Aluminerie Alouette is one of a number of companies that successfully redirected a significant percentage of their shipments overseas to European markets in the face of U.S. tariffs.
Economic resilience
A week ago, things were looking pretty grim. Trade talks with Washington had collapsed, and the U.S. followed through with 50% tariffs on roughly $20 billion of Canadian goods — wine, hockey sticks, cement. Prime Minister Mark Carney described it as an “attack”, said Canada is “at war,” and promised dollar-for-dollar retaliation on American steel, dairy, appliances and electronics starting Sept. 8. By any normal reading, this should have been a bad week for the Canadian economy.
Then on Thursday, Statistics Canada reported the economy grew at an annualized 3.3% in the second quarter — the fastest pace in three years — while revising away the first-quarter contraction that had everyone muttering “recession” back in May. Exports jumped 3.6%, mostly autos. Business capital investment rose 2.3%, snapping five straight quarters of decline. And Canada posted its first current account surplus since 2022 — $8.8 billion, the largest since 2005 — on the back of a 27% surge in energy exports.
Put those two paragraphs together and you get the odd mood of the moment: Ottawa and Washington are supposedly in a trade war, and the Canadian economy just had its best quarter in years. As analyst Heather Exner-Pirot argued on X this week, the pessimists on both sides — the ones certain the trade war will wreck Canada, and the ones certain Canada can’t develop its resources fast enough to matter — are both getting over their skis. More potash, uranium, copper, oil, gas and gold are coming out of the ground regardless of what happens in Washington. The only real question is how much of the global market Canada actually captures.
Which brings us to Sept. 14-15, when Carney convenes 100 of the world’s biggest investors in Toronto to pitch a trillion dollars of Canadian nation-building. A new TD Economics report, timed almost too perfectly for the occasion, argues the country is sitting on the edge of a genuine investment supercycle: over $1 trillion in projects already proposed or approved through 2035, with upside to $1.5-1.7 trillion if Ottawa plays it right — enough to add $12,000 to per-capita output by 2035. TD’s list of preconditions is the same one everyone’s been reciting for a decade: faster permitting, competitive taxes, room for firms to scale, a skilled labour supply that doesn’t depend on last year’s immigration mistakes.
Build Canada’s position on all this hasn’t changed. We want a trade deal, but not any deal, and not at the cost of the growth agenda. Dollar-for-dollar tariffs on select American goods are a defensible response to the new tariffs, but they are not a plan. They don’t build a mine, train a welder, or shave a day off a federal impact assessment. The GDP and current account numbers are good news indeed, but it is mostly oil prices and a weak loonie doing the work, not policy. The summit in three weeks is an important step in finding out whether Canada can turn a lucky quarter into a decade.
L’effet Trump
Quebec premier Christine Fréchette dissolved the National Assembly on Thursday and asked for an Oct. 5 vote, kicking off 39 days of door-knocking that would, in normal times, revolve around Quebec’s place in Canada. This time is different. “My adversary is named Donald Trump,” Fréchette told reporters, launching her CAQ campaign in Quebec City. “He’s the real opponent. He is the one threatening Quebec. We have to fight him.”
The more telling data point belongs to the other side of the constitutional divide. Parti Québécois leader Paul St-Pierre Plamondon has spent his entire leadership promising a sovereignty referendum “before the decade is out.” Last week he announced the PQ won’t hold one while Trump remains in office — pushing the vote past January 2029 so the question isn’t, in his words, “hijacked by the ups and downs of American politics.” A separatist leader back-burnering a sovereignty push to a foreign election calendar is not a familiar sight in Quebec’s political landscape.
The polling suggests it’s working for both of them, at everyone else’s expense. A Synopsis survey for La Presse, conducted Aug. 24-26 as the tariff fight peaked, has the CAQ up seven points in two weeks to 27%, essentially tied with the PQ’s 28%. The Liberals sit at 20%, the Conservatives at 14%, Québec Solidaire at 10%. Four years ago Legault’s CAQ was so far ahead the only question was who’d finish second. This time Fréchette is climbing out of a deep hole, pulling women and over-55 voters back on a message of economic stability.
Ottawa has spent half a century trying to argue Quebecers out of sovereignty. Trump may be doing it by accident. It will bear watching whether that holds once the trade war stops being the only story, and whether a federalist coalition built on fear of Washington survives when, or if, that fear eventually fades.
This week in Building Canada
Aug 29: Construction of the Grand Trunk Pacific Railway’s Western Division — the third transcontinental railway, intended to reach a new deep-water port at Prince Rupert — began with the first sod turned near Carberry, Manitoba on this day in 1905, two days before Alberta and Saskatchewan were officially created as provinces.
Aug 30: Charles Walcott discovered the Burgess Shale on this day in 1909, in the Canadian Rockies near Field, B.C.It is one of the most important fossil sites on Earth, and is now a UNESCO World Heritage Site.
Sep 1: Terry Fox was forced to stop the Marathon of Hope on September 1, 1980, just outside Thunder Bay after running 5,373 km in 143 days, when cancer was found to have spread to his lungs.
Sep 2: On this day in 1945, Japan surrendered, ending the Second World War. Canada’s war production ranked fourth among the Allies, behind only the US, UK, and Soviet Union, with Canada’s GNP having roughly tripled over the course of the war.
One upon a time in North America
What else we’ve noted
Canada has recruited 64 global superstars in science research, three quarters of them from the U.S.A.
Canada surpasses California as the largest legal cannabis market in the world.
Canadian aluminum exports grew during the second quarter, largely thanks to a doubling of sales to markets outside the Unites States.
Clerk of the Privy Council Michael Sabia has given his deputy ministers until March to come up with “bold ideas” focused on an “entrepreneurial mindset”
Paul Wells has an interesting substack post on what really drove Canada to say no to the U.S. trade deal.
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Andrew — please have the courage to write about First Nations issues. It’s the single biggest factor in major project approval, and I think we’re quietly undergoing a revolution.
Not sure if anyone noticed, but there’s all of a sudden First Nations invested in almost all the new projects, and the protests and blockades seem to be not happening.
The Carney plan of “make the First Nations industrial capitalists, and then we’re speaking the same language and can move forward together” seems to be working?
I can’t find any good writing on how things have changed in the last twelve months.
Canada's ability to carry out projects is determined by workers and materials, not money. Foreign investors trade foreign currency for Canadian dollars. Where do the foreign currencies go. Is it for consumption of foreign products? Please explain the benefits of foreign unvestment when Canada can create its own money and merium of exchange and do the investment for Canadians.