Productivity, Innovation And How Canada's Tax System Can Help

Canada and its new government find themselves at a crossroads in the summer of 2025. The Trump administration's first six months have changed (likely forever) Canada's relationship with its closest neighbour and largest trading partner. While the Canada-United States-Mexico Free Trade Agreement has cushioned most of the impact to date, we still face considerable economic headwinds from threatened tariffs (both general and sectoral) and the prospect of CUSMA being renegotiated in 2026. The resulting uncertainty creates a drag on the economy, as businesses hesitate to expand or modernize at a time when important parameters are changing weekly.

Moreover, the "One Big Beautiful Bill Act" enacted in July 2025 includes a host of highly stimulative tax changes designed to super-charge the American economy. These include faster tax write-offs of business expenditures, export subsidies, expanded investor-level tax relief, and the extension of reduced income tax rates, all