DR. JACK MINTZ
President’s Fellow at the School of Public Policy,
University of Calgary

Trade‑policy uncertainty is being identified as a major deterrent to business investment and economic growth, because irreversible spending is delayed when tariff and trade‑agreement outcomes remain unpredictable. The forthcoming review of the Canada‑U.S.‑Mexico Agreement (CUSMA) has heightened this uncertainty, and recent studies have shown that both investment and GDP were reduced during periods of unclear trade policy; a low‑tariff regime, while not optimal, was deemed preferable to prolonged ambiguity. The unpredictable imposition and negotiation of tariffs under the current U.S. administration are cited as the primary source of this uncertainty, with adverse effects observed on business planning and hiring – even in the absence of a deeper recession.

Consequently, costs are borne by firms and workers alike, as job creation and investment decisions are put on hold amid unstable trading conditions. Canadian policymakers face a dilemma: allow CUSMA to lapse – thereby removing uncertainty but sacrificing economic output and employment – or negotiate a new arrangement that restores predictability, albeit with altered terms. As a result, unresolved trade‑policy ambiguity weighs on economic confidence and activity.

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