RBC analysts emphasize that recent and upcoming changes in tariffs, elevated energy prices, and ongoing CUSMA renewal negotiations are critical factors shaping Canada's macroeconomic environment and the outlook for the Canadian Dollar (CAD) [1]. According to RBC, the March trade data is expected to benefit from stronger net energy exports, driven by a spike in energy prices resulting from conflict in the Middle East. This increase in energy prices is anticipated to boost Canada's net energy trade balance, although it will also raise costs for consumers [1].
The monthly trade data is currently being distorted by the timing of tariff announcements. RBC notes that the U.S. tariff rate on imports from Canada was likely less affected than most other countries by the shift in U.S. tariff policy in February, following the U.S. Supreme Court ruling against IEEPA tariffs [1]. Despite this, significant trade uncertainty persists, with CUSMA renewal negotiations expected to intensify in the coming months. RBC's base-case scenario projects a more stable international trade backdrop in 2026, albeit with higher tariff rates, which should make trade less of a headwind to growth compared to 2025 [1].
RBC further expects that the lagged impact of earlier Bank of Canada interest rate cuts and increased government spending will support improvements in per-person and per-worker economic conditions in the year ahead [1].
CONCLUSION
RBC analysts see a complex but improving outlook for Canada's trade and economic conditions, with energy exports and policy support offsetting tariff-related headwinds. While trade uncertainty remains due to CUSMA negotiations and elevated tariffs, the forecast for 2026 is more stable, suggesting medium market impact for the Canadian Dollar. Investors should monitor upcoming trade data and policy developments for further direction.