Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsEconomyOntario faces slowest growth in Canada as trade tensions take tollManufacturers in this province and neighbouring Quebec are 'under real pressure,' says Canadian think-tankLast updated 4 days ago You can save this article by registering for free here. Or sign-in if you have an account.Workers assemble vehicles at the Honda of Canada Manufacturing Plant 2 in Alliston, Ont. The province is the heart of Canada’s automotive manufacturing industry. Photo by GettyOntario’s economy will grow at the slowest pace among Canadian provinces in 2026, with trade tensions with the United States continuing to play a key role in the province’s muted performance, according to a new forecast by an economic think tank.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorOntario’s real gross domestic product growth is expected to be 0.7 per cent in 2026, “in part due to a troubled EV sector and the province’s exposure to U.S. automotive and steel tariffs,” Signal49, formerly the Conference Board of Canada, said in its latest outlook.Ontario’s forecast is tied with Quebec’s for the lowest in the country. Quebec has also been hammered over the past year by U.S. tariffs on the steel, aluminum and forestry sectors.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“There are a couple of different pieces to that story, but, broadly speaking, it certainly is generated by U.S. trade policy that’s really weighing down growth this year,” Christopher Heschl, principal economist at Signal49, said.He said the pressures of the ongoing trade war will continue to be felt more heavily in communities where manufacturing represents a larger share of the economy, such as southwestern Ontario, the heart of Canada’s automotive manufacturing industry and a region where unemployment has been edging higher for the better part of the year.For example, the London area recorded the country’s second-highest unemployment rate in May, tied with Kitchener-Waterloo and Barrie at 8.7 per cent, while Oshawa was at 8.5 per cent and Windsor at 8.2 per cent, according to Statistics Canada’s latest labour market data. All were well above the national unemployment rate average of 6.6 per cent.Though Ontario’s manufacturing sector has shown its resiliency and has managed to keep its head above water, with massive layoffs still rare, “manufacturers are under real pressure,” said Alan Arcand, chief economist at Canadian Manufacturers and Exporters (CME).“One of the biggest challenges is the uncertainty,” he said. “Manufacturers are responding in rational ways by delaying investment plans and reducing production rates . . . (but) investment dollars that aren’t being spent today is future production loss tomorrow.”Signal49 said the economic outlook could improve quickly in 2027, but that largely depends on a speedy resolution to the Canada-U.S.-Mexico Agreement (CUSMA) negotiations.“If tariffs persist or if negotiations deteriorate, we would expect to see a worse outlook over the near term, as businesses choose not to invest and perhaps even cancel current plans,” Heschl said.He pointed to Honda Canada Inc.’s decision in April to indefinitely suspend its planned $15-billion investment in an electric vehicle and battery manufacturing complex in Alliston as an example of the toll trade tensions are taking on investment in Canada.The free-trade agreement among the three North American countries is up for review this year, with a deadline of July 1 for all three nations to decide whether to renew the agreement and extend it for an additional six years to 2042.U.S. President Donald Trump told reporters at the White House on Wednesday that he is not looking to renew the agreement. If CUSMA is not renewed, it will remain in place until 2036 with annual reviews.Arcand said renewal of the agreement and the removal of sector-specific tariffs would be “the best-case scenario” for Ontario’s manufacturing sector.A quick resolution would jump-start Ontario’s economy “pretty quickly,” he said, though the damage already done would take time to repair.“You would see a pickup in investment and a pickup in activity, but there’s definitely some scarring that’s going to take some time to heal,” he said.Signal49 said Ontario’s economy is also likely to be affected this year by the war in the Middle East, which has pushed gas prices higher, affecting consumer confidence and spending power at a time of slow population growth.On the flip side, higher gas prices will benefit the finances of resource-producing provinces, including Alberta and Newfoundland and Labrador, whose economies are expected to grow by 1.4 per cent and 2.4 per cent, respectively.With files from The Financial Post Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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