Canadian Chamber Appears Before Senate Finance Committee on Canada’s Economic Outlook

On October 7, 2025, our Chief of Public Policy Matthew Holmes and Principal Economist Andrew DiCapua appeared before the Senate Standing Committee on National Finance to discuss Canada’s current financial and economic outlook.

They emphasized the need for bold action to boost growth, productivity, and resilience, highlighting priorities such as removing internal trade barriers, expanding trade infrastructure, modernizing tax and regulatory systems, and tackling skills shortages. While recent U.S. tariffs and declining exports have put pressure on the economy, moderating inflation and stable forecasts suggest Canada may avoid a recession.

Their message was clear: to secure long-term prosperity, Canada must strengthen its competitiveness and act decisively to build a more resilient economy.

Full video and remarks are available below.

Transcript

Honourable Senators, thank you for the opportunity to appear before you today on Canada’s current financial and economic standing.

I am joined by my colleague, Andrew DiCapua, Principal Economist.

The Canadian Chamber of Commerce is Canada’s largest and most activated business network — representing roughly 400 chambers of commerce and boards of trade and more than 200,000 business of all sizes, sectors and regions of the country.

Even before recent international trade shifts, Canada’s economic position was weak. Which is why, in February, the Canadian Chamber called for the government to come alongside businesses in what we call our All-In Canada Plan that would not only minimize tariff damage but chart a more prosperous path.

The plan addresses three critical challenges requiring immediate action.

First, economic growth. We’ve been relying on U.S. trade for years to cover up gaps in our own domestic economy. That has to stop. It’s time to dismantle our internal trade barriers to achieve free trade in Canada and claim the estimated 4% GDP gain that we’re leaving on the table.

Going beyond our borders, we need to look at building on already established trade deals and relationships in the Indo-Pacific, Mexico, European Union and the United Kingdom. But as a trading nation, Canadian businesses need efficient channels to get goods to markets overseas. This requires urgently expanding our roads, rail, airports, and port infrastructure. Further, we cannot allow the repeated shutdown of critical operations to prevent the flow of goods and services and damage Canada’s reputation as a reliable trade partner. When we jeopardize supply chains, they take a long time to return.

And while we commend the government on Bill C-5’s swift passage, we remain concerned that a two-track system could emerge that blesses some projects even as others remain stalled. Every project needs to face reasonable, transparent and predictable processes.

Second, global competitiveness. Canada’s appeal as a place to do business is declining. We need a regulatory and tax environment that attracts domestic and international investment, helps businesses grow and encourages new businesses to launch. While tariffs are today’s concern, it will be the structural changes to U.S. tax and regulatory regimes that will truly challenge Canada’s long-term competitiveness.

Third, addressing Canada’s skills gaps. This year alone, the talent shortage cost our economy $2.6 billion, according to the Conference Board of Canada. We need both a national workforce strategy that invests in upskilling and reskilling workers, with a focus on those vulnerable to automation and AI, and a strategic immigration system that respects the needs and constraints of provinces, territories, communities, employers and employees.

Canada cannot achieve economic security without bold action on these three fronts.

I will now turn things over to my colleague.

Thank you, Matthew, and honourable Senators, for the opportunity to appear today. I’ll offer brief remarks on current economic conditions.

Canada’s economy is at a crossroads. We have navigated uncertainty before, but this moment presents another opportunity to shape our path for future growth and prosperity.

Trade remains foundational to that prosperity. Our trade relationship with the United States alone supports nearly three million Canadian jobs. The recent U.S. tariffs on Canadian goods represent one of the largest external shocks since the 2008 financial crisis, excluding the pandemic.

The data reflects this pressure. In Q2 2025, export volumes fell 7.5%. Investment in machinery and equipment declined 9.4%, as uncertainty clouds business decision-making. The labour market is loosening: we’ve seen moderate job losses in recent months, the unemployment rate has risen to 7.1%, and trade-exposed sectors have shed roughly 80,000 jobs since January.

For 2025, we expect real GDP growth of about 1%. The Bank of Canada’s July Monetary Policy Report anticipates similar growth for the rest of 2025, with private-sector economist consensus even more pessimistic, expecting roughly 0.5% growth for Q3/Q4. The Chamber’s nowcast expects 1.5% growth in Q3, suggesting the worst is behind us and that Canada is likely to avoid a recession.

On a positive note, inflation has been within the Bank’s target range for 20 consecutive months, allowing interest rates to move lower and provide some support. Households have remained resilient, though early signs suggest this momentum may fade.

Still, the trade shock has left a structural mark, putting the economy on a permanently lower trajectory. As my colleague outlined, strengthening competitiveness, accelerating productivity, and accelerating diversity—in people and markets—will be crucial.

Canada is vulnerable to these external shocks; building resilience against them is essential.

The fiscal response faces some constraints. Balancing prudence with growth will be a challenge. The Parliamentary Budget Officer’s September outlook projects a federal deficit of about $70 billion in 2025. This alongside rapidly increasing debt service costs will make fiscal anchors harder to achieve.

Finally, the scarring effects from recent U.S. actions have yet to be fully realized. We must act with urgency and ambition to revive growth, bolster resilience, and set an optimistic course for long-term prosperity.

Thank you. Merci.