New forecasts show Canada, Mexico, and the U.S. facing the sharpest growth revisions among advanced and emerging economies.
The damage from Donald Trump’s trade war is coming into clearer focus.
According to the latest IMF World Economic Outlook, Canada, Mexico, and the United States are now projected to experience significantly slower economic growth.
In January of 2025, the IMF forecast 2.7% growth for the US this year, alongside 2.0% growth for Canada and 1.4% growth for Mexico.
Since then, U.S. President Donald Trump has launched a trade war against much of the world, unilaterally abrogated the Canada-US-Mexico Agreement (CUSMA), and undermined global perceptions of U.S. reliability.
The updated IMF forecast now projects 1.8% growth for the United States, 1.4% for Canada, and -0.3% for Mexico, marking respective downward revisions of 0.9, 0.6, and 1.7 percentage points.
These are not only significant declines – they are the worst among their economic peer groups. The United States saw the sharpest downgrade among Advanced Economies, and Canada the second-worst. Mexico’s decline is the steepest of any Emerging Market or Developing Economy in the report.
A Self-Inflicted Wound
Notably, despite being the primary target of Trump’s tariffs, China’s growth forecast declined by only 0.6%, a smaller drop than that of the U.S. and dramatically less than Mexico.
Thus, Washington’s protectionist posture – ostensibly aimed at constraining China’s economic rise – is hurting the United States more than it hurts China.
Further, by weakening its neighbours, the United States is reducing the economic influence – and thus long-term political and military influence – of its own closest trading partners.
China’s relative strength could expand, while America’s relative strength declines.
When combined with the erosion of American institutional trust caused by erratic statements and unpredictable trade actions, we can see that Trump’s tariff offensive is a self-inflicted wound, one that will grow in scale the longer tariffs remain in place.
As the damage from Trump’s trade war spreads, Canada faces a heightened imperative to deepen ties with reliable partners, eliminate interprovincial trade barriers, utilize our abundant energy resources, and undertake a significant military buildup to generate economic activity and strengthen our sovereignty.
Through strategic, long-term investments in a national energy corridor, domestic defence procurement, expanded research and development funding, outreach to disgruntled American scientists and other elite talent, and the cultivation of new trade ties, Canada will be able to emerge from this challenging time as a more resilient nation.
However, Canada must act with urgency, or risk being pulled under by the gravity of American disorder.
Spencer Fernando
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