August 28, 2026 - Breaking point

Opening Track

The week in review

This week: We’ve seen a breaking point in the “negotiations” between Canada and the United States, though we remain cautiously optimistic about the Canadian economy.

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Top of the Charts

Chart of the week | Canada’s advantage

The trade war between the United States and Canada is making headlines, with one dominant narrative: the United States has a larger, more dynamic economy and is better equipped to absorb the shock. That is partly true, but it's not the whole story.

Canada’s main advantage lies in its fiscal room to manoeuvre. Interest expenses account for just over 10% of government revenues in Canada, compared with nearly 28% in the United States. A much larger share of U.S. public revenues is therefore devoted simply to servicing the debt.

This matters. Canada has real capacity to support its economy through the storm while continuing its plan to stimulate public and private investment. The U.S. economy remains exceptionally dynamic, but its fiscal position is becoming an increasingly significant constraint. In short, Canada has ammunition to defend itself