On Feb. 11, Wilfrid Laurier University hosted its 35th annual Economic Outlook event. This year’s theme is: The Era of Uncertainty.
As global tariffs continue to shift, new trade alliances are emerging and artificial intelligence is reshaping various industries. Presented by the Laurier Centre for Economic Research and Policy Analysis (LCERPA) and Laurier’s Lazaridis School of Business and Economics, the event featured a panel discussion with Trevor Tombe, economics professor at the University of Calgary and Brian Lewis, senior fellow and lecturer at the Munk School of Global Affairs and Public Policy at the University of Toronto. Although the event was expecting a third speaker, Angella MacEwan, the acting research director and senior economist with the Canadian Union of Public Employees, she was absent at the event.
The event delved into the current state of the Canadian economy, examining how unprecedented uncertainty is defying historical norms. The event discussion focused on how businesses and policymakers can pivot to stay resilient amid these rapidly shifting conditions.
Brian Lewis, who served as Ontario’s Chief Economist from 2015 to 2022, brought a perspective shaped by 32 years in public service. Addressing the looming 2026 trade reviews, Lewis suggested that Canada’s resilience depends on continuing to make a case for mutual economic wins between Canada, the U.S., and Mexico, rather than escalating tensions.
He noted that the most effective message is one that reminds the U.S. that its robust, dynamic economy has worked well under current trade relationships and there is no reason to change that.
Trevor Tombe expanded on this by noting that while Canada aggressively pursues trade diversification, the process is difficult. He explained that the dominant factors influencing which countries trade with which other countries are size and distance, and because the U.S. is a “behemoth force,” efforts to diversify often have no effect. Instead of focusing on trade agreements, Tombe focused on the physical infrastructure that enables trade.
“Our ability to move goods from Canada elsewhere requires expanded port capacity,” he said, citing the Vancouver and Montreal port expansions as meaningful increases in our physical capacity to export.
He also highlighted the importance of the internal market. He explains the Canadian Mutual Recognition Agreement, signed in December 2025, allows provinces to recognize each other’s rules as “de facto compliant.” Drawing on research he contributed to for the IMF, Tombe estimated that complete internal trade liberalization could result in $210 billion in potential gains, though he noted that service barriers are where the real potential gains lie.
However, the panel was blunt about the costs of seeking independence through “friend-shoring” to secure supply chains. Lewis explained that Canada can’t strengthen economic security without driving up costs for households.
“It costs money… if we want governments to move Canada to a place where we are more self-reliant… it does mean we are going to have to pay more for things,” said Lewis.
He goes on to question if Canadians are prepared for a potential regression in the country’s standard of living to pay for the shift. When debating whether Canada should match heavy U.S. domestic spending, Lewis argued for a focus on human capital over regulations or taxes. He pointed out that when businesses decide where to locate, their top priority is finding skilled labour.
“The most important thing governments can actually do is educate and train the labour force of the future,” Lewis said.
The discussion also touched on Canada’s reliance on natural resources. While sectors like oil and gas show high productivity, Tombe cautioned that they are not a “magic bullet” because the sector is quite volatile.
“Commodities prices go up and down… so while the level of productivity is high, the level of volatility is high,” said Tombe.
As the panel shifted toward the role of generative AI, both experts remained cautious. Tombe referenced the “productivity paradox,” quoting Nobel winner Robert Solow.
“You can see the computer age everywhere but in the productivity statistics,” he said.
Tombe also noted that the long-run GDP effect of AI might be between 1 and 4 per cent.
“We shouldn’t be counting on it being something that delivers us from the challenges that we face,” Tombe said.
“Do not ever use it to replace doing real work… develop your critical thinking skills. That is what is going to get you really far in your future careers, and that actually will help you not be replaced by AI someday,” said Lewis.
He concluded by advising Canadians to watch the unemployment rate as the truest indicator of economic pain, noting that wages have not kept pace with labour productivity growth, and the focus must remain on living standards rather than assuming economic theories will simply work out.
Contributed Photo/Sangjun Han
