Canada Capital Spending to Decelerate in 2026

By Paul Vieira

OTTAWA--Capital spending in Canada is expected to slow this year, with the bulk of industrial sectors - - led by manufacturing - - keeping a lid on expenditures amid an uncertain trade-policy environment.

Statistics Canada's annual survey of capital expenditures, issued Wednesday, indicates that outlays on machinery, equipment and non-residential buildings are set to rise 3.7%, or a deceleration from an estimated 4.7% increase in 2025.

The slowdown in spending reflects an economy still grappling with President Trump's sharp turn toward protectionist trade policy. Central bank officials believe business investment in Canada would remain weak because executives are reluctant to deploy cash, or hire additional workers, until the future of the U.S.-Mexico-Canada trade treaty is resolved.

That pact, also known as USMCA, faces a U.S.-led review later this year, and trade analysts expect the U.S. to demand more concessions from Canada and Mexico to keep the agreement intact.

The Bank of Canada has identified USMCA's uncertain future as a key risk to the economic outlook. At this moment, most Canadian exports to the U.S. are exempt from Trump's global tariffs because they comply with USMCA's terms. Trump moved to impose a new 10% tariff, soon to be increased to 15%, on imports, to replace duties invalidated by a Supreme Court ruling. Canadian and Mexican exports are still eligible for an exemption with the new tariffs.

The Statistics Canada survey said 11 sectors intend to scale back capital spending in 2026, versus nine sectors that plan to increase outlays. The energy and mining sector anticipates a 6.8% increase in capital spending, following a 3.1% reduction in 2025. Firms in the logistics and transport sector also plan to ramp up spending, by nearly 11%.

The manufacturing sector reduced capital-expenditure spending by 2.6% in 2025. Factories faced the biggest squeeze from tariffs, due to President Trump's hefty sectoral tariffs, of up to 50%, that targeted products like steel, aluminum, automobiles and forest products. The survey for 2026 suggests spending by factory owners will be flat.

The Statistics Canada survey doesn't incorporate expenditures on software.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

February 25, 2026 09:39 ET (14:39 GMT)