Canada will receive a clearer picture of how deeply U.S. tariffs and trade tensions affected its economy when Statistics Canada releases its December gross domestic product (GDP) report on Friday. The data will close out the fourth quarter of 2025 and provide the first comprehensive view of the country’s economic performance for the year.
The report arrives at a moment of heightened uncertainty. A fresh wave of 10 per cent U.S. tariffs on countries worldwide took effect earlier this week, following a separate set of global tariffs introduced by U.S. President Donald Trump in early 2025 that were struck down on Feb. 20. Economists say the shifting trade landscape has made forecasting for 2026 increasingly difficult.
Friday’s figures will be closely watched for signs of how Canada weathered a year marked by trade volatility. GDP, which measures the total value of goods and services produced within a country, is the broadest indicator of economic health.
In a report released Feb. 20, Royal Bank of Canada (RBC) economists Nathan Janzen and Claire Fan projected a modest rebound in December. They expect GDP to increase by 0.2 per cent for the month, slightly above Statistics Canada’s advance estimate of 0.1 per cent.
According to RBC, most of the fourth quarter’s weakness was concentrated in October and November, when growth slowed amid ongoing trade disruptions. However, industry data from December points to stronger activity late in the quarter, offering what the bank described as a “silver lining” to an otherwise subdued period.
If RBC’s forecast holds, fourth-quarter growth would likely be flat overall. That would mark a sharp slowdown from the third quarter, when the economy expanded at an annualized rate of 2.6 per cent between July and September. That growth spurt helped Canada avoid a technical recession, defined as two consecutive quarters of economic contraction.
Despite that earlier momentum, concerns about the economy’s resilience persist. The Canadian Chamber of Commerce cautioned late last year that headline growth figures masked underlying fragility. Businesses and households, it noted, appeared hesitant to spend and invest, leaving domestic demand weaker than needed to sustain stronger expansion.
Economists say the December GDP report will be critical in determining whether Canada ended 2025 on steadier footing or whether trade-related headwinds continue to weigh heavily on growth. With new tariffs now in place and global uncertainty lingering, the data may also shape expectations for the Bank of Canada’s next policy moves.
As policymakers and markets await the numbers, the report is set to serve as a benchmark not just for how 2025 concluded, but for how prepared the Canadian economy is to navigate another year of trade turbulence.
