OTTAWA – Statistics Canada says the Canadian economy contracted last quarter as exports plummeted in the face of U.S. tariffs.
The agency says real gross domestic product declined 1.6 per cent on an annualized basis in the second quarter, slowing from growth of two per cent in the first quarter of 2025.
Exports were down 7.5 per cent in the second quarter, StatCan says, while business investment in machinery and equipment also fell.
Faster accumulation of business inventories offset the contraction, as well as higher household and government spending and a slowdown in imports.
Economists expected a sharp slowing in growth last quarter as businesses seemed to rush orders early in the year to get ahead of tariffs from the United States, which boosted activity in the first quarter and cooled the economy off in the second.
StatCan also says the economy contracted 0.1 per cent in June, matching declines in April and May, but there were early signs of a rebound in July.
This report by The Canadian Press was first published Aug. 29, 2025.
