BCBusiness
The outlook for 2026 offers more trade uncertainty, corporate reconfiguration and a focus on bread-and-butter issues.
We knew we were in for a rough year in 2025, but not how rough. We hadn’t factored in the breadth and intensity of the incoming Trump administration’s trade actions. As we look forward to 2026, we can expect more of the same, including a likely fraught Canada-United States-Mexico Agreement (CUSMA) renegotiation.
On the plus side, most economic forecasts suggest the business cycle has bottomed and should improve, if slowly, henceforward. And with diversions like local FIFA World Cup matches on tap, 2026 should have its moments.
“Relative to its history, B.C.’s economic growth remains subdued, but it has managed to display more resiliency than we had expected amid the ongoing trade headwinds,” noted the TD Economics team in its fall provincial economic forecast. The addition of liquefied natural gas (LNG) exports to the provincial accounts following the start-up of LNG Canada in June 2025 made up for the U.S. government’s imposition of the steepest softwood lumber duties in living memory, which has hobbled an already ailing forest industry, TD noted. And B.C.’s housing market seems to be emerging from its doldrums faster than other provinces. “Notably, we see resale volumes rising by a nation-leading 18 percent next year,” the report said.
The federal government’s caps on international student visas and temporary foreign worker permits will keep a lid on population and retail sales growth. But that should have a positive impact on the job market. “We expect B.C.’s unemployment rate to reach a cyclical peak of 6.5 percent by the turn of the year before drifting lower in 2026,” the TD economists wrote.
With two elections having taken place in the past 15 months, don’t expect major political realignments in 2026. What looked to be a razor-thin victory by the NDP provincially in October 2024 has since widened as the Opposition B.C. Conservatives have shed members from their caucus.
Victoria must nonetheless grapple with a ballooning deficit. In the government’s most recent statement for the 2025-26 fiscal year, it was pegged at $11.6 billion, with similar shortfalls projected for the two years to follow. According to the Fraser Institute, the B.C. government spent $4.4 billion on interest payments in 2024-25, equivalent to 5.3 percent of the budget or $2,064 per person. Premier David Eby has said there’s no need to panic. But as B.C.’s credit rating gets further downgraded and borrowing becomes more expensive, even the NDP will have to contemplate spending cuts or tax increases—probably both.
“We’re getting to the end of the road on that,” says David Williams, vice- president of policy for the Business Council of British Columbia (BCBC). “This rate of spending and borrowing is not really sustainable.”
While not on the scale of the recently completed LNG Canada, Coastal Gaslink, Trans-Mountain Expansion or Site C dam projects, there are several major projects under construction or in advanced planning stages in B.C., and they were given a new urgency by the provincial and federal governments’ responses to U.S. trade action. The Liberal government in Ottawa named LNG Canada’s phase 2 and expansion of Newmont Corp.’s Red Chris mine, both in the northwest of the province, among its five priority projects to fast-track as a way to lessen Canada’s dependence on the U.S. market.
In addition, there are three smaller LNG terminals being built—Cedar LNG in Kitimat, Woodfibre LNG in Squamish and Ksi Lisims near Prince Rupert—along with the new Prince Rupert Gas Transmission natural gas pipeline, to supply Ksi Lisims. Add to that some dozen greenfield mining projects and expansions, and the capital spending drought following the 2018-2024 building boom is looking to be short-lived. Still, Central 1 Credit Union chief economist Bryan Yu warns, “It’s going to take some time for the FIDs [final investment decisions] to occur.”
For all the fear and loathing over “Liberation Day” last April and the targeting of the softwood lumber industry, Canada has come away relatively unscathed from U.S. trade action, with 85 to 90 percent of Canadian exports to the U.S. continuing to cross the border tariff-free. Whether that free pass stays in place depends on negotiations to extend or replace CUSMA, which comes up for renewal in July. Based on past experience with the Trump administration, the process will not go smoothly. It could involve late-stage threats, reversals and uncertainty for affected industries.
In the meantime, many exporters that have not already done so are working toward CUSMA compliance. But that paperwork is a hurdle too high for many small vendors that have been harmed by the removal of “de minimis” exemptions for orders worth less than $800. Postal services around the world suspended delivery of business-to-consumer packages to the U.S. starting in August. Canada Post, which carries nearly two thirds of Canadian e-commerce shipments to the U.S., has hired technology provider Zonos help it charge duties at source. For those exporting stateside, that means an extra cost of $80 to $200 per package, more than many customers will likely be willing to pay.
“B.C. has the highest percentage of businesses impacted by the removal of this exemption,” notes Kalith Nanayakkara, senior policy analyst, B.C., for the Canadian Federation of Independent Business. And for now, “most are just eating it up.” But just 41 percent of business owners polled by CFIB think they can continue doing so for more than a year. A great many small businesses, in other words, will have to reconfigure their markets, distribution and supply chains in 2026.
The longer-term issue for Canada is that the Trump regime does not fundamentally believe in a continental free-trade zone. It aims to force manufacturers serving the U.S. market to move their operations stateside. And there’s no saying future American administrations will see the value in free trade either.
“That’s a real challenge for Canada,” which has for 35 years counted U.S. market access as one of its value propositions, BCBC’s Williams says. The only positive to come out of this, he thinks, is the way it has refocused the national conversation in Canada: “I’m seeing more concern about the state of the economy and our economic sovereignty.”
We all fantasized that automation would replace jobs cleaning toilets and serving coffee. Instead, research by Stanford University’s Digital Economy Lab indicates that artificial intelligence is coming for “laptop jobs,” including software development itself. Most at risk of layoffs or reduced opportunities are entry-level knowledge workers. That could help explain why B.C.’s 200,000-strong technology sector saw a small net loss of jobs in 2024 compared with a year earlier.
Another recently booming industry now cutting staff is higher education. Universities, colleges and vocational schools have been cutting staff in response to a 10 percent reduction in foreign student visas issued by the federal government, meant to help ease the high cost of housing. Foreign students paying high tuitions had been a source of growth for the education sector for the previous decade.
By contrast, tourism had a banner year in 2025 as Canadians opted to stay home rather than travel to the U.S. And 2026, with the coming of the World Cup in June and July, is looking even busier.
While the housing market has shown flickers of light with the halting decline of interest rates in 2025, there will yet be more failures among projects and development companies as they reach the end of their financial rope. And with the presale condo pipeline running dry, Yu says, “there’s likely to be a steep drop-off” in housing starts, a troubling portent for the construction sector.
A few years ago, amid the drama of the Meng Wanzhou extradition, it seemed that Canada was pivoting away from an increasingly autocratic China. But of necessity, and bolstered by challenging relations with the U.S., Canada-China relations seem to be normalizing. BC Ferries picked a Chinese shipyard to build its latest line of vessels. China Eastern airlines resumed flights into Vancouver International Airport in September. Expect more low-key cooperation in 2026. This is not a return to pre-COVID chumminess so much as an echo of how Canada had to conduct its foreign relations with a more authoritarian world during the Cold War: stay wary, and act in your national interests.
When Teck Resources, B.C.’s fifth-biggest company by revenue and Canada’s largest base metals miner, announced its tie-up with Anglo American PLC, a London-based mining company with South African roots, in July, it was clear they were playing to win. The combined Anglo Teck, executives promised, would be headquartered in Vancouver, a pledge designed not only to secure Ottawa’s assent but also to set a bar too high for rival acquisitors to match. The proponents committed to spending at least $4.5 billion on Canadian operations over the next five years, more than half at Teck’s Highland Valley mine near Kamloops and $750 million on its smelter in Trail.
In December 2025, Ottawa approved the merger. More than just consolidation for consolidation’s sake, it has a compelling rationale: the two companies’ largest assets are copper projects in Chile just 15 kilometres apart. Anglo’s Collahuasi has the richer ore, but Teck’s Quebrada Blanca has superior processing capacity. Combining and optimizing their operations would achieve a projected US$1.4 billion a year in synergies, money that would flow straight to the bottom line.
Having a mining major worth $70 billion headquartered in Vancouver will do good things for the city’s stature as a business capital, bringing additional high-paying head-office jobs and more work for law, accounting, management, office leasing and IT firms. It might also result in bigger contributions to B.C. nonprofits than Teck already provides.
The lingering question is how sticky Anglo Teck’s commitment to B.C. will be. The company will still be legally domiciled in the United Kingdom (on that count, Anglo American will not budge). For decades Teck owed its independence, in the face of takeover bids from Glencore PLC and others, to the controlling stake of the Keevil family, as canny and patriotic founders as any civic booster could ask for. With Anglo shareholders holding 62.4 percent of Anglo Teck, that backstop will be gone. In an industry rife with mergers and acquisitions, in a time when investors, companies and countries are scrambling for critical minerals including copper, it’s anybody’s guess where the shots will be called from 10 years hence.
Editor’s note: A different version of this text appeared in our January/February issue prior to the merger being approved on December 15, 2025 by the federal government.
Both the federal and provincial governments killed their respective carbon taxes and electric vehicle rebates in 2025 and President Trump called the climate fight a “con job.” Is the drive to decarbonize over?
The pace of change may slow in North America, but “it doesn’t change the trajectory,” Yu opines. Energy-importing countries in Asia and Europe are still highly motivated to become self-sufficient with renewable sources, aided by ever more efficient technologies. And the Trump administration itself has been putting money where its mouth isn’t, investing in two B.C.-based companies, Lithium Americas and Trilogy Metals, that are developing American mineral deposits critical to the energy transition.
“The policy agenda that governments have been following ran headlong into the fact that it’s not affordable,” Williams says. The shame is that B.C. implemented a relatively efficient, revenue- neutral carbon pricing system in 2008, but successive governments reneged on the promise and kept more of the proceeds while spending on expensive subsidies and regulatory interventions. Now governments have to go back to the drawing board. That is, if there’s the political will.
After Trump “sucked all the air out of the room” in the first half of 2025, the issues that returned to the top of the public’s mind were housing, the economy and jobs, says Mario Canseco, president of polling firm Research Co. Not in 30 years has he seen so many British Columbians saying they are struggling to pay for necessities like groceries.
“Part of what we’re seeing is your average 18- to 34-year-old cannot afford to protest anymore,” Canseco says. “They’re heavily invested in dealing with their own lives and expenditures, how they get into the housing market.”
Michael is a financial journalist based in the Cowichan Valley. He's a former managing editor of Canadian Business and editorial director of Canada Wide Media, BCBusiness's publisher. In 2024, he co-authored Personal Finance for Canadians for Dummies, 7th Edition (Wiley, 2024).
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