Canada is likely to bear more of the economic pain from its trade war with the U.S., although public comments from key negotiators suggest there may be a path back to talks.
BNN Bloomberg spoke with David Doyle, head of economics at Macquarie Group, about the risks of a prolonged dispute and whether Canada’s recent economic momentum can withstand the uncertainty.
Key Takeaways
- Trade wars hurt both participants, but Canada’s smaller economy and reliance on the bilateral relationship leave it more exposed.
- Doyle described the remarks from Trump and Ontario Premier Doug Ford as political gamesmanship.
- Recent comments from U.S. Trade Representative Jamieson Greer and Minister Dominic LeBlanc indicate some softening in tone.
- Prolonged uncertainty and continued tariffs could undermine improving business sentiment and investment.
- Stronger real GDP data, solid labour reports and falling unemployment may provide Canada with some economic resilience.
Read the full transcript below:
ROGER: All right. I think we have the technical difficulties figured out. We’re going to bring David Doyle, head of economics at Macquarie Group, back in to talk about the trade war that’s full-blown right now between the U.S. and Canada. David, thanks again for joining us. Where we stand now, it’s ugly. Is this hurting everybody right now, both the U.S. and Canada?
DAVID: Well, look, I think that’s right. I mean, a trade war hurts both parties, right? That’s, I think, why the best — you know, the best approach is to try to avoid them as much as possible. But certainly, because of the relative importance of the economic relationship, this is likely to have a greater toll on Canada’s economy than on the U.S. economy, and that’s just a function of the math at work. I think there’s various things Canada is doing to try and mitigate some of those impacts, but there’s only so much, you know, that you can do and adjust. At the end of the day, you know, you’re challenging an economy — you’re dealing with an economy that’s roughly, you know, 10, 11, 12 times your size, right? Which limits the effects in terms of, on a relative basis, where the pain — where the pain will be felt.
ROGER: All right, and now — and there’s — we — this is very serious, what’s going on, but there’s been some incredible things on Instagram and memes happening on social media. I just wanted — do we have that one from Trump? The latest now, what he wants to do? We don’t have it. Okay, we don’t have the one where we want to say, “This is Lake Ontario in Canada and the United States, but we’re going to make a little change. We’re going to make it something different than Lake Ontario, call it Lake America.” Does this bode well for how the talks are going when we hear things like that? When we hear Premier Ford telling Trump to kiss his butt, is that negotiating tactics that lead to good results?
DAVID: Well, look, I think part of what you’re seeing, you know, both from Premier Ford and President Trump, is gamesmanship, right? You had, you know, a lot of folks that thought that the U.S. and Canada was on the precipice of a deal late last week. Things fell apart on Friday, and then tensions mounted earlier in the week. But I actually think you’re seeing, you know, some other members — you know, not Premier Ford or President Trump, but other parts of the negotiating teams on both sides — trying to calm down the rhetoric a fair bit. Ambassador Greer, the U.S. trade representative, gave an interview last night where he was explaining the U.S. side in a very clear and sort of transparent manner, I thought. And then this morning, you had, you know, Canada-U.S. Free Trade or Trade Minister LeBlanc out making comments about how he was pleased. You know, there had been a reduction in the demands from the U.S. side in regards to the French-language issues that were faced in the negotiation. So, I do think, you know — you know, there’s a temptation just to focus on, on, you know, the headlines from President Trump and Premier Ford. But I think beneath the surface, you are seeing some softening in tone, and there’s some green shoots there that, you know, maybe we’re not quite back at the negotiating table, but it feels like there’s a pathway to get there. And hopefully, we get there before that eighth of September deadline of when Canada, you know, is poised to introduce its retaliatory tariffs.
ROGER: So, does it sound like the back channels are working right now?
DAVID: Look, I don’t know about the back channels. That’s not — I’m not plugged in in that respect. I’m more referring to the public commentary from what you might call, you know — I would — not the primary faces. They’re more secondary figures as part of the negotiation. They’re not the ones that sign off on the end agreement, but my understanding is that Minister LeBlanc and Ambassador Greer had done much of the legwork in, in that, that, that deal that seemed close late last week. And so, the fact that you’re seeing, you know, some positive tone from the two of them, I would take as a green shoot that potentially, you know, negotiations may recommence — maybe not before the eighth of September, but hopefully in around that time.
ROGER: What’s the biggest danger to Canada if this drags on?
DAVID: Look, I think the biggest danger is just, you know, the prolonged uncertainty, right, and what that could do to fixed business investment. There had been some very encouraging, highly encouraging reports from the Bank of Canada and some other organizations through the spring and early summer that Canadian businesses were getting used to the uncertainty with regards to trade policy, and they were just going to get on with it, right, and make those investments and deal with the fact that we didn’t have a new CUSMA slash USMCA agreement, and they were prepared to move forward. So, I wonder, you know, the longer this goes on, if tariffs and countertariffs remain in place, what that does to that improving sentiment that, that seemed to be afoot and underway.
But I’d say that the good news for Canada, right — because there was a lot of good news coming out in advance of the weekend — is it looks like we have strong growth momentum, right? The monthly real GDP data had — was improved and picking up. The labour market had shown, you know, three very strong, or at least reasonably solid, reports in a row. Unemployment falling. So, Canada, you know, has been on an upswing, and we’ll see if that can be sustained with regards to the increase in uncertainty. But there was some good — I think that’s something that’s getting lost a lot in the discussion around this — is that, you know, there was a lot of good news for Canada that was coming out, you know, in advance of this.
ROGER: Okay, we have to wrap it up there, David. But thanks very much for joining us.
DAVID: Anytime. Thanks for having me.
ROGER: David Doyle, head of economics at Macquarie Group.
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This BNN Bloomberg summary and transcript of the Aug. 27, 2026 interview with David Doyle are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
