Five things to watch in Canadian business for 2026

OTTAWA — Trade issues dominated headlines for Canadian business in 2025, but the stock market seemed to shrug off the economic woes as it hit record highs.

Heading 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.

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Here’s a look at five things to watch in Canadian business for 2026:

Trade

U.S. President Donald Trump and his tariffs were the big story for 2025 and that isn’t expected to change for 2026 as the free trade agreement between Canada, the United States and Mexico is up for formal review.

Ahead of the talks, 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.

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.

Nation building projects

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.

Markets

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 centres 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. He says if there is a pullback in spending on AI, it likely won’t be enough to cause a broader recession in the economy that could trigger a bear market.

Real estate

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

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 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. It noted that a changing regulatory environment and the elimination of tax credits in the U.S. made the business even more challenging.

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.

This report by The Canadian Press was first published Dec. 31, 2025.

Craig Wong, The Canadian Press