There are those who will tell you that our nation is “broken” and that we face a host of insurmountable problems coming into the new year—usually followed by an assertion that is the currently governing Liberal’s fault. While it is true that we are staring down many challenges coming into 2026, our nation remains remarkably strong despite those issues—and it isn’t as though we are alone, most nations across the globe have the same challenges standing in their progress. But to channel le Petit Gar, “the land, it is strong.”
Top of mind for many Canadians is trade and the disruptive influence on our economy incurred through the actions of the current POTUS.
This year is particularly troubling, as our nation’s bulwark against the Trump tariffs, the Canada-US-Mexico Agreement (CUSMA) is up for re-negotiation in 2026. That trade agreement has ensured our nation has the least tariff hit among the Western World, but although it was Donald Trump who negotiated that agreement, the US president seems to have had a senior’s moment when it comes to who negotiated that deal—himself—labelling it as needing significant “improvements,” by which we can read as more favourable to the US.
While there may be some concerns about our supply management programs protecting our nation’s farmers being voiced going into the negotiations, there is little indication that would be a deal breaker. More worrying are the overtures regarding the automotive sector, one of the most integrated economic systems in the world and one in which the US, Canada and Mexico have each benefitted greatly.
The CUSMA deal will be formally reviewed in July.
Our gross national product has benefited significantly thanks to high immigration, but that factor has masked a “lost decade” of stagnant living standards and resulted in weak per-person economic growth. While labour costs have benefitted from the influx of temporary foreign workers, productivity has also been complicated by poor business investment in productivity enhancing technology and efficiency. But Canada’s productivity shortfall far precedes the current decades. Lower productivity trends began all the way back in the 1970s, and continued through the 80s, falling significantly behind the US during the 1990s until its present level of around 75 percent of the US by 2022. That sad factor is a pox on all political houses—changes in governments notwithstanding—yep dropping even farther behind during the Harper years. That doesn’t let Liberals off the hook—just provides a bit of perspective.
Parts of that issue lie in our nation’s continuing role as “hewers of wood and drawers of water.” Dependence on natural resources, arguably and historically our country’s greatest asset, non-partisan studies have fingered that as having hampered our productivity.
Much of those challenges lie outside our political masters’ hands, it is true, but their short-sighted policy decisions certainly have not helped.
Inflation remains an issue, particularly in the realms of groceries and housing. Although the overall inflation rate is now within spitting distance of the Bank of Canada target of two percent, the cost of living has not improved.
In the Baby Boom years, families could afford to put a roof over their heads, even one they own. Now, the cost of a house has escalated into the stratosphere—lying far outside a young couple’s reach and given the lagging number of housing starts in Ontario, we can confidently predict that will not improve soon. Even worse, those rising costs have made having children more and more difficult. Estimates to raise a child to age 17 range from almost $300,000 to over $400,000, depending on a family’s income level. You can tally in another $100,000 or so if a child stays in the home until age 22—a factor becoming more and more common. Youth unemployment levels mean later and later starts to even trying to save up for a down payment.
Of course, this generation has expenses that were unheard of in past iterations, or in the realm of science fiction—cellphone plans anyone? Internet access?
We still face labour and talent shortages, despite the current unemployment rate. Our aging population combined with a declining birth rate continue to contribute to a shrinking workforce, particularly vulnerable are the health, tech and engineering—those last two a significant factor in our nation’s productivity struggle.
The widening gap between the rich and poor is also a major issue—and if that continues unabated, social unrest will rise dramatically. Think Freedom Convoy on a truly national level.
We have not even started in on the impacts climate change and artificial intelligence will have in the coming years (not decades)—not helped by the avalanche of misinformation out there.
That’s quite a depressing litany of challenges—but we have some incredible strengths on the other side of the ledger that should give rise to some optimism/
We still have those vast natural resources, most of which remain untapped. We are, despite naysayers claims to the contrary, an energy superpower compared to the rest of the world and our vast reaches contain many of the critical minerals that the world needs and wants.
Recent moves to remove internal trade barriers are also a shining light on the horizon, albeit the benefits of those may have been somewhat oversold.
Our nation remains among the world’s leaders in artificial intelligence development, IT technology, software and possess a highly educated workforce. Our nation is one of the most stable and, despite the cost-of-living challenges, we are also ranked among the top in the world for quality of life.
Everything is relative it seems.
So, as we head into what promises to be something of a nerve-wracking new year, do not lose hope, because all is most certainly not lost.
A critical part of getting our elbows up will be rolling up our sleeves and tackling the issues that have been too long ignored by our political classes. Complacency is no longer an option.
