may not be realized until 2027.

With files from Srushti Gangdev.