Trade, AI and housing risks in 2026

As we look ahead to 2026, both Canada and the United States are projected to experience continued economic growth. This positive outlook is underpinned by several key factors, including the increasing adoption of artificial intelligence (AI) technologies, which are expected to drive productivity gains and innovation across multiple sectors. However, this growth is not without its challenges. Trade uncertainty remains a significant concern, with ongoing geopolitical tensions and evolving trade policies potentially disrupting supply chains and market stability. These uncertainties could lead to increased volatility in financial markets and impact business investment decisions.

Housing markets in both countries also present notable risks. Elevated housing prices and affordability issues continue to pressure consumers, potentially dampening household spending and overall economic momentum. The risk of a housing market correction or slowdown could have broader implications for economic growth, given the sector's integral role in employment and wealth accumulation. Additionally, geopolitical risks, including international conflicts and diplomatic tensions, add another layer of complexity to the economic landscape, potentially affecting trade flows and investor confidence.

Michael Dehal, a senior portfolio manager, highlights that while AI adoption offers promising opportunities for economic expansion, it also introduces new uncertainties related to labor market shifts and regulatory responses. Businesses and policymakers will need to navigate these changes carefully to maximize benefits while mitigating potential disruptions. Furthermore, the interplay between trade dynamics and housing market conditions will be critical in shaping the economic trajectory of Canada and the U.S. in 2026.

Investors and stakeholders should remain vigilant to these evolving risks and opportunities. Diversification and strategic planning will be essential to manage potential volatility arising from trade disputes, housing market fluctuations, and geopolitical developments. Monitoring policy responses and technological advancements will also be important to anticipate shifts in the economic environment.

In summary, 2026 promises growth for Canada and the U.S., driven by AI and other innovations, but this growth will be tempered by trade uncertainties, housing market vulnerabilities, and geopolitical factors. Navigating these complexities will require adaptive strategies from businesses, investors, and policymakers alike.