CHARLEBOIS: Canada’s economy is shrinking. Doesn’t matter how we call it

The greatest threat to Canada's food economy isn't a recession. It's the illusion that someone else is responsible for our economic decline

Published Jun 01, 2026  •  Last updated 26 minutes ago  •  3 minute read

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Canada’s economy is now smaller than it was when Prime Minister Mark Carney took office. The country has recorded two consecutive quarters of declining real GDP, and many economists now consider Canada to be in a technical recession. Predictably, much of the blame has been directed south of the border, toward President Donald Trump and the uncertainty surrounding trade relations with the United States. Trade tensions have certainly not helped. Businesses dislike uncertainty, and agri-food is particularly vulnerable to disruptions in cross-border commerce. But to suggest that Canada’s economic troubles are primarily Trump’s fault is both convenient and misleading.

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The reality is that Canada’s economy was showing signs of weakness long before the latest round of trade disputes. Productivity growth has lagged behind that of the United States for years. Business investment has remained disappointingly weak. GDP per capita has struggled despite rapid population growth. Housing costs have soared, infrastructure has failed to keep pace with demographic expansion, and many sectors have become increasingly dependent on government spending rather than private-sector investment. Trump may have added pressure to an already fragile system, but he did not create the underlying vulnerabilities.

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Food economy doesn’t operate in isolation

This matters because while Canada’s food economy has so far remained remarkably resilient, it does not operate in isolation from the broader economy. Agriculture and agri-food continue to perform relatively well compared to many other sectors. Canadians may postpone buying homes, vehicles, or appliances, but they still need to eat. Grocery stores remain busy. Food manufacturers continue to produce. Farmers continue to plant, harvest, and raise livestock. Food exports continue to support economic activity across the country.

Yet resilience should not be mistaken for immunity. If economic weakness persists, the consequences for agri-food will eventually become more visible. The first signs are already emerging in food service, where many restaurants are facing softer demand as consumers become increasingly price-sensitive. Rising labour costs, occupancy expenses, insurance premiums, and financing costs continue to squeeze margins. For many operators, profitability has become increasingly difficult to sustain.

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The greater concern, however, lies in investment and competitiveness. Food processors facing economic uncertainty may postpone expansion projects. Farmers may delay equipment purchases or modernization efforts. Investors may choose to place capital elsewhere. The danger is not that Canada will suddenly stop producing food. The danger is that the sector gradually loses momentum while competitors accelerate.

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Recession debate matters

Across the United States, billions of dollars continue to flow into new food-processing facilities, logistics infrastructure, and agricultural innovation. South American producers are expanding their global footprint. Other countries are aggressively pursuing productivity gains and export opportunities. Canada, meanwhile, risks becoming complacent because the food economy continues to perform reasonably well despite broader economic weakness.

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This is why the recession debate matters. The issue is not whether Canadians will continue to buy food. They will. The issue is whether Canada can maintain a competitive agri-food sector capable of attracting investment, creating jobs, driving innovation, and generating long-term growth. A shrinking economy may not immediately trigger a food recession, but it can slowly undermine the conditions that make future growth possible.

Canada’s food economy is not in recession today. In many respects, it remains one of the country’s strongest economic pillars. But no sector can indefinitely outrun the broader economy. Blaming Trump for Canada’s economic challenges may be politically convenient, but it does little to address the structural issues that have been building for years. If policymakers want the food economy to remain a source of strength, they need to focus less on finding external villains and more on restoring Canada’s competitiveness at home.

– 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.

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