Canada Trade Outlook

Tariffs could derail economic and CRE outlook. As a small open economy with over 30 per cent of its GDP tied to a single large foreign buyer, the United States, Canada is highly vulnerable to trade barriers from its southern neighbour. The recently proposed import duties on Canadian goods, coupled with the nation’s planned retaliation, have heightened domestic recession risks and could potentially disrupt the current recovery stemming from lower borrowing costs. A potential recession threatens to weaken near-term fundamentals across all commercial real estate property types. Uncertainty about the near-term political and economic outlook is expected to prompt additional investors to remain on the sidelines until the outlook becomes more clear. As a result, last year’s rebound in the transaction market may prove to be short-lived, despite lower borrowing costs.