By Carl Gomez
CoStar Analytics
September 3, 2025 | 11:52 AM
The Canadian economy may have slipped into a recession this summer thanks to Donald Trump’s trade war.
According to Statistics Canada, Canadian real GDP contracted 1.6% annualized in the second quarter, a bigger contraction than markets expected. Reflecting the direct impact of the U.S. president's trade policies, net exports slashed 8.1 percentage points from overall growth, the second most on record (only the pandemic was worse).
The uncertain market environment also weighed heavily on business investment, with spending on machinery and equipment plunging 32.6% during the quarter, the fourth-largest decline on record.
