Executive Summary:

1. Canada is better positioned than headlines suggest

Many of us are anchored to negative narratives (trade war, regulation, cost of living), but the data shows Canada avoided recession and continues attracting capital.

2. Global capital is asking about Canada again

After years of global investors focusing solely on the outlook for the U.S., in recent meetings investors were consistently asking about the outlook for Canada. Foreign investors increasingly view Canada as strategically important due to: critical minerals, food security, energy supply, freshwater access, geopolitical stability.

3. USMCA has been a shock absorber

Despite trade tensions, roughly 90% of exports remain tariff-free under the agreement negotiated as the United States–Mexico–Canada Agreement. RBC’s base case is something approaching status quo on trade. Even adverse renegotiation scenarios likely mean adjustment, not collapse.

4. Affordability stress is real under the surface

Headline wage growth masks significant divergence, with the top households accumulating savings, while the majority are drawing down savings to maintain lifestyle as cost of living pressures disproportionately impact lower-income households.

5. Productivity remains a core economic theme

Population growth is slowing sharply and Canada cannot rely on labour expansion. Growth will depend on deregulation, capital investment, automation, and innovation.

6. Currency Outlook - No big move in the Canadian dollar expected.

USD/CAD expected to remain range-bound. Currency unlikely to be a major return driver near term as the Bank of Canada and U.S. Federal Reserve are keeping interest rates on hold in the near term.

Please feel free to reach out any time if you would like to discuss the information covered in these articles or any specifics of your portfolio.