Canada's economy is now smaller than when Prime Minister Mark Carney took office, with two consecutive quarters of declining real GDP, leading many economists to declare a technical recession. While much blame is directed at U.S. President Donald Trump and trade tensions, Dr. Sylvain Charlebois argues that this is misleading. The real issue lies in Canada's long-standing structural weaknesses: lagging productivity growth, weak business investment, stagnant GDP per capita despite rapid population growth, soaring housing costs, and over-reliance on government spending. Trump's policies may have added pressure, but they did not create these vulnerabilities.
Resilience Is Not Immunity
Canada's food economy has remained resilient, as people still need to eat. However, this resilience should not be mistaken for immunity. The first signs of strain are appearing in the food service sector, where restaurants face softer demand due to consumer price sensitivity. Rising labour costs, occupancy expenses, insurance premiums, and financing costs are squeezing margins, making profitability increasingly difficult.
The greater concern is investment and competitiveness. Food processors may postpone expansion projects, farmers may delay equipment purchases, and investors may look elsewhere. While Canada's food sector remains a strong pillar, it cannot indefinitely outrun the broader economy. Competitors in the United States and South America are investing heavily in processing facilities, logistics, and innovation, while Canada risks complacency.
The Recession Debate Matters
The debate over recession is crucial because it highlights the need to address structural issues. A shrinking economy may not immediately cause a food recession, but it undermines conditions for future growth. Blaming Trump is politically convenient but does nothing to restore Canada's competitiveness. Policymakers must focus on domestic reforms to ensure the food economy remains a source of strength.
Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast, and visiting scholar at McGill University.
