In this week’s The Seven…

• Underwhelming - Canada’s economic output
• Ghost of pipelines past - Bridger pipeline proposal
• Is it 100%, 50%, 35%, 10% or 0%? - Trump’s tariffs on Canada
• ICYMI - The 2026 Alberta budget
• Interesting Fact - Why Canadians move provinces
• Chart of the Week - Rolling in dough - Venture capital bets on AI

“It's a game of give and take”

—The Supremes, “You Can’t Hurry Love”

The Supremes are singing about love, but “it’s a game of give and take” also applies to the economy.

AI chip-maker Nvidia reported strong growth on Wednesday only to see its stock price fall on Thursday.

The U.S. Supreme Court ruled against Trump’s use of the International Emergency Economic Powers Act to impose broad-based tariffs, but a new blanket tariff has been imposed under Section 122 of the Trade Act.

The Keystone XL oil pipeline project was abandoned after President Biden revoked its permit in 2021, but a new project has been proposed that could revive the Canadian portion.

And, as discussed below, the Canadian economy posted strong growth in the third quarter of 2025, but stalled in the fourth.

As we get deeper into 2026, the hope is that there will be more give than take.

A low bar - Canada’s economy shrank in Q4

The details matter—and there are extenuating circumstances in the form of U.S. tariffs, labour disruptions and semiconductor shortages—but standing back and looking at Canada’s economic performance in 2025, it’s hard not to conclude that it was pretty weak. Yes, we avoided the recession that was feared at this time last year when we didn’t know the U.S. would decide to exempt most Canadian goods from its blanket “border and fentanyl” tariff, but that is a very low bar.

At an estimated 1.7%, last year’s real GDP growth is, as Statistics Canada points out, “the slowest pace of annual growth since the decline in 2020” and simply not good enough if we want to materially improve the situation on the ground for Canadian households. As we’ve highlighted many times, this means addressing Canada’s weak productivity growth and building the country’s economic muscle in ways that will propel it through not only the current trade headwinds, but future challenges as well.

Ok, editorial frustrations aside, let’s take a look at today’s GDP report.

Statistics Canada says the economy wrapped up the year with a contraction in the final quarter of 2025. GDP declined by 0.6% (annualized rate), compared to a 2.4% increase in the previous quarter.

The fourth quarter decrease was largely due to withdrawals of business inventories following inventory accumulation in the third quarter, which essentially means businesses were selling off old inventory rather than producing new goods. Offsetting some of the decline was higher exports and increased consumer, business, and government spending.

Canada’s GDP per capita, meanwhile, looks to have increased for the first time in three years, but this is due to the rapid drop in the number of non-permanent residents in Canada rather than a surge in economic strength.

Despite the contraction to end the year, the bottom line for the Bank of Canada’s next interest rate decision on March 18 is that the economy is still not struggling enough to warrant another cut.  

The ghost of Keystone XL - Bridger’s pipeline proposal

Wyoming-based Bridger Pipeline has applied to the Montana Department of Environmental Quality to build a 1,038-km pipeline with a capacity of 550,000 barrels per day from the Canada-U.S. border to the crude oil logistics hub in Guernsey, Wyoming. The idea is that the Canadian portion of the defunct Keystone XL project would also be completed and join up with the U.S. portion. The proposal has only just surfaced and requires a lot of things to fall into place before moving forward, but we will be closely watching to see what happens next.

The tariffs are dead, long live the tariffs - U.S. trade policy

About a month ago, President Trump threatened to impose a 100% tariff on all Canadian goods entering the U.S. if “Canada makes a deal with China.” Fortunately, this imposition hasn’t happened.

In the meantime, the U.S. Supreme Court has ruled that the International Emergency Economic Powers Act (IEEPA) “does not authorize the President to impose tariffs.” As a result, the blanket 25% (later raised to 35%) "border and fentanyl" tariff on Canadian goods that went into effect on March 4, 2025 is no longer in play. While most Canadian goods were exempt from this tariff if they could demonstrate compliance with the Canada-U.S.-Mexico Agreement (CUSMA), not all were, so the Supreme Court decision was a welcome development.

Other tariffs, however, remain firmly in place and a new blanket tariff of 10% has been imposed on Canada using different legislation. As was the case with the previous blanket tariff, an exemption applies for CUSMA-compliant goods.

Where does this leave us? Roughly where we were before. The sector-specific tariffs are a major issue for the affected industries with the uncertainty surrounding U.S. trade policy adding to the economic drag. Looking ahead, maintaining something akin to the existing CUSMA exemption is the critical issue with most signs pointing to U.S. tariffs sticking around in one form or another for some time to come.

In case you missed it - The 2026 Alberta budget

Released yesterday, the 2026 Alberta budget proposes $83.9 billion (including a $2 billion contingency) in spending during the 2026-27 fiscal year. The deficit is pegged at $9.4 billion, up from an estimated $4.1 billion last year. Deficits of $7.6 billion and $6.9 are expected in 2027-28 and 2028-29, respectively.

The budget’s economic outlook has Alberta's real GDP rising by 1.8% in 2026 (down from an estimated 2.2% last year) amid slowing population growth and ongoing trade uncertainty. Growth is forecast to improve next year at 2.3%. The budget’s forecast is broadly in line with our outlook from December.

Oil prices, which are a key factor affecting provincial revenue, are expected to remain relatively soft at just over US$60 per barrel of WTI in 2026-27.

Interesting Fact: Why Canadians move from one province to another

I once asked a job candidate why they moved from Spain to Alberta. Without missing a beat, they boldly stated: “For love, Rob, for love!”

I can’t think of a better reason to make a long-distance move, but this was not a standard response category in the 2022 Canadian Housing Survey—the results of which have just been analyzed to provide a better understanding of why Canadians decide to move from one province to another.*

Notwithstanding the power of love, Statistics Canada found that employment was the most frequently cited reason for moving across provinces with 42.5% of households that moved interprovincially citing a new job or job transfer as one of their reasons for moving. Wanting to be closer to family was the second most frequently cited reason at 27.6%. Keeping in mind respondents could select multiple reasons, if you add up the categories related to housing, this is also a key reason why Canadians decide to move from one province to another.

The overall results, however, mask some major differences across age groups with younger Canadians (Gen Z) more likely to cite moving to another province for school (61.1%) while Millennials (59.1%) and Generation X (51.6%) tend to cite employment. Being closer to family was the most frequently cited reason for older generations at 48.1% among Baby Boomers and 76.7% among the Interwar and Greatest Generation cohort.

*Believe it or not, these stats from 2022 are the best indicator we have on hand of why Canadians move from province to province.