Key Takeaways
- Trade issues will continue to dominate Canadian business headlines in 2026, with the free trade agreement between Canada, the United States, and Mexico up for formal review.
- The Canadian government is expected to make fundamental changes to the economy, including nation-building projects, in 2026.
- The stock market is expected to experience slower growth in 2026, with valuations in a trickier spot.
- The housing market is expected to be a transition year, with economic uncertainty weighing on the market.
- The Unifor contracts at the big U.S. automakers come up for negotiation in 2026, with the union working to protect Canadian jobs.
Introduction to Canadian Business in 2026
The year 2025 was marked by trade issues dominating headlines for Canadian business, but the stock market seemed to shrug off the economic woes as it hit record highs. As we head into 2026, trade will remain in the spotlight, but the new year also brings new challenges as Ottawa looks to make fundamental changes to the economy. The free trade agreement between Canada, the United States, and Mexico is up for formal review, and the U.S. has said it is looking at greater market access for U.S. dairy products. Canada is also facing pressure to eliminate both the Online Streaming Act and Online News Act, and end the provincial bans on the distribution of U.S. alcohol.
Trade Issues in 2026
U.S. President Donald Trump and his tariffs were the big story for 2025, and that isn’t expected to change for 2026. CIBC senior economist Katherine Judge said she thinks Trump sees the virtues of the trade agreement and that despite his bluster, the U.S. president will not ditch the deal. "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," she said of the trade agreement. Judge says there is some incentive for Trump to wrap up the trade talks before the midterm elections in the U.S. as the cost of U.S. tariffs begin to feed into consumer prices. The trade talks will be a crucial aspect of Canadian business in 2026, and the outcome will have significant implications for the economy.
Nation Building Projects in 2026
Prime Minister Mark Carney has talked a big game about nation-building projects, and 2026 will see if he can start to deliver. The federal government has announced an agreement with Alberta to support the development of a new pipeline and a deal with Ontario to help facilitate the development of critical mineral projects in the province’s Ring of Fire region. However, the test for 2026 will be getting shovels in the ground and making good on shifting Canada’s economic focus away from the United States. The success of these projects will depend on various factors, including government support, private investment, and regulatory approvals.
Market Trends in 2026
The S&P/TSX composite index hit record highs in 2025, helped by strength in the financial sector, the soaring price of gold, and Shopify. The gains came as the excitement around artificial intelligence and the spending needed to build and power the data centers the technology requires also drove U.S. stock markets to record levels. Macan Nia, co-chief investment strategist at Manulife Investments, doesn’t see the same level of returns for 2026, but says there’s still room for growth. "The drivers that have driven it to mid-20 per cent returns this year, those catalysts are still in place for next year. They’re just not going to be able to shine as brightly because valuations are in a trickier spot," he said. Nia says he thinks the comparisons to the dot-com bubble in the 2000s are premature.
Real Estate Market in 2026
Home sales in Canada began to show some life toward the end of the year, but they were coming off a period of sustained weakness. CIBC’s Judge sees 2026 as a transition year for the housing market, with economic uncertainty tied to the free trade talks with the U.S. and Mexico still weighing on the market. "We don’t think we’ll see a sustained pickup really until the second half of the year," she said, noting that conditions are expected to improve into 2027. Building new homes was a major promise in the federal election, and Judge says there has been a pickup in construction of new rental units. "It’s not something that can happen overnight, obviously. I think we are making steps in the right direction but there’s just so much pent-up demand as well," she said.
Auto Talks in 2026
The Unifor contracts at the big U.S. automakers come up for negotiation in 2026. The union made gains in their last round of bargaining in 2023, but the landscape has changed. U.S. President Donald Trump wants to grow the U.S. auto industry even if it comes at the expense of Canadian operations. The talks come after Stellantis announced it was moving planned production of its Jeep Compass from Brampton, Ont., to Illinois. Stellantis is adding a third shift to the Windsor Assembly Plant, however no replacement has been named for the Brampton plant. General Motors, which has announced plans to cut the third shift at its Oshawa, Ont., plant, also ended production of its BrightDrop electric delivery van at its CAMI Assembly plant in Ingersoll, Ont., after it said the market for electric vehicles has developed at a much slower pace than expected. Unifor national president Lana Payne said there is a lot of uncertainty heading into bargaining this year, but the union will work to protect Canadian jobs. "We have to continue to make progress for working people despite the challenges in front of us," she said.