Canada’s economy is beginning to feel the strain of escalating U.S. trade protectionism, while Europe appears to be gaining momentum, says CPA Canada’s chief economist.
The Canadian economy contracted in February, with key sectors—such as hospitality, entertainment and residential construction—pulling back as overall growth falters heading into spring.
“This economic drag is now extending beyond the labour market and impacting broader GDP performance, reflecting the ripple effects of American tariffs,” says David-Alexandre Brassard. “Without a major policy shift, Q2 could be far worse.”
Meanwhile, the U.S. economy stumbled in the first quarter of 2025, posting its weakest performance since early 2022. Reduced government spending and inventory stockpiling ahead of tariffs being implemented played a major role in the slowdown.
“The American economy contracting in Q1 reflects the uncertainty of the pre-tariff environment and does not bode well for the current quarter, during which tariffs were significantly escalated to levels unseen in the last century,” says Brassard.
As North America grapples with these self-inflicted headwinds, Europe is quietly gaining momentum.
“Tariff policies are predictably backfiring,” says Brassard. “We’re now left wondering whether the U.S. administration will reconsider its approach in light of this data—or simply accept these poor results as short-term pain.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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