Canada’s economy grew 0.3% in May, coming in above expectations
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- Canada's economy expanded 0.3% in May with a June advance estimate of 0.2%, putting Q2 on track for annualized growth above 3% — above the Bank of Canada's 2.5% projection and well above the US's 1.5% for the same quarter.
- Statistics Canada reported growth in 13 of 20 industrial sectors, led by resources, construction, real estate and public-sector hiring tied to 2026 census preparation, with oil and gas posting the single largest gain.
- The Trump administration announced 50% tariffs on July 20 targeting industries concentrated in British Columbia, Ontario and Quebec, set to take effect Aug. 19 and affecting roughly 5% of Canadian exports to the US.
- The United States declined to extend USMCA on July 1, pushing the continental trade pact into a period of annual reviews and adding a second layer of uncertainty for Canadian exporters.
- The Trans Mountain pipeline entered apportionment for the second month in July, with shipping requests exceeding physical capacity and limiting Canadian producers' ability to capitalize on Brent crude prices above US$100/barrel.
- Economists at BMO Capital Markets and Desjardins said the encouraging data will not shift the Bank of Canada off hold this year, with Douglas Porter (BMO) citing fresh tariff threats and lofty energy prices as the bigger-picture concern.
Why it matters: Canadian exporters in targeted industries have less than three weeks before 50% U.S. tariffs hit Aug. 19, and with USMCA now in annual reviews rather than locked in, the very strengths powering May's beat — broad-based sector growth and elevated energy prices — could reverse in H2 if even a fraction of threatened companies pause investment and hiring, as multiple Canadian firms have already begun doing.
