Canada’s economy is showing renewed signs of strain, with new data suggesting the country’s gross domestic product may have contracted in the fourth and final quarter of 2025. Economists point to ongoing trade pressures, particularly from U.S. tariffs, as a key factor weighing on growth in a trade-dependent economy.

According to Statistics Canada, economic activity stalled completely in November, marking zero growth for the month. This followed a 0.3 per cent decline in October, making it the second consecutive month without any measurable improvement in overall economic output.

Analysts say tariffs imposed by the United States on Canadian steel, aluminum, lumber, and automotive products have continued to hurt exports, dampening momentum across several key industries. Current estimates suggest the economy may have shrunk by about 0.5 per cent in the fourth quarter.

There is growing concern that if the economy records negative growth for two consecutive quarters, Canada could enter a technical recession. Such a development could increase pressure on employment levels and household spending, particularly in export-driven regions of the country.

Statistics Canada’s latest outlook projects full-year economic growth of 1.3 per cent for 2025. Meanwhile, the Bank of Canada said earlier this week that modest improvement is expected in 2026, although officials cautioned that recovery will likely be gradual amid ongoing global uncertainty.